Wer1 World Network v. Cyberlynk Network, Inc.

• Decision Date: 31 October 2014
• Docket Number: Case No. 11–C–0901.
• Citation: 57 F.Supp.3d 926
• Parties: WER1 WORLD NETWORK, Plaintiff, v. CYBERLYNK NETWORK, INC., Michael Scott Jewson, John Does 1–10, Jane Does 1–10, Doe Partnerships 1–10, Doe Corporations 1–10, Doe Entities 1–10, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

57 F.Supp.3d 926

WER1 WORLD NETWORK, Plaintiff

v.CYBERLYNK NETWORK, INC., Michael Scott Jewson, John Does 1–10, Jane Does 1–10, Doe Partnerships 1–10, Doe Corporations 1–10, Doe Entities 1–10, Defendants.

Case No. 11–C–0901.

United States District Court, E.D. Wisconsin.

Signed Oct. 31, 2014.

Brandon M. Segal, Louise Ky Ing, Alston Hunt Floyd & Ing, Honolulu, HI, Stephanie M. Erickson, Erickson Legal Office LLC, Milwaukee, WI, for Plaintiff.

Nicholas C. Zales, Zales Law Office, Jeremy P. Levinson, Halling & Cayo SC, Milwaukee, WI, for Defendants.

DECISION DENYING MOTION FOR SUMMARY JUDGMENT (DOC. 84) AND MOTION FOR PARTIAL SUMMARY JUDGMENT (DOC. 86)

C.N. CLEVERT, JR., District Judge.

This case involves those terms and conditions that appear on internet websites and, more particularly, what happens when the provider has kept no copy of them and the customer claims not to have seen them. Through a website, WeR1 World Network signed up for data storage with CyberLynk Network, Inc. The parties do not dispute that they had a contract by which CyberLynk provided the storage to WeR1 in exchange for money for about eleven months. Instead, they dispute what the details of the contract were, as neither party memorialized the agreement. If WeR1's version of the facts is true, CyberLynk guaranteed safe and secure storage in exchange for payment from WeR1, without detailed terms and conditions or limitations of liability. If CyberLynk's version of the facts is true, detailed terms and conditions existed (even if WeR1's representative failed to read them) and WeR1 assumed the risk of a loss of data by CyberLynk and also agreed to limit its damages for any data loss.

WeR1 did not back up or keep copies of all the materials it placed on CyberLynk's server and suffered a data loss when a recently fired CyberLynk employee, Michael Jewson, began deleting files. WeR1 filed this case alleging breach of contract and negligence against CyberLynk along with conversion and computer fraud against Jewson.¹ CyberLynk counterclaimed for breach of a contract's forum selection provision because WeR1 filed this case in Hawaii rather than in Wisconsin. (This case was transferred to the Eastern District of Wisconsin from the District of Hawaii under 28 U.S.C. § 1404(a) for the convenience of the parties.) CyberLynk has moved for summary judgment, while WeR1 has moved for partial summary judgment.

Summary judgment is proper if the depositions, documents or electronically stored information, affidavits or declarations, stipulations, admissions, interrogatory answers or other materials show that there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a), (c) ; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party bears the initial burden of demonstrating it is entitled to summary judgment. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once this burden is met, the nonmoving party must designate specific facts to support or defend each element of its cause of action, showing that there is a genuine issue for trial. Id. at 322–24, 106 S.Ct. 2548. In analyzing whether a question of fact exists, the court construes the evidence in the light most favorable to the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The mere existence of a factual dispute does not defeat a summary judgment motion; there must be a genuine issue of material fact for the case to survive.

Id. at 247–48, 106 S.Ct. 2505. “Material” means that the factual dispute must be outcome-determinative under governing law. Contreras v. City of Chicago, 119 F.3d 1286, 1291 (7th Cir.1997). Failure to support any essential element of a claim renders all other facts immaterial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. To establish that a question of fact is “genuine,” the nonmoving party must present specific and sufficient evidence that, if believed by a jury, would support a verdict in its favor. Fed.R.Civ.P. 56(e) ; Anderson, 477 U.S. at 249, 106 S.Ct. 2505.

When both parties move for summary judgment, each is required (for its motion) to show that no genuine issues of material fact exist, taking the facts in the light most favorable to the opponent. If genuine issues of material fact exist, neither party is entitled to summary judgment. Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349 (7th Cir.1983). That both parties move for summary judgment does not mean that a trial is unnecessary or empower the court to enter judgment as it sees fit. See 10A Charles Alan Wright et al., Federal Practice & Procedure § 2720 at 327–28 (3d ed.1998). Cross-motions for summary judgment do not constitute a waiver of trial. See Miller v. LeSea Broad., Inc., 87 F.3d 224, 230 (7th Cir.1996). The proper procedure is to assess the merits of each summary judgment motion independently. See Santaella v. Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir.1997).

UNDISPUTED FACTS

Plaintiff WeR1 World Network is a Hawaii-incorporated and Hawaii-based television and software production company. (Doc. 84 Statement of Undisputed Material Facts ¶ 3.² ) Ingrid Wang is the CEO and owner of WeR1. (Id. ) Wang formed WeR1 in 2000 to create, produce, and distribute children's educational shows. (Doc. 86 Mem. at 2.) WeR1 created and produced “Zodiac Island,” a children's “edutainment” show, which used animation as well as live video and focused on the Chinese lunar calendar. (Id. ) To develop, create and produce Zodiac Island, designers, actors, animators, creators, and others contributed from around the world, including Hong Kong, China, The Philippines, Hawaii, and California. (Id. at 3.)

Due to the world-wide involvement of people in the creation of Zodiac Island, Wang and Dr. Bernard Yaged, Chief Financial Officer of WeR1 in 2008, decided that WeR1 needed a safe and central storage location for its computer files, including digital, production, and animation files. (Doc. 86 Mem. at 3; Doc. 113 at 18.) WeR1 determined that it must have a central online data storage provider that would allow everyone involved in the creation of Zodiac Island to upload and access files online. (Doc. 86 Mem. at 3; Doc. 113 at 18; see Doc. 118 ¶ 2.)

CyberLynk is a Wisconsin corporation that provides internet services from its business location in Franklin, Wisconsin. (Doc. 84 Statement ¶ 4.) Michael Jewson is a former employee of CyberLynk. (Id., ¶ 5.) In 2008, CyberLynk had six employees, including Jewson. (Doc. 110, ¶ 4.)

In 2008, Yaged researched several online data storage providers that would allow WeR1 to upload and store its data electronically in one location. (Doc. 86 Mem. at 3.) After reading reviews on CyberLynk's services and reviewing CyberLynk's website, on April 12, 2008, WeR1 signed up to use CyberLynk's File Transport Protocol³ (“FTP”) hosting services (Doc. 113 at 3; see Doc. 118, ¶ 3; Doc. 84 Statement ¶ 6.) CyberLynk's website stated that its FTP hosting service was a “central location to store files” and that it was a “fast and secure method” of transferring files. (Doc. 86 Mem. at 4; Doc. 113 at 18.)

On April 12, 2008, WeR1 and CyberLynk entered an agreement for the provision of FTP services. (Doc. 84 Statement ¶ 6; Doc 113 at 3.) Yaged, acting on behalf of WeR1, opened a FTP hosting services account with CyberLynk by using CyberLynk's website. (Doc. 84 Statement ¶ 7.) When WeR1 signed up for CyberLynk's FTP service it had several options regarding different “packages” offered by CyberLynk. The prices of the packages varied based on number of users and storage space required. (Doc. 86 Mem. at 4; Doc. 113 at 19.)

Signing up for CyberLynk's services involved a series of web pages. (Doc. 104, ¶ 10; see Doc. 86 Mem. at 4 (stating that the “Alleged Agreement” was “not available on the pages where the client signs up for the service”).) The registration page contained the following language: “By clicking the button below you agree you have read and agree to the FTP Hosting Service Subscription Agreement.” (Doc. 84 Statement ¶ 16; Doc. 113 at 9.) Yaged clicked the “Complete Registration Form” button. (Doc. 84 Statement ¶ 18; Doc. 113 at 9.)

According to CyberLynk, by signing up for CyberLynk's service, WeR1 agreed to CyberLynk's FTP Hosting Service Subscription Agreement as it existed at that time (the “FTP Agreement”). (Doc. 7 Hobach Decl. ¶¶ 5–6, Ex. B; see Doc. 86 Mem. at 4; Doc. 104, ¶ 10.) According to Hobach, the FTP Agreement was found by clicking a hyperlink in the above-quoted statement that the customer had read just above the “Complete Registration Form” button. (Doc. 7 Hobach Decl. Ex. C (showing screenshot including above the “Complete Registration Form” button the statement: “By clicking the button below you agree you have read and agree to the FTP Hosting Service Subscription Agreement. ”); see Doc. 86 Mem. at 4; Doc. 104, ¶ 10.)

CyberLynk cannot produce a copy of the FTP Agreement in effect at the time WeR1 signed up for the FTP hosting service. (See Doc. 113 at 19; Doc. 118, ¶ 7.) Nor does WeR1 have any written or saved version of any contract between itself and CyberLynk. (See Doc. 84 Zales Decl. Ex. B at 1–2.) A copy of CyberLynk's FTP Hosting Service Subscription Agreement from August 2008 (four months after WeR1 subscribed to CyberLynk's service⁴ ) exists (the “August 2008 FTP form”). (See Doc. 113 at 19; Doc. 118, ¶ 7; Doc. 86 Mem. at 4.)

However, according to Hobach, he placed CyberLynk's FTP Agreement on CyberLynk's website on January 1, 2006, and the FTP Agreement remained unchanged until August 2008, when two sections irrelevant to this lawsuit, sections 1(a) and 1(c), were amended or added to create the August 2008 FTP form. (Doc. 84 Hobach Aff. ¶¶ 5–7; see Doc. 118, ¶ 7; Doc. 104, ¶ 11.) Hobach says that he monitored his system from time to time to ensure the integrity of the information displayed and that the...