Case 2:12-cv-00583-SRB Document 48 Filed 08/15/12 Page 1 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 At issue is Defendant GoDaddy.coms (GoDaddy) Motion to Dismiss (MTD) (Doc. 21). The Court also resolves Plaintiffs Motion for Leave to File a Sur-reply to GoDaddys Reply in Support of GoDaddys Motion to Dismiss First Amended Complaint (Pl.s Mot.) (Doc. 29). I. BACKGROUND Defendant GoDaddy is an [I]nternet domain name registrar offering low cost [I]nternet domain name registrations and other services related to domain name registrations. (Doc. 12, 1st Am. Compl. (FAC) 7-8.) One service Defendant offers is called Private Registration (PRS), which permits domain name owners to keep their identities out of the public WHOIS database. (Id. 12.) The PRS service runs concurrently with the term of the domain name registration and is purchased at the time of the registration. WineStyles, Inc., on behalf of itself and all) ) others similarly situated, ) ) Plaintiff, ) ) vs. ) ) GoDaddy.com, LLC, a Delaware limited) ) liability company, ) ) Defendant. ) ) No. CV 12-583-PHX-SRB ORDER IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA NOT FOR PUBLICATION

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(Id. 14-15.) GoDaddy also offers discount bulk rates for purchases of five or more domain names at one time. (Id. 18.) Bulk pricing rates are posted on GoDaddys website in a chart. (Id.) According to the FAC, Defendant offers free PRS with the purchase of five or more domain name registrations. (Id.) Without the bulk pricing discount, customers pay separately for PRS. (Id. 19.) Plaintiff WineStyles registered 14 domain names in two bulk purchases for one-year terms on December 17, 2009. (Id. 116, 118.) Plaintiff registered eight additional domain names for a one-year term in a bulk purchase made on November 30, 2009. (Id. 133.) Finally, Plaintiff registered five domain names for a one-year term in a bulk purchase on January 13, 2010. (Id. 125.) With the bulk registrations, Plaintiff received free PRS. (Id. 117, 119, 134.) Plaintiff renewed the registrations at least one time each and, upon renewal, was charged for PRS, rather than receiving the service for free. (Id. 120-24; 12631; 135-40.) Defendants Uniform Terms of Service Agreement (UTSA), which must be accepted by a customer before an online purchase is complete, provides for automatic renewal of domain name registrations at then current rates. (Id. 27; see also id., Ex. A.) Plaintiff contends that GoDaddy improperly failed to notify it that PRS would not be free on renewal. (E.g., FAC 1-2.) The FAC contains the following claims: breach of contract (Count I); breach of the implied covenant of good faith and fair dealing (Count II); unjust enrichment (Count III); unfair and deceptive trade practices, in violation of Arizona state consumer fraud laws (Count IV); and violation of the Electronic Funds Transfer Act (EFTA) (Count V). (Id. 146-210.) Defendant moves to dismiss the FAC in its entirety with prejudice. (MTD at 1.) II. LEGAL STANDARDS AND ANALYSIS A. Standard of Review

The Federal Rules of Civil Procedure require only a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the . . . claim is and the grounds upon which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); see also Fed. -2-

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R. Civ. P. 8(a)(2). Thus, dismissal for insufficiency of a complaint is proper if the complaint fails to state a claim on its face. Lucas v. Bechtel Corp., 633 F.2d 757, 759 (9th Cir. 1980). While a complaint attacked by a Rule 12(b)(6) motion does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Twombly, 550 U.S. at 555 (citations omitted). A Rule 12(b)(6) dismissal for failure to state a claim can be based on either (1) the lack of a cognizable legal theory or (2) insufficient facts to support a cognizable legal claim. Balistreri v. Pacifica Police Dept, 901 F.2d 696, 699 (9th Cir. 1990); Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). In determining whether an asserted claim can be sustained, all allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir. 1994). [A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that recovery is very remote and unlikely. Twombly, 550 U.S. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). However, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief. Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In other words, the complaint must contain enough factual content to raise a reasonable expectation that discovery will reveal evidence of the claim. Twombly, 550 U.S. at 556. In addition, Federal Rule of Civil Procedure 9(b) requires that, in alleging fraud, a party must state with particularity the circumstances constituting fraud. To meet the Rule 9(b) particularity requirement: a plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false. In other words, the plaintiff must set forth an explanation as to why the statement or omission complained of was false or misleading. Yourish v. Cal. Amplifier, 191 F.3d 983, 993 (9th Cir. 1999) (quoting In re GlenFed, Inc. -3-

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Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994) (en banc), superceded by statute on other grounds, Private Securities Litigation Reform Act of 1995, Public Law 104-67 (codified at 15 U.S.C. 78u-4 (1995))). In addition, the plaintiff must set forth, as part of the circumstances constituting fraud, an explanation as to why the disputed statement was untrue or misleading when made. Id. (quoting GlenFed, 42 F.3d at 1549). The plaintiff must include statements regarding the time, place, and nature of the alleged fraudulent activities, and mere conclusory allegations of fraud are insufficient. GlenFed, 42 F.3d at 1548 (quotation omitted). Averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). B. Statute of Limitations

GoDaddy argues that Plaintiffs claims for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment are all barred by a one-year limitation period contained in the 2010 UTSA. (MTD at 6-7; see also Doc. 27, Def.s Reply in Supp. of MTD at 7 n.9.) The 2010 UTSA, attached as an exhibit to the FAC, states that any claim arising out of or related to this Site or the Services found at this Site must be brought within one year of the accrual of the claim. (See FAC, Ex. A at 56.) When Plaintiff renewed its domain names in November 2010, December 2010, and January 2011, this term was in effect. (Id. at 51 (reflecting that the 2010 UTSA took force on April 23, 2010).) In the absence of unconscionability, courts typically uphold contractual provisions shortening limitations periods. See Soltani v. W. & S. Life Ins. Co., 258 F.3d 1038, 1042 (9th Cir. 2001); see also Herstam v. Deloitte & Touche, LLP, 919 P.2d 1381, 1386 (Ariz. Ct. App. 1996) ([P]arties are at liberty by contract to shorten the limitations period provided by statute.). Even when considering a contract of adhesion, such as the one at issue here, a provision shortening the applicable statute of limitations is enforceable so long as the limitations period is substantively reasonable. Janda v. T-Mobile USA, Inc., 378 F. Appx 705, 709 (9th Cir. 2010). A one-year limitations period is not substantively unreasonable. Id.; see also Soltani (upholding six-month limitation period as reasonable); Han v. Mobil Oil -4-

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Corp., 73 F.3d 872, 877 (9th Cir. 1995) (A contractual limitation period requiring a plaintiff to commence an action within 12 months following the event giving rise to a claim is a reasonable limitation which generally manifests no undue advantage and no unfairness.). The Court finds that the one-year limitation period in the UTSA is not unreasonable or unconscionable. The Court further finds that Plaintiffs claims accrued for purposes of this action on the first renewal of each batch of domain names, one year after the initial purchases: November 30, 2010, December 17, 2010, and January 13, 2011. (See FAC 11621, 125, 127, 133, 136.) Plaintiff filed suit on March 20, 2012. (See Doc. 1, Compl.) Plaintiffs claims in Counts I, II, and III are barred by the contractual limitation period, which expired in January 2012 at the latest. Counts I, II, and III are dismissed. C. Fraud

GoDaddy contends that Plaintiffs claim for unfair and deceptive trade practices, Count IV, is also time-barred on account of the one-year limitation period in the UTSA. (MTD at 12-13.) Plaintiff responds that the FAC alleges that fraudulent documents were sent to Plaintiffs in 2011, less than a year before Plaintiff filed suit. (Doc. 25, Pl.s Resp. Opposing MTD (Resp.) at 16.) Indeed, Plaintiff has sufficiently alleged that GoDaddy sent documents forming the basis of the unfair and deceptive trade practices claim. (See FAC 123, 129, 139.)1 However, the Court finds that Plaintiff has not satisfied the requirements of Rule 9(b) with respect to Count IV. It is not entirely clear what claim Plaintiff asserts in Count IV, but whether it arises under common law or Arizona Revised Statutes 41-2081, 44-1522, it appears to be grounded in fraud and must comply with Rule 9(b). (See FAC 180-98.) Plaintiff states that its claim is that Defendant improperly failed to disclose that PRS would not be free after the first year. (See Resp. at 14.) Failure to disclose only constitutes fraud where the defendant had a duty to disclose. Gould v. M & I Marshall & Isley Bank, No. Likewise, Plaintiff has alleged that charges were made in violation of EFTA less than a year before Plaintiff filed suit. (E.g., FAC 124, 130-31, 139-40.) Accordingly, the one-year limitation in the UTSA does not bar Plaintiffs EFTA claim on its face. -51

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CV11-1299-PHX-DGC, 2012 WL 827115, at *2 (D. Ariz. Mar. 12, 2012). This requirement applies to consumer fraud as well as to a standard fraud claim. Id.; see also State ex rel. Horne v. AutoZone, Inc., 258 P.3d 289, 299 (Ariz. Ct. App. 2011) (holding that a claim under the Arizona Consumer Fraud Act can be based on an omission when the law imposes a duty to disclose), vacated on other grounds, 275 P.3d 1278 (Ariz. 2012) . Plaintiff has not alleged with particularity that Defendant had a duty to disclose that PRS would not be free in perpetuity. The FAC alleges that Defendant disclosed that PRS was free for bulk purchases on registration and that renewals were priced at then current rates. (E.g., FAC 46, 48, 79, 83.) Taking the allegations in the FAC to be true and considering them together, the Court finds that Plaintiff has not plausibly alleged that Defendant had a duty to disclose that PRS was not provided for free beyond the first registration. Cf. Banner Health v. Med. Sav. Ins. Co., 163 P.3d 1096, 1102-03 (Ariz. Ct. App. 2007) (holding that a price term set by rates filed with the Department of Health Services was not missing or ambiguous, even though not expressly referenced in the agreement). Plaintiff has not satisfied the pleading requirements of Rule 9(b) with respect to Count IV. Count IV is dismissed. D. EFTA

Plaintiffs claim under EFTA is that Defendant made a practice of improperly charging consumer credit cards the then current price for a domain name registration upon renewal without disclosing that PRS would not be free. (E.g., FAC 24, 199-210.) EFTA requires that electronic fund transfers be preauthorized in writing by the consumer, and if the amount of the transfer will vary, consumers must be provided with reasonable advance notice of the change. See 15 U.S.C. 1693a(9), 1693e. GoDaddy argues that, by accepting the UTSA, Plaintiff preauthorized the charge for PRS at then current rates. (MTD at 13.) Indeed, from the face of the FAC and Exhibit A, it is clear that Plaintiff has not stated a claim under EFTA plausibly entitling it to relief because the UTSA states that renewals will be charged at then current rates. (See FAC 27, 79; id., Ex. A.) Plaintiff does not contest that the UTSA governed its relationship with GoDaddy. (E.g., FAC 27-28, 94(c), 160; see -6-

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also, e.g., id., Ex. A at 3, 51.) The allegations in the FAC do not plausibly state that Defendant violated EFTA.2 Count V is dismissed. III. CONCLUSION Plaintiff requests leave to amend. Rule 15(a) of the Federal Rules of Civil Procedure states that leave to amend a pleading shall be freely given when justice so requires. (Resp. at 17.) Counts I, II, and III are dismissed with prejudice because no amendment can rectify the pleading defect. Counts IV and V are dismissed without prejudice because it is possible that Plaintiff could remedy the flaws identified herein through amendment. Plaintiff has already amended once; the Court will permit one further amendment, which may only be undertaken in compliance with the legal standards contained in this Order.3 IT IS ORDERED granting Defendant GoDaddy.coms Motion to Dismiss (Doc. 21). IT IS FURTHER ORDERED denying Plaintiffs Motion for Leave to File a Surreply to GoDaddys Reply in Support of GoDaddys Motion to Dismiss First Amended Complaint (Doc. 29). IT IS FURTHER ORDERED directing Plaintiff to file any amended Complaint within 30 days of the date of entry of this Order. DATED this 15th day of August, 2012.

Furthermore, the Court notes that EFTA does not apply to credit transactions, and it appears from the FAC and the Response that Plaintiff renewed its domain name registrations using a credit card. (See FAC 24, 94(b); Resp., Exs. B, C); see also Sanford v. MemberWorks, Inc., 625 F.3d 550, 560 (9th Cir. 2010) ([EFTA] does not apply to creditbased transactions.). WineStyles requests leave to file a sur-reply. (See Pl.s Mot. at 1.) The Local Rules of this district do not permit the filing of sur-replies. See LRCiv 7.2 (providing for response and reply pleadings only). Plaintiff does not assert any valid basis for filing a sur-reply, and the Court, in its discretion, finds that Plaintiffs proposed sur-reply would not be helpful. Accordingly, Plaintiffs Motion is denied. -73