LegalForce RAPC Worldwide, P.C. et al v. Trademark Engine LLC et al, No. 3:2017cv07303 - Document 104 (N.D. Cal. 2018)

Court Description: ORDER DENYING DEFENDANTS' MOTION TO COMPEL ARBITRATION. Signed by Judge Maxine M. Chesney on June 26, 2018. (mmclc1, COURT STAFF) (Filed on 6/26/2018)
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1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 LEGALFORCE RAPC WORLDWIDE P.C., et al., 8 Plaintiffs, 9 10 v. ORDER DENYING DEFENDANTS' MOTION TO COMPEL ARBITRATION Re: Dkt. No. 26 TRADEMARK ENGINE LLC, et al., 11 United States District Court Northern District of California Case No. 17-cv-07303-MMC Defendants. 12 13 Before the Court is defendants Trademark Engine, LLC ("Trademark Engine") and 14 Travis Crabtree's ("Crabtree") "Motion to Compel Arbitration," initially filed February 26, 15 2018, and renoticed April 16, 2018. Plaintiffs LegalForce RAPC Worldwide, P.C. 16 ("LegalForce RAPC") and LegalForce Inc. ("LegalForce") have filed opposition,1 to which 17 defendants have replied. Additionally, with leave of court, the parties have filed 18 supplemental briefs. Having read and considered the papers filed in support of and in 19 opposition to the motion, the Court rules as follows.2 BACKGROUND 20 21 In the operative complaint, the First Amended Complaint ("FAC"), plaintiffs allege 22 that LegalForce RAPC is a law firm that "practices patent and trademark law before the 23 USPTO [United States Patent and Trademark Office]" (see FAC ¶ 2), that LegalForce is a 24 25 26 27 1 The opposition was also filed on behalf of Raj V. Abhyanker ("Abhyanker"), who, at that time, was a named plaintiff. Subsequently, plaintiffs filed a notice dismissing Abhyanker's claims. (See Notice, filed March 19, 2018.) Consequently, to the extent the motion seeks an order compelling Abhyanker to arbitrate his claims, the motion is moot. 2 28 By order filed June 12, 2018, the Court took the matter under submission. 1 corporation "offering law firm automation and free trademark search services through its 2 website" (see FAC ¶ 3), and that Trademark Engine, as "one of the 3 largest filers of trademarks before the [USPTO]," is one of LegalForce RAPC's 4 "competitors" (see FAC ¶¶ 13, 19).3 Plaintiffs' claims against defendants are based on 5 defendants' allegedly having made "false and misleading advertising statements" about 6 the nature of Trademark Engine's services. (See FAC ¶ 24.) DISCUSSION 7 8 9 Defendants seek, "pursuant to the Federal Arbitration Act ["FAA"], 9 U.S.C. §§ 116," an order compelling plaintiffs to arbitrate their claims. The FAA provides as follows: 11 United States District Court Northern District of California 10 If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration." 12 13 14 15 See 9 U.S.C. § 3. 16 The district court's role under the FAA is "limited to determining (1) whether a valid 17 agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the 18 dispute at issue." See Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 19 1130 (9th Cir. 2000) "If the response is affirmative on both counts, then the [FAA] 20 requires the court to enforce the arbitration agreement in accordance with its terms." Id. 21 With respect to the first of the above-referenced determinations, the party seeking 22 to compel arbitration has the "burden of proving the existence of an agreement to 23 arbitrate by a preponderance of the evidence." See Knutson v. Sirius XM Radio Inc., 771 24 F.3d 559, 565 (9th Cir. 2014). In the instant case, defendants have offered evidence, 25 undisputed by plaintiffs, that "Trademark Engine's website does not allow a user to 26 27 28 3 Plaintiffs allege that defendant Crabtree, "a licensed Texas attorney," is "an alter ego of Trademark Engine." (See FAC ¶ 5.) 2 1 purchase Trademark Engine's services without affirmatively agreeing to the Terms of 2 Service" on the website (see Crabtree Decl. ¶ 3), and that the Terms of Service include a 3 provision that "[a]ny Dispute shall be finally and exclusively resolved by binding individual 4 arbitration conducted by the American Arbitration Association . . . under its Consumer 5 Arbitration Rules" (see id. Ex. 1 at 6) (emphasis omitted). Consequently, there is no 6 dispute that an agreement to arbitrate exists. There is a disagreement, however, as to 7 whether the two plaintiffs are parties to such agreement or otherwise bound thereby. 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 In that regard, defendants rely on the following allegations contained in plaintiffs' initial complaint: 37. Plaintiffs requested the filing of a trademark application through the website. Email addresses of for customer Raj Abhyanker was used. 38. A real trademark related to [the] business of Plaintiffs was used for Everest Clay Realtors [sic] was applied for federal registration through the Trademark Engine website. . . . . 39. For the prospective trademark, Everest Clay Realtors, Trademark Engine provided legal advice to Plaintiffs by selecting classification and modifying the goods and service description from the template thereby applying specific law to facts. . . . (See Compl. ¶¶ 37-39.) 17 Defendants contend the initial complaint's reference to "Plaintiffs," as quoted 18 above, constitutes a "judicial admission" that Abhyanker acted as an agent for 19 LegalForce RAPC and Legal Force, and, consequently, that such entities are parties to 20 the Terms of Service and thus bound by its arbitration provision. (See Defs.' Reply at 21 3:22-27, 5:11-12.) In support thereof, defendants cite to Ronches v. Dickerson Employee 22 Benefits, Inc., 2010 WL 11508128 (C.D. Cal. May 24, 2010), in which the district court 23 found "an admission [in a complaint] that a plaintiff is a party to a contract containing an 24 arbitration clause is binding on the party that makes it." See id. at *6-7. 25 The Ninth Circuit has held, however, that where "the party making an ostensible 26 judicial admission explains the error in a subsequent pleading or by amendment, the trial 27 court must accord the explanation due weight." See Sicor Ltd. v. Cetus Corp., 51 F.3d 28 3 1 848, 859-60 (9th Cir. 1995). Here, in contrast to the plaintiffs in Ronches, who did "not 2 address [the defendant's] contention that the allegations of the complaint constitute[d] a 3 judicial admission," see Ronches, 2010 WL 11508128, at *7, plaintiffs have addressed 4 the contention in their opposition and have endeavored to clarify that the above-quoted 5 provisions in the initial complaint were meant to refer solely to Abhyanker. The Court, 6 having considered the initial complaint as a whole and having considered the evidence 7 submitted by the parties, finds plaintiffs' argument persuasive, specifically, that the 8 above-quoted uses of the plural in the complaint were not intended to refer to any person 9 or entity other than Abhyanker. 10 First, to the extent the initial complaint includes factual allegations pertaining to the United States District Court Northern District of California 11 identity of the user or users of Trademark Engine's services, those allegations, as 12 plaintiffs point out, refer solely to Abhyanker, in particular, his inquiry regarding a 13 trademark for a company called Everest Clay Realtors. (See Supp. Opp. at 3:10 - 4:10; 14 see, e.g., Compl. ¶ 38 (alleging "Everest Clay Realtors is [a] trade name of a real estate 15 brokerage and investment firm started by Plaintiff Raj Abhyanker"); ¶ 43.a.i. (alleging 16 Trademark Engine employee "provided legal advice to the applicant Plaintiff Raj 17 Abhyanker who was contemplating filing a trademark application for Everest Clay 18 Realtors"); ¶ 43.a.iv. (alleging Trademark Engine "signed the USPTO form to proceed 19 with the filing on behalf of Raj Abhyanker"); ¶ 113 (alleging Trademark Engine "collected 20 more than $450 in legal service and government fees from Plaintiff Raj Abhyanker").) 21 Second, only "the owner of a trademark" may seek to register the mark, see 15 22 U.S.C. § 1051(a)(1), and plaintiffs have submitted a declaration by Abhyanker, who 23 avers: "I first used the name Everest Clay Realtors associated with a real estate 24 brokerage that I started in 2002." (See Abhyanker Decl. ¶ 6.) Abhyanker further avers: 25 "I recently restarted my real estate brokerage as a sole proprietorship . . . ." (See id. ¶ 8.) 26 Defendants have not argued or presented any evidence to the contrary. Likewise 27 uncontested is plaintiffs' evidence that LegalForce RAPC and LegalForce "do not own 28 any title, ownership, or beneficial interest, equitable or otherwise, in the Everest Clay 4 1 2 Realtors trademark." (See id. ¶ 9.) Third, although the initial complaint, when expressly referring to Abhyanker, 3 generally uses the singular, the initial complaint also includes the following sentence, in 4 which Abhyanker is referred to both as "Plaintiffs" and "Plaintiff": 5 6 7 8 9 10 11 Trademark Engine unilaterally waive [sic] Plaintiffs Raj Abhyanker's right to privacy with respect to the Everest Clay Realtors by having non-attorney staff sign off rights while paying government fees by check box clicking off the following on the USPTO government fee form . . . including: (1) Waiving Plaintiffs Raj Abhyanker's right to cancel the filing or refund the government fee paid on their behalf; (2) Waiving right to confidentiality of name, phone number, e-mail address, and street address of Plaintiff Raj Abhyanker with respect to their trademarks; and (3) Representing to the federal government, without checking with Plaintiff Raj Abhyanker has [sic] the authority to grant, and is granting, the USPTO permission to make the information available in its on-line database and in copies of the application or registration record. United States District Court Northern District of California (See id. ¶ 43.a.iv.) 12 In light of all of the above, the Court finds the contract with Trademark Engine was 13 entered by Abhyanker alone. 14 The Court next turns to defendants' alternative argument that LegalForce RAPC 15 and LegalForce, even if not parties to the Terms of Service, nonetheless are equitably 16 estopped from avoiding arbitration. For the reasons set forth below, the Court finds such 17 argument unpersuasive. 18 In particular, the cases on which defendants rely are distinguishable on their facts. 19 In each of those cases, the court found the plaintiffs therein were estopped from avoiding 20 arbitration for the reason that their lawsuits were for breach of contract and each such 21 contract contained an arbitration provision. See Langell v. Ideal Homes LLC, 2016 WL 22 8711704, at *5 (N.D. Cal. November 18, 2016) (finding plaintiffs suing for breach of 23 warranty containing arbitration provision "estopped from avoiding arbitration"; noting 24 plaintiffs "sought to take advantage of the terms of the warranty agreement"); Evergreen 25 Media Holdings, LLC v. Stroock & Stroock & Lavan LLP, 2015 WL 12765630, at *4-5 26 (C.D. Cal. April 16, 2015) (finding plaintiffs bound by arbitration provision in agreement, 27 where "[p]laintiffs [brought] suit expressly to enforce obligations formed under the 28 5 1 [agreement]"; citing Halperin v. Raville, 176 Cal. App. 3d 765, 772 (1986) (holding "no 2 person can be permitted to adopt that part of an entire transaction which is beneficial to 3 him/her, and then reject its burdens")). 4 Here, by contrast, neither LegalForce RAPC nor LegalForce has sought relief 5 under the agreement between Abhyanker and Trademark Engine. Although the initial 6 complaint did include claims for professional negligence and breach of fiduciary duty 7 based on the manner in which Trademark Engine performed its contractual duties (see 8 Compl. ¶¶ 113-118, 123-128), those two claims are not contained in the FAC and, in any 9 event, were brought solely on behalf of Abhyanker (see Compl. ¶¶ 120, 130). 10 United States District Court Northern District of California 11 Accordingly, defendants having failed to show plaintiffs are parties to the Terms of Service or that they are estopped from avoiding arbitration, the motion will be denied. CONCLUSION 12 13 14 15 For the reasons stated above, defendants' Motion to Compel Arbitration is hereby DENIED. IT IS SO ORDERED. 16 17 Dated: June 26, 2018 MAXINE M. CHESNEY United States District Judge 18 19 20 21 22 23 24 25 26 27 28 6