Expired domain clawback lawsuit to proceed against GoDaddy — Judge allows
GoDaddy clawed back two domain names that firms had won in expired domain auctions.
A federal judge has denied (pdf) much of GoDaddy’s (NYSE: GDDY) motion to dismiss a lawsuit over two revoked domain names, allowing a number of of the plaintiffs’ claims to move forward.
In a decision filed Tuesday, Judge John J. Tuchi of the U.S. District Court for the District of Arizona granted in part and denied in part GoDaddy’s motion to dismiss a case brought by Prime Loyalty LLC and Crisby Studio AB.
Prime Loyalty LLC bought butane.com at GoDaddy Auctions, and Crisby Studio AB bought calor.com. Calor Gas Ltd of the United Kingdom previously owned both domains, which then went through the expiration cycle at 123-Reg, a registrar owned by GoDaddy.
GoDaddy clawed the domains back regarding two months following they were sold, stating that the domains had been auctioned in error. By then, the firms had by now invested in the planned sites for the domains and entered into partnerships.
Judge Tuchi dismissed three of the plaintiffs’ twelve claims outright: gross negligence, estoppel, and injunctive relief.
He allowed the other claims to proceed, but some of the defendants were dismissed from them.
There are three GoDaddy entities names in the lawsuit: GoDaddy Inc, GoDaddy LLC, and 123-Reg.
Tuchi dismissed all of the tort claims against GoDaddy, LLC on the basis of Arizona’s economic loss doctrine. Since the plaintiffs had a contract with GoDaddy, LLC, the court found that they were limited to contractual remedies. Still, he stated these claims could proceed against GoDaddy, Inc. [Update: by mutual agreement, GoDaddy, Inc. has been removed.]
Judge Tuchi also dismissed all claims against 123-Reg, a UK-based registrar owned by GoDaddy, citing a lack of jurisdiction.
The plaintiffs’ contract-based claims against GoDaddy, LLC, counting breach of contract, breach of the registration agreement, and breach of the implied covenant of good faith and fair dealing, survived. The judge found that the plaintiffs had plausibly alleged that GoDaddy breached the agreements by rescinding the domain names following the original registrants’ recovery periods had ended.
GoDaddy argued that the agreements gave it broad discretion to cancel transactions, but the judge stated that whether an actual error occurred and whether that error justified revocation under the terms of the agreement could not be resolved at this stage of the lawsuit.
