SiteLock LLC v. GoDaddy.com LLC

• Decision Date: 02 March 2022
• Docket Number: CV-19-02746-PHX-DWL
• Citation: 562 F.Supp.3d 283
• Parties: SITELOCK LLC, Plaintiff, v. GODADDY.COM LLC, Defendant.
• Court: U.S. District Court — District of Arizona

562 F.Supp.3d 283

SITELOCK LLC, Plaintiff,

v.GODADDY.COM LLC, Defendant.

No. CV-19-02746-PHX-DWL

United States District Court, D. Arizona.

Signed March 2, 2022

Aaseesh P. Polavarapu, Pro Hac Vice, Catherine Redlingshafer, Pro Hac Vice, Kevin Brent Huff, Pro Hac Vice, Leslie V. Pope, Pro Hac Vice, Thomas Graham Schultz, Pro Hac Vice, Kellogg Hansen Todd Figel & Frederick PLLC, Washington, DC, Thomas Andrew Gilson, Beus Gilbert PLLC, Phoenix, AZ, for Plaintiff.

Jeffrey M. Monhait, Pro Hac Vice, Cozen O'Connor, Philadelphia, PA, Nathan Dooley, Pro Hac Vice, Cozen O'Connor, Los Angeles, CA, Paula L. Zecchini, GoDaddy.com LLC, Kirkland, WA, Sydney R. Hitchcock, Pro Hac Vice, Cozen O'Connor PC, Seattle, WA, for Defendant.

ORDER

Dominic W. Lanza, United States District Judge In 2013, Plaintiff SiteLock LLC ("SiteLock") and Defendant GoDaddy.com LLC ("GoDaddy") entered into a contract (the "Reseller Agreement") under which GoDaddy agreed to promote and sell SiteLock's website security services to GoDaddy's customers. In this action, SiteLock accuses GoDaddy of various contractual breaches, as well as Lanham Act and related state-law violations.

Now pending before the Court are four motions: (1) GoDaddy's motion for summary judgment (Doc. 340); (2) SiteLock's motion for partial summary judgment (Doc. 341); (3) SiteLock's motion for sanctions (Doc. 348); and (4) GoDaddy's motion to exclude certain opinions of Dr. Steven Kursh (Doc. 356). For the following reasons, both summary judgment motions are granted in part and denied in part, SiteLock's motion for sanctions is granted, and GoDaddy's motion to exclude is denied.

BACKGROUND

I. Factual Background

The facts summarized below, and detailed throughout this order, are taken from the parties’ summary judgment submissions and other documents in the record. The facts are uncontroverted unless otherwise noted.

GoDaddy "offers a wide array of website-related services, including domain registration, web hosting, and virtual private servers, to millions of customers around the world." (Doc. 13 ¶ 2.) SiteLock "offers website security services to customers, including small businesses," and "sells its services by offering annual or monthly subscriptions to its customers." (Doc. 1 ¶ 1.)

As summarized in earlier orders, the gist of the complaint is that "SiteLock and GoDaddy entered into a contract under which GoDaddy agreed to market and sell SiteLock's website security services. When a GoDaddy customer would purchase a SiteLock subscription and then take the additional step of activating that subscription, GoDaddy would remit a portion of the sale proceeds to SiteLock. When a GoDaddy customer would purchase a SiteLock subscription but then fail to activate it, GoDaddy would not remit any of the sale proceeds to SiteLock. One of the disputed issues in this case is whether GoDaddy was required by the parties’ contract to remit payment to SiteLock in this latter circumstance—SiteLock says yes, GoDaddy says no." (Doc. 248 at 4.) In addition to this and other contract-based claims, the complaint asserts Lanham Act and state-law unfair competition claims premised on the allegation that GoDaddy misused SiteLock's trademark. (Doc. 1 ¶¶ 72-85.)

II. The Claims

In Count One of the complaint, entitled "Breach of Contract (Refusal to Remit Payment for Orders of SiteLock Subscriptions)," SiteLock alleges that the Reseller Agreement "requires GoDaddy to pay SiteLock each time a customer orders a subscription to SiteLock's services. The Agreement does not condition GoDaddy's obligation to pay SiteLock on whether the customer subsequently activates or uses SiteLock's services. GoDaddy materially breached the Agreement by failing to pay SiteLock for each order of a SiteLock subscription and by taking the other actions described [within the Complaint]." (Id. ¶¶ 48-49.)

In Count Two, entitled "Breach of Contract (Violation of Reporting Obligations)," SiteLock alleges that the Reseller Agreement "requires GoDaddy to ‘provide tracking and reporting [to SiteLock] of all sign-ups related to this Agreement’ " and that GoDaddy breached this requirement "by failing to provide tracking or reporting of sign-ups related to the Agreement." (Id. ¶¶ 52, 54.)

In Count Three, entitled "Breach of Contract (Breach of Third Addendum)," SiteLock alleges that "[t]he Third Addendum [to the Reseller Agreement] provides that GoDaddy ‘will enable activation of SiteLock Basic, Professional, and Premium as part of the setup process for [GoDaddy's] cPanel shared hosting products by November 1, 2016’ " and that GoDaddy breached this requirement "by failing to enable activation of SiteLock's services as part of the setup process for GoDaddy's cPanel shared hosting products by November 1, 2016 (or thereafter)." (Id. ¶¶ 59-60.)

In Count Four, entitled "Breach of Contract (Promotion of Competing Service)," SiteLock alleges that the Reseller Agreement "requires GoDaddy to ‘endeavor to promote [SiteLock's] services’ " and that GoDaddy breached this requirement "by promoting GoDaddy's own competing website security service, Sucuri, and using SiteLock's trademark to redirect customers who clicked on a link for SiteLock's services to a page promoting Sucuri." (Id. ¶¶ 63-64.)

In Count Five, entitled "Unjust Enrichment," SiteLock alleges that "GoDaddy's practice of pocketing payments it received for SiteLock's services directly enriched GoDaddy at the expense of SiteLock. GoDaddy's practice of pocketing payments it received for a service offered by another company was unjustified and unjust." (Id. ¶¶ 69-70.)

In Count Six, entitled "Violation of the Lanham Act," SiteLock alleges that "GoDaddy used SiteLock's trademark to market Sucuri, an inferior web security service that competes directly with SiteLock and offers many of the same features as SiteLock. Specifically, GoDaddy redirected customers who clicked on links advertising ‘SiteLock’ on GoDaddy's website and in Google search results for GoDaddy to a website that marketed and offered Sucuri for sale. By redirecting customers who clicked on a link for SiteLock's services to a page promoting its own competing service (Sucuri), GoDaddy used SiteLock's trademark in a way that was likely to cause confusion, to cause mistake, and to deceive as to the affiliation, connection, or association of SiteLock with [Sucuri], and to deceive as to the origin, sponsorship, and approval of SiteLock's and [Sucuri's] services, in violation of the Lanham Act, 15 U.S.C. § 1125." (Id. ¶¶ 75, 77.)

In Count Seven, entitled "Unfair Competition under Arizona Common Law," SiteLock alleges that "[b]y redirecting customers who clicked on a link for SiteLock's services to a page promoting its own competing service (Sucuri), GoDaddy used SiteLock's trademark in a way that GoDaddy knew would confuse and mislead the public regarding SiteLock's services. GoDaddy's use of SiteLock's trademark to promote a competing and inferior service was an unfair business practice that harmed SiteLock's brand and unfairly capitalized on the goodwill associated with SiteLock's mark." (Id. ¶¶ 83-84.)

III. Affirmative Defenses

GoDaddy's answer asserts twenty-seven affirmative defenses. (Doc. 13 at 11-15.) SiteLock now moves for partial summary judgment on the eighth, eleventh, and thirteenth affirmative defenses. (Doc. 341.)

In the eighth affirmative defense, entitled "Estoppel," GoDaddy asserts that SiteLock "is estopped from asserting the claims set forth in the Complaint because, among other reasons, it knowingly sent invoices and accepted payments based upon product activations, and not upon the alleged rights to payment asserted in the Complaint." (Doc. 13 at 12.)

In the eleventh affirmative defense, entitled "Set-off," GoDaddy asserts that SiteLock's "claims are barred in whole or in part by the doctrine of recoupment and/or set-off. [GoDaddy] is entitled to offset and recoup against any judgment that may be entered for [SiteLock] for all obligations owing to [GoDaddy], including, but not limited to, any unpaid account balances and/or any damages incurred in connection with any termination of contracts between [GoDaddy] and [SiteLock]." (Id. at 13.)

In the thirteenth affirmative defense, entitled "Unjust Enrichment," GoDaddy asserts that "[a]ny award to [SiteLock] would constitute unjust enrichment." (Id. )

IV. Procedural Background

On April 30, 2019, SiteLock filed the complaint. (Doc. 1.)

On July 8, 2019, GoDaddy filed its answer. (Doc. 13.)

For over two years, the parties engaged in a "seemingly endless series of discovery disputes." (Doc. 248 at 1.)

On July 26, 2021, GoDaddy filed a motion for summary judgment. (Docs. 340, 342.) That motion is now fully briefed. (Docs. 370, 396.)

That same day, SiteLock filed a motion for partial summary judgment. (Doc. 341.) That motion is now fully briefed. (Docs. 367, 395.)

On July 30, 2021, SiteLock filed a motion to "exclude GoDaddy's undisclosed recoupment theories." (Doc. 348.) That motion is now fully briefed. (Docs. 368, 393.)

On August 16, 2021, GoDaddy filed a motion to exclude certain opinions of Dr. Kursh. (Docs. 356, 357.) That motion is now fully briefed. (Docs. 382, 399.)

On February 15, 2021, the Court issued a tentative ruling addressing all four motions. (Doc. 433.)

On February 24, 2022, the Court heard oral argument.

ANALYSIS

I. Cross-Motions For Summary Judgment

A. Legal Standard

"The court shall grant summary judgment if [a] movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A fact is ‘material’ only if it might affect the outcome of the case, and a dispute is ‘genuine’ only if a reasonable trier of fact could resolve the issue in the non-movant's favor." Fresno Motors, LLC v. Mercedes Benz USA, LLC , 771 F.3d 1119, 1125 (9th Cir. 2014). The court "must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inference in the nonmoving party's favor." Rookaird v....