UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Transcription

1 Case :-cv-0-cas-e Document Filed 0// Page of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 Neil D. Martin (Bar No. 0) nmartin@hillfarrer.com Clayton J. Hix (Bar No. ) chix@hillfarrer.com One California Plaza, th Floor 00 South Grand Avenue Los Angeles, California 00- Tel: () -00 Fax: () -0 BODMAN PLC Dennis J. Levasseur dlevasseur@bodmanlaw.com th Floor at Ford Field 0 St. Antoine Street Detroit, Michigan Tel: () - Fax: () - [Admitted Pro hac vice] Attorneys for Defendant A HOSTING, INC. VOLKS USA, INC., a California corporation, v. Plaintiff, A HOSTING, INC., a Michigan corporation, Defendant. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CASE NO. :-cv-0-cas-e REPLY IN SUPPORT OF DEFENDANT S MOTION TO DISMISS PLAINTIFF S FIRST AMENDED COMPLAINT Date: October, Time: 0:00 a.m. Judge: Hon. Christina A. Snyder Courtroom, nd Floor

2 Case :-cv-0-cas-e Document Filed 0// Page of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 TABLE OF CONTENTS - i - Page I. ARGUMENT... A. Plaintiff s Affidavits Should Be Stricken.... B. Plaintiff s Claims Are Not Outside The Scope of the TOS.... C. Plaintiff Has Failed to State a Claim for False Advertising Under the Lanham Act and the FAL... D. Plaintiff Has Failed to State Claims Under the CFAA and Cal. Penal Code E. Plaintiff Has Failed to State a Claim Under the UCL.... F. Plaintiff Has Failed to State a Breach of Contract Claim.... G. Plaintiff Has Failed to State a Breach of Warranty Claim.... H. Plaintiff Has Failed to State a Negligence Claim.... I. The Remainder of Plaintiff s Counts Fail to State a Claim....

3 Case :-cv-0-cas-e Document Filed 0// Page of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 TABLE OF AUTHORITIES Page Cases Coates v. Bastian Bros. Mich. App. ; N.W.d (0)... Grosse Pointe Park v. Mich. Muni. Liability Pool Mich. ; 0 N.W.d 0 (0)... Guadagno v. E*Trade Bank F.Supp. d (E.D. Cal. 0)... Hauter v. Zogarts Cal. Rptr. ; Cal. Rptr. ()... In re American Cont. Sec. Litig. 0 F.d (th Cir. )... Inter-Mark USA, Inc. v. Intuit, Inc. 0 WL * (N.D. Cal. //0)... Klapp v. United Ins. Group Mich. ; N.W.d (0)... Lexmark Int. v. Static Control Comp. S.Ct. ()... Statutes California Civil Code..., California Penal Code 0..., - ii -

4 Case :-cv-0-cas-e Document Filed 0// Page of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 Defendant A Hosting, Inc. ( A ) submits this reply in support of its motion to dismiss. I. ARGUMENT A. Plaintiff s Affidavits Should Be Stricken. With its opposition, plaintiff submitted the affidavits of its counsel and Hideyoshi Shigetain. Those affidavits should be stricken as they are inappropriate in a Rule (b) motion setting. In re American Cont. Sec. Litig., 0 F.d, (th Cir. ). B. Plaintiff s Claims Are Not Outside The Scope of the TOS. At pages to and elsewhere in of its response, plaintiff makes numerous arguments in a fruitless attempt to avoid the TOS; the very contract it entered into in December. First, plaintiff argues that the TOS only applies to hosting not data migration. Yet, data mitigation is a necessary part of hosting because unless the data is migrated there is nothing to host. Furthermore, the TOS clearly applies to the parties overall relationship, irrespective of the specific services. It states on the very first page: This Terms of Service, or TOS, is a contract between you and A Hosting, Inc. * * *. All clients of A Hosting agree to abide by these policies. See, FAC, Ex. 0, p. ; emphasis added. At pages and, plaintiff argues that the Money Back Guarantee described in Section of the TOS reflects an intent to limit the TOS only to hosting. Plaintiff is wrong. The Money Back Guarantee simply says that it is limited to Hosting services. Nothing suggests that it limits the rest of the TOS to hosting. Rather, it applies to the entirety of the relationship. Second, at pages and, plaintiff shows profound confusion about A s argument in its initial brief that data migration is a necessary component of hosting

5 Case :-cv-0-cas-e Document Filed 0// Page of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 where plaintiff argues (based on its attorney s definitions of hosting and migration) that A has misrepresent[ed] technology to this Court. Plaintiff is either confused or purposefully mischaracterizes the argument. In short, it is unquestionably the case that web hosting only works if there is data to host. Customer data gets to A s servers by migration. Third, plaintiff argues that the TOS is a clickwrap contract of adhesion and must, therefore, be construed against A. Plaintiff is wrong. Federal courts in California routinely enforce click wrap contracts where the terms are made available to the party asserting the contract. See, e.g., Guadagno v. E*Trade Bank, F.Supp. d, (E.D. Cal. 0) (party is bound by clickwrap agreement if the terms are clear and acceptance if unambiguous, regardless of whether he actually reads them); Inter-Mark USA, Inc. v. Intuit, Inc., 0 WL * (N.D. Cal. //0) (courts apply traditional principals of contract law and focus on whether the plaintiff had notice of and manifested assert to clickwrap agreement ). There is no question that the TOS was made available to plaintiff before it completed its order. See, FAC, ( I have read and agree to the Terms of Service which appears above the box Complete Order ). Fourth, plaintiff claims that A modified its website to mislead plaintiff and this Court. Plaintiff does so in an attempt to excuse its misrepresentation (in its FAC) to this Court that screen shots attached as Exhibits and to plaintiff s FAC did not mention data mitigation when they surely did. In fact, plaintiff s FAC complaint represented that those screen shots were from Defendant s website from -present. See, FAC, p., n.. Plaintiff only compounds its attempt to mislead this Court by attaching (as Exhibit to its response) just one page of The notion that data migration is not necessary for hosting a web site because a web site can be built up from the ground up, as plaintiff asserts at page, is irrelevant because A was not asked to build a website. The Michigan Supreme Court has rejected the contract of adhesion theory asserted by plaintiff. See, Rory v. Continental Casualty, Mich. (0) (adhesion contracts are no different from any other contract and are to be enforced according to their plain meaning). - -

6 Case :-cv-0-cas-e Document Filed 0// Page of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 defendant s home page. Plaintiff neglects to attach the following pages which appears as Exhibit - to its FAC that states Free Account Mitigation. Fifth, at pages to, plaintiff argues that it should be given discovery to show that the TOS is ambiguous. Plaintiff has it wrong. Under Michigan law, contracts are to be construed so as to honor the intent of the parties and unambiguous contracts are to be interpreted and enforced as written. Klapp v. United Ins. Group, Mich., ; N.W.d (0). Courts are not to impose an ambiguity on clear contract language. Grosse Pointe Park v. Mich. Muni. Liability Pool, Mich., ; 0 N.W.d 0 (0). A contract is ambiguous when two provisions irreconcilably conflict with each other, or when [a term] is equally susceptible to more than a single meaning. Coates v. Bastian Bros., Mich. App., 0; N.W.d (0). Here, plaintiff other than his bald and conclusory argument that the TOS is ambiguous - has not pointed to any ambiguity in the TOS. Rather, plaintiff makes a number of incoherent statements about various contracts when the only contract mentioned in the FAC and that the parties clearly entered into was the TOS. C. Plaintiff Has Failed to State a Claim for False Advertising Under the Lanham Act and the FAL. Plaintiff mischaracterizes A s standing argument. No matter how plaintiff tries to spin it, Lexmark Int. v. Static Control Comp., S.Ct., (), requires a competitive injury and plaintiff must show a economic or reputational injury flowing directly from the deception wrought by the defendant s advertising; and that occurs when the deception of consumers causes them to withhold trade from the plaintiff. Lexmark, S.Ct. at. At page, plaintiff tries to explain its nonsensical allegations that A s hosting was inextricably intertwined Plaintiff s counsel doubles down on his attempt to mislead this Court by submitting an affidavit that refers to Exhibits to of plaintiff s response which attach only one page of A s website. Had plaintiff s counsel bothered to attach the entirety what was available on the Wayback Machine ( he would have produced Exhibit A hereto that shows that data mitigation was a service offered for free on A s website in December. - -

7 Case :-cv-0-cas-e Document Filed 0// Page of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 with plaintiff s brand. See, FAC, -. Again, plaintiff has it backwards. Plaintiff has not alleged and cannot allege that A deceived consumers which caused them to withhold trade from plaintiff. Plaintiff s attempt at page to compare its FAC to the claims in Lexmark is baseless because the counterplaintiff in Lexmark, a remanufacturer of Lexmark ink cartridges, had alleged that Lexmark materially misrepresented to end users (consumers) the nature, characteristics and qualities of its products and those of defendant. S.Ct. at. Plaintiff s FAC contains no such allegations. At pages to of its response, plaintiff misapprehends A s argument. In December, plaintiff was advised in the TOS of the terms of the Money Back Guaranty and the fact that A would not be liable for lost data before plaintiff put its data at risk in March. No amount of discovery will change that fact. Finally, at page plaintiff argues its FAL claims predated the TOS so that Michigan law should not apply. That is simply wrong. The exculpatory language in the TOS is very broad and put plaintiff on notice (well before March ) about specifics of the Money Back Guaranty. D. Plaintiff Has Failed to State Claims Under the CFAA and Cal. Penal Code 0. Plaintiff does not bother to address A s choice of law argument which should result in the dismissal of plaintiff s California statutory claims, including under Cal. Penal Code 0. Rather, plaintiff repeats its baseless argument that the TOS does not apply to data migration. Plaintiff tries to avoid the exculpatory language in the TOS by arguing Cal. Civ. Code prohibits contracts that limit liability for fraud or willful injury. Yet, plaintiff has not pleaded fraud or willful injury. Finally, plaintiff makes the nonsensical argument that A did not have access to the Web Store data when it surely did. Plaintiff s response to A s motion expands the allegations in its FAC. Plaintiff now argues that the hosting service was inextricably intertwined with plaintiff s business and reputation. See, Pl. s Resp., p.. - -

8 Case :-cv-0-cas-e Document Filed 0// Page of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 E. Plaintiff Has Failed to State a Claim Under the UCL. Plaintiff s attempt to avoid the TOS s choice of law provision and its impact on its UCL claim is baseless. Next, plaintiff has abandoned its reliance on the Automatic Renewal Act as a predicate for a UCL claim. Rather, plaintiff contends that the CFAA and 0 claims are enough of a base to assert a claim under the UCL. Yet, as demonstrated above and in A s initial brief, those claims fail. Thus, plaintiff s UCL claim fails as well. F. Plaintiff Has Failed to State a Breach of Contract Claim. Plaintiff now argues that there is a contract separate from the TOS. Other than bald and conclusory statements, none has been alleged. Plaintiff s reliance on paragraphs - of the FAC is simply wrong as there is no separate contract alleged in compliance with Twombley and Iqbal. Moreover, there could be no implied contract when there is an express contract. G. Plaintiff Has Failed to State a Breach of Warranty Claim. Plaintiff asserts that A did not properly disclaim breach of implied warranties under California law. That argument should be rejected because () Michigan law applies and () Hauter v. Zogarts, Cal. Rptr. ; Cal. Rptr. (), a case under the UCC, simply held that a party wishing to disclaim implied warranties must place the buyer on notice which A did in the TOS. H. Plaintiff Has Failed to State a Negligence Claim. Plaintiff raises its failed argument that the TOS does not apply which should be rejected for the reasons stated above. Moreover, plaintiff s reliance on Cal. Civ. Code should be rejected because () Michigan law applies and () Cal. Civ. Code only applies to contracts that seek to excuse a party from fraud or willful injury to person or property. Plaintiff also did not properly allege that A engaged in fraud or willful injury to persons or property. - -

9 Case :-cv-0-cas-e Document Filed 0// Page of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 I. The Remainder of Plaintiff s Counts Fail to State a Claim. With regard to the other counts, plaintiff raises its baseless argument that the TOS does not apply. Plaintiff s trespass to chattels claim (Count IX) fails because plaintiff gave A access to its data. Plaintiff s negligent misrepresentation claim (Count X) fails because the TOS expressly described the Money Back Guarantee. Finally, as to its tortious interference claim (Claim XI), plaintiff has not properly pleaded an improper motive and plaintiff s assertion that it should be given discovery to support its claim is baseless and is an admission that he never should have pleaded that claim in the first place. DATED: October, - - By: /s/ Clayton J. Hix CLAYTON J. HIX Attorneys for Defendant A Hosting, Inc.

10 Case :-cv-0-cas-e Document Filed 0// Page 0 of 0 Page ID #:0 LOS ANGELES, CALIFORNIA 00-0 HFB 00. A