Kremen v. Cohen

Decision Date03 January 2003
Docket NumberNo. 01-15899.,01-15899.
Citation325 F.3d 1035
PartiesGary KREMEN, an individual, Plaintiff-Appellant, and Online Classifieds, Inc., a Delaware Company, Plaintiff, v. Stephen Michael COHEN, an individual; Ocean Fund International Ltd., a foreign company; Sand Man Internacional Ltd., a foreign company; Sporting Houses Management Corporation, a Nevada company; Sporting Houses of America, a Nevada company; Sporting Houses General Inc., a Nevada company; William Douglas, Sir, an individual; VP Bank (BVI) Limited, a foreign company; Andrew Keuls, an individual; Montano Properties LLC, a California Limited Liability Company; Ynata Ltd., Defendants, and Network Solutions, a Delaware Company, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

James M. Wagstaffe, Pamela Urueta, Alex K. Grab, Kerr & Wagstaffe, Richard S. Diestel, Bledsoe, Catheart, Diestel, Livingston And Pedersen, San Francisco, CA, for Plaintiff-Appellant/Plaintiff.

Robert Selvidge, San Francisco, CA, W. Michael Mayock, Law Offices of W. Michael Mayock, Pasadena, CA, Robert S. Dorband, DuBoff, Dorband, Cushing & King, Portland, OR, David Henry Dolkas, Gray Cary Ware & Freidenrich, Palo Alto, CA, Robin Offner, Robin Offner & Associates, San Diego, CA, Kathryn E. Karcher, Gray Cary Ware & Freidenrich, San Diego, CA, for Defendant-Appellee/Defendant.

Brian E. Gray, Professor, Robin D. Gross, Electronic Frontier Foundation, San Francisco, CA, William H. Bode, William H Bode & Associates, Washington, DC, for Amicus.

Before: KOZINSKI, McKEOWN, Circuit Judges, and FITZGERALD, District Judge.1

ORDER

We certify to the California Supreme Court the question set forth in Part II of this order. All further proceedings in this case are stayed pending final action by the California Supreme Court, and this case is withdrawn from submission until further order of this court.

I

CAPTION AND COUNSEL

Gary Kremen is deemed the petitioner in this request because he appeals from the district court's adverse rulings on the issue certified. The caption of the case is:

GARY KREMEN, an individual, Plaintiff-Appellant, and

ONLINE CLASSIFIEDS, INC., a Delaware Company, Plaintiff,

v.

No. 01-15899 D.C. No. CV-98-20718-JW Northern District of California, San Jose STEPHEN MICHAEL COHEN, an individual; OCEAN FUND INTERNATIONAL LTD., a foreign company; SAND MAN INTERNACIONAL LTD., a foreign company; SPORTING HOUSES MANAGEMENT CORPORATION, a Nevada company; SPORTING HOUSES OF AMERICA, a Nevada company; SPORTING HOUSES GENERAL INC., a Nevada company; WILLIAM DOUGLAS, Sir, an individual; VP BANK (BVI) LIMITED, a foreign company; ANDREW KEULS, an individual; MONTANO PROPERTIES LLC, a California Limited Liability Company; YNATA LTD., Defendants, and

NETWORK SOLUTIONS, a Delaware company, Defendant-Appellee

The following is a list of counsel appearing in this matter:

Counsel for appellant Gary Kremen:

James M. Wagstaffe 100 Spear Street, Suite 1800 San Francisco, CA 94105 415-371-8500

Counsel for appellee Network Solutions, Inc.:

Kathryn E. Archer 401 B Street, Suite 2000 San Diego, CA 92101 619-699-4750

Other counsel appeared for the other-named parties in this appeal; those counsel are not listed here because the claims related to those parties were disposed of by separate disposition as set out in Part III of this order.

II

QUESTION CERTIFIED

Pursuant to Rule 29.5(a) of the California Rules of Court, we respectfully request the California Supreme Court to exercise its discretion to adjudicate a question of California law related to Internet domain names and the tort of conversion. This particular case centers on the domain name "sex.com." The decisions of the California appellate courts provide no controlling precedent regarding the certified question, the answer to which may be determinative of this appeal. We respectfully request that the California Supreme Court answer the certified question presented below. We acknowledge that your Court may decide to reformulate the question, and our phrasing of the issue is not intended to restrict your Court's consideration of the case. We agree to follow the answer provided by the California Supreme Court.

We invoke the certification process only after careful consideration and do not do so lightly. The certification procedure is reserved for state law questions that present significant issues, including those with important public policy ramifications, and that have not yet been resolved by the state courts. We request certification not because a difficult legal issue is presented but because of deference to the state court on significant state law matters.1 We have noted, in reference to Arizonans for Official English v. Arizona,2 520 U.S. 43, 62 76-79, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997), that "we have an obligation to consider whether novel state-law questions should be certified — and we have been admonished in the past for failing to do so." Parents Involved in Community Schools v. Seattle School District, 294 F.3d 1085, 1086 (9th Cir.2002) (certifying question despite parties' unanimous request not to certify) (oral arguments heard on certified question in Washington State Supreme Court on October 24, 2002).

Although we are quite capable of resolving the issue presented, we should not reach out to grab the question in the first instance simply because the case involves a novel and "sexy" issue. We are not, of course, unmindful of the burgeoning caseload of the California Supreme Court, and we recognize that the decision to accept certification lies solely within the discretion of your court. But it is not our role to pass advance judgment on the Court's priorities. We would not presume to certify a run-of-the mill case to your Court nor would we use the certification process to sidestep our diversity jurisdiction. In a case such as this one that raises a new and substantial issue of state law in an arena that will have broad application, the spirit of comity and federalism cause us to seek certification. We accordingly invoke this procedure under the California Rules of Court.

The question of law to be answered is:

Is an Internet domain name within the scope of property subject to the tort of conversion?

(a) For the tort of conversion to apply to intangible property, is it necessary that the intangible property be merged with a document or other tangible medium?

(b) If the answer to Question (a) is "yes," does the tort of conversion apply to an Internet domain name, or, more specifically, is an Internet domain name merged with a document or other tangible medium?

III

STATEMENT OF FACTS

This action stems from Gary Kremen's ("Kremen") suit against Network Solutions, Inc. ("NSI") for the fraudulent transfer of his properly-registered Internet domain name, "sex.com," to a third party.

A short background regarding the Internet will assist in putting this case in context. The Internet has been described as "a vast system of interconnected computers and computer networks." See Name. Space, Inc. v. Network Solutions, Inc., 202 F.3d 573, 576 n. 1 (2d Cir.2000). Each computer that is connected to the Internet has a unique Internet Protocol ("IP") number that functions as a kind of Internet address. Id. An IP number consists of four sets of numbers separated by periods. Id. at 576. Early Internet innovators created the Domain Name System ("DNS"), a system designed to relate easily-remembered domain names with difficult-to-remember IP numbers. Domain names are comprised of alphanumeric fields separated by dots — e.g., — where the field farthest to the right (".gov" in the example) is the Top Level Domain ("TLD"). Id. at 577. The field second from the TLD is the Second Level Domain; and the field third from the TLD is the Third Level Domain. Id.

Under a cooperative agreement entered into with the National Science Foundation ("NSF") on January 1, 1993, NSI became the exclusive registrar for various TLDs, including ".com". By accepting the role of registrar, NSI took "primary responsibility for ensuring the quality, timeliness and effective management of the registration services provided" under the agreement. The agreement expired on September 30, 1998; thereafter other entities have shared the role of domain name registrar. From April 1993 until September 1995, NSI provided its registration service to the public at no cost. During this period, NSF paid NSI a fixed fee and costs for registering domain names.

Under its agreement with NSF, NSI undertook responsibility to "compile and maintain an authoritative, reliable, and up-to-date database" of registered domain names in addition to the conversion tables that index registered domain names to IP numbers.

On May 9, 1994, Kremen registered the domain name "sex.com" with NSI. Kremen did so by filling out and electronically submitting a short registration form. No payment was necessary in order to effect the registration. Kremen registered sex.com under his d/b/a "Online Classifieds, Inc." ("OCI") and listed himself as the administrative and technical contact person. Kremen did not use the domain name for any significant purpose during the 18 months that it was registered to OCI.

In October 1995, NSI received a letter on OCI letterhead and putatively signed by OCI's president. The letter was addressed to Stephen Cohen ("Cohen") and purportedly authorized him to notify NSI on OCI's behalf that NSI should delete the sex.com domain name from its database, thereby terminating OCI's registration. The letter further stated that OCI had no objection to Cohen's registering sex.com in his own name.

Upon receipt of the letter, NSI deleted OCI's registration of sex.com and re-registered it to Sporting Houses Management, Inc., one of Cohen's alter ego corporations, with Cohen listed as the administrative contact. Cohen proceeded to use the sex.com domain name as a platform upon which to build a lucrative Internet-based pornography...

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