Leo India Films Limited v. GoDaddy.com LLC

• Court: District Court, D. Arizona
• Decided: February 20, 2020
• Docket: 2:19-cv-04803
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Leo India Films Limited, No. CV-19-04803-PHX-DLR

10 Plaintiff, ORDER

11 v.

12 GoDaddy.com LLC,

13 Defendant. 14 15 16 Defendant GoDaddy.com LLC (“GoDaddy”) is an internet domain name registrar; 17 Plaintiff Leo India Films Limited (“Leo”) operates einthusian.tv, a subscription website 18 streaming Indian and other South Asian films. Leo registered the einthusan.tv domain 19 name (“Domain”) with GoDaddy in February 2013, agreeing to GoDaddy’s Universal 20 Terms of Service (“UTOS”) in the process. In July 2019, GoDaddy suspended the Domain 21 in response to a notice from Indian law enforcement that Leo had been accused of and was 22 being investigated for piracy and copyright infringement. As a result, Leo’s subscribers 23 have been unable to access the Domain and Leo has been unable to transfer it to a new 24 domain registrar. Leo soon brought this lawsuit, alleging contract and tort claims against 25 GoDaddy based on its suspension of the Domain. 26 Leo alleges federal jurisdiction exists because the parties are completely diverse and 27 the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). GoDaddy has moved 28 to dismiss under Federal Rule of Civil Procedure 12(b)(1), arguing there is no federal 1 jurisdiction because the UTOS explicitly limits GoDaddy’s total aggregate liability to 2 $10,000. (Doc. 18.) Ordinarily, a good-faith allegation that the amount in controversy 3 exceeds $75,000 satisfies the jurisdictional requirement. Pachinger v. MGM Grande 4 Hotel-Las Vegas, Inc., 802 F.2d 362, 363 (9th Cir. 1986). Dismissal is appropriate, 5 however, if it appears to a legal certainty that the claim really is for less than the 6 jurisdictional amount. Id. at 363-64. “Only three situations clearly meet the legal certainty 7 standard: 1) when the terms of a contract limit the plaintiff’s possible recovery; 2) when a 8 specific rule of law or measure of damages limits the amount of damages recoverable; and 9 3) when independent facts show that the amount of damages was claimed merely to obtain 10 federal court jurisdiction.” Id. at 364 (quoting 14A Wright, Miller, and Cooper, Federal 11 Practice and Procedure, Jurisdiction, § 3702 at 48-50 (2d ed. 1985)). This case falls within 12 the first of these situations—the UTOS explicitly states, “in no event shall GoDaddy’s total 13 aggregate liability exceed $10,000.00 U.S. dollars.” (Doc. 20-2 at 11.) 14 Leo’s counterargument is two-fold: (1) the UTOS liability limitation provision is 15 substantively unconscionable1 because $10,000 is inadequate to compensate Leo for its 16 losses and (2) Leo’s attorneys’ fees should be included in determining the amount in 17 controversy. (Doc. 25.) 18 Taking these arguments in reverse order, Leo cannot rely on its attorneys’ fees to 19 inch this case above the jurisdiction threshold because the UTOS explicitly limits 20 GoDaddy’s “total aggregate liability” to $10,000, and the only other UTOS provision that 21 references attorneys’ fees requires Leo to indemnify GoDaddy for attorneys’ fees in certain 22 situations. (Doc. 20-2 at 11.) Leo therefore cannot rely on A.R.S. § 12-341.01(A)—a fee- 23 shifting statute for actions arising out of contract—because the parties’ contract controls to 24 the exclusion of the statute. Rich v. Bank of Am., N.A., 666 F. App’x 635, 642 (9th Cir. 25 2016). 26 1 “Substantive unconscionability concerns the actual terms of the contract and 27 examines the relative fairness of the obligations assumed,” whereas procedural unconscionability concerns the fairness of the bargaining process itself. Maxwell v. 28 Fidelity Fin. Services, Inc., 907 P.2d 51, 57-58 (Ariz. 1995). Leo’s argument concerns the fairness of the liability limitation provision, not the fairness of the bargaining process. 1 Next, the UTOS liability limitation provision is not substantively unconscionable.2 2 Arizona law “generally presumes, especially in commercial contexts, that private parties 3 are best able to determine if particular contractual terms serve their interests.” 1800 4 Ocotillo, LLC v. WLB Grp., Inc., 196 P.3d 222, 224 (Ariz. 2008). Arizona courts therefore 5 “uphold limitation of liability provisions absent ‘an identifiable public policy that clearly 6 outweighs any interests in their enforcement.’” Love v. W. Union Fin. Services, Inc., No. 7 CV-16-00051-PHX-SRB, 2016 WL 9343081, at *4 (D. Ariz. May 6, 2016) (quoting 1800 8 Ocotillo, 196 P.3d at 226). Leo identifies no public policy that clearly outweighs the 9 interests in enforcement of the UTOS’s liability limitation provision. To the contrary, the 10 Arizona Supreme Court has explained that “[s]uch clauses may desirably allow the parties 11 to allocate as between themselves the risks of damages in excess of the agreed-upon cap, 12 which could preserve incentives for one party to take due care while assigning the risk of 13 greater damages to another party that might be better able to mitigate or insure against 14 them.” 1800 Ocotillo, 196 P.3d at 226. 15 Leo instead relies on In re Yahoo! Inc. Customer Data Sec. Breach Litig., 313 F. 16 Supp. 3d 1113 (N.D. Cal. 2018), a case from the Northern District of California applying 17 California unconscionability law. In re Yahoo! says nothing about Arizona public policy, 18 as it does not address Arizona law, and the Court could find no Arizona case relying on it. 19 Leo also cites Nomo Agroindustrial Sa De CV v. Enza N. Am., Inc., 492 F. Supp 2d 1175 20 (D. Ariz. 2007), a decision that dealt with the enforceability of contracts that limited 21 damages for defective seeds. Nomo speaks to public policy concerns unique to the 22 agricultural context, but does not persuade this Court that the UTOS liability limitation 23 provision is unconscionable. 24 Accordingly, the Court lacks subject-matter jurisdiction over this action because the 25 2 It is not premature to decide the unconscionability question. Although a party 26 raising unconscionability must be given an opportunity to present evidence, a separate, formal evidentiary hearing is not required. Maxwell, 907 P.2d at 56. Arizona law requires 27 only a reasonable opportunity to present evidence. Id. Leo argues that the UTOS liability limitation provision is substantively unconscionable because $10,000 is inadequate to 28 compensate Leo for its losses. Leo put on evidence of these losses during the October 29, 2019 hearing on the parties’ competing motions. 1] UTOS liability limitation provision makes it legally certain that the amount in controversy 2|| is less than $75,000. The Court therefore dismisses this case and does not reach GoDaddy’s || alternative arguments under Federal Rule of Civil Procedure 12(b)(6), or Leo’s request to 4|| preliminarily enjoin GoDaddy from withholding access to the Domain. 5 IT IS ORDERED that GoDaddy’s motion to dismiss under Fed. R. Civ. P. 12(b)(1) 6|| (Doc. 18)is GRANTED. This matter is dismissed without prejudice. The Clerk is directed || to terminate all remaining motions as moot and close this case. 8 Dated this 19th day of February, 2020. 9 10 ll {Z, 12 _- {UO 13 Upited States Dictric Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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