Discovery into other GoDaddy auction clawbacks in ongoing lawsuit — Court allows

Judge states GoDaddy must disclose details regarding prior clawbacks and disputes.

A federal judge has ordered (pdf) GoDaddy to turn over information regarding other domain auction reversals in an ongoing lawsuit over domains that were clawed back months following being won at auction.

Two firms sued the registrar following they say domains they purchased through GoDaddy Auctions were taken away following they had begun making plans to use them.

Crisby Studio AB won the auction for calor.com, while Prime Loyalty LLC bought butane.com. Both domains had previously been owned by the U.K. energy firm Calor Gas Ltd and were ultimately returned to that firm.

In a recent order, the judge resolved a number of discovery disputes between the parties.

First, the plaintiffs sought examples of other domain auction reversals GoDaddy attributed to an “unexpected error” during the past five years. GoDaddy argued that producing this information was unnecessary. The court disagreed, finding that such examples could be relevant to the plaintiffs’ claims. Still, the judge limited the request to reversals that occurred in the 18 months ahead of the disputed clawbacks rather than the full five-year period.

Second, the plaintiffs asked GoDaddy to identify all lawsuits, arbitrations, or administrative proceedings during the past five years involving disputes over post-auction reversals or cancellations. The court again narrowed the scope, ordering GoDaddy to provide information covering the past two years.

Third, GoDaddy sought documents regarding Prime Loyalty’s discussions with suppliers, distributors, and other business partners related to plans to launch a butane.com-branded business. The firm argued that these communications were relevant to the evaluation of the plaintiffs’ claimed damages. The plaintiffs countered that they are not seeking damages for lost profits tied to those business plans. The judge agreed that, on that basis, discovery into the non-party business partners was unnecessary.

Finally, the court addressed a dispute over attorney-client privilege tied to GoDaddy’s discovery of the alleged auction error. The plaintiffs asked for details regarding when and how GoDaddy learned of the issue, who was involved, what corrective actions were taken, and whether GoDaddy believes registrar 123-Reg contributed to the problem.

GoDaddy argued that internal communications with counsel are privileged. The judge agreed that the communications themselves are protected but ruled that the underlying facts must still be disclosed. He wrote:

Defendants must disclose when GoDaddy first discovered the error, and they must disclose how they discovered it as well, even if that discovery occurred in the course of a conversation with counsel. If that were the case, the Court will not deem privilege to be waived beyond the answer itself, and Defendant need not divulge any of the communications themselves. Defendants also must identify the persons involved in identifying the error, other than any counsel. Any nonprivileged communications describing the error are also to be disclosed, as are the corrective actions taken. Finally, Defendants must disclose whether GoDaddy believes that 123-Reg contributed to or caused the error and why it believed that, excluding any communications with or advice of counsel on that issue.