Domain Prot., LLC v. Sea Wasp, LLC

DOMAIN PROTECTION, LLC, Plaintiff, v. SEA WASP, LLC, ET. AL. Defendants.

Civil Action No. 4:18-cv-792

United States District Court EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

May 20, 2020

Judge Mazzant

MEMORANDUM OPINION AND ORDER

Pending before the Court are Plaintiff Domain Protection's Motion for Statutory Relief (Dkt. #383), Defendant Sea Wasp LLC's Motion for Attorneys' Fees Under the Texas Theft Liability Act (Dkt. #390), and Defendants' Motion for Entry of Final Judgment (Dkt. #391). Having considered the motions and the relevant pleadings, the Court finds that Plaintiff Domain Protection's Motion for Statutory Relief is DENIED, Defendant Sea Wasp LLC's Motion for Attorneys' Fees Under the Texas Theft Liability Act is DENIED, and Defendants' Motion for Entry of Final Judgment is GRANTED in part.

BACKGROUND

Domain Protection is the registered name holder for over 50,000 domain names (the "Domain Names"). Sea Wasp is the registrar over those Domain Names. This suit concerned whether Sea Wasp encroached on Domain Protection's proprietary interest in the Domain Names by placing an executive lock on them, which prevented Domain Protection from selling the Domain Names or updating their registration information. Domain Protection brought claims against Sea Wasp for tortious interference, civil conspiracy, conversion, and respective violations of the Texas Theft Liability Act ("TTLA") and the Stored Communications Act ("SCA") (Dkt. #1).¹ Sea Wasp insisted, and to this day still insists, that Domain Protection lacks any proprietary interest in the Domain Names in light of a dispute over their ownership. That ownership dispute need not be fully discussed here but can be viewed in its entirety in the Court's Memorandum Opinion and Order granting in part and denying in part Domain Protection's First Motion for Partial Summary Judgment (Dkt. #332).

On February 3, 2020, after the Court found Sea Wasp liable for violations of the TTLA and SCA, as well as tortious interference and conversion (Dkt. #332), the Court proceeded to trial. The issues at trial were: (1) what amount of damages, if any, was Domain Protection entitled to under the TTLA, SCA, tortious interference with contract, or conversion; and (2) whether Defendants Vernon Decossas and Gregory Faia ("Individual Defendants") were personally liable for Sea Wasp's conduct. On February 4, 2020, the Court granted the Individual Defendants' Motion for Directed Verdict (Dkt. #373). Following the Court's entry of a directed verdict, the Court submitted the issue of damages to the jury. That same day, the jury returned a take-nothing verdict on all counts (Dkt. #379).

On February 5, 2020, the Court ordered Domain Protection to file a motion for statutory damages under the TTLA (Dkt. #374). On February 19, 2020, Domain Protection filed Plaintiff Domain Protection's Motion for Statutory Relief (Dkt. #383). In its Motion, Domain Protection seeks $57,000,000 in statutory damages, $483,930 in punitive damages, and attorneys' fees (Dkt. #383). Domain Protection also seeks a permanent injunction (Dkt. #383). Notably, Domain Protection's Motion abandons the issue of statutory damages under state law and instead seeks damages and fees under the SCA (Dkt. #383).

On March 4, 2020, Sea Wasp filed Defendant Sea Wasp, LLC's Response to Plaintiff Domain Protection's Motion for Statutory Relief (Dkt. #388). Sea Wasp avers that: (1) Domain Protection waived any damages under the TTLA; (2) Domain Protection lacks Article III standing to seek relief under the SCA; (3) Domain Protection is not entitled to SCA damages because the jury awarded no actual damages; (4) even if actual damages are not required for a statutory damages award under the SCA, the SCA does not provide for a statutory award of $1,000 per violation; (5) even if the SCA provides for a per violation award, Domain Protection is not entitled to $57,000,000; (6) Domain Protection waived any claim for punitive damages; (7) even if Domain Protection did not waive its claim for punitive damages, the Court should deny the request; (8) the Court should deny Domain Protection's request for attorneys' fees under the SCA; and (9) the Court should deny Domain Protection's request for a permanent injunction (Dkt. #388). On March 11, 2020, Domain Protection filed Plaintiff Domain Protection's Reply in Support of Motion for Statutory Relief (Dkt. #393). On March 17, 2020, Sea Wasp filed Defendant Sea Wasp, LLC's Sur-Reply to Plaintiff's Reply in Support of Plaintiff's Motion for Statutory Relief (Dkt. #395).

On March 5, 2020, Sea Wasp filed the second post-trial motion with the Court: Defendant Sea Wasp LLC's Motion for Attorneys' Fees Under the Texas Theft Liability Act (Dkt. #390). In its Motion, Sea Wasp asserts that it is the prevailing party under the TTLA because it successfully defended against Domain Protection's TTLA claim (Dkt. #390). Consequently, Sea Wasp concludes that it is entitled to attorneys' fees (Dkt. #390). On March 19, 2020, Domain Protection filed Plaintiff Domain Protection's Response to Defendant Sea Wasp LLC's Motion for Attorneys' Fees Under the Texas Theft Liability Act (Dkt. #390). Domain Protection counters that Sea Wasp's request must be rejected because: (1) Sea Wasp did not comply with the mandatory notice requirement for attorneys' fees; and (2) in any event, Sea Wasp is not the prevailing party(Dkt. #390). On March 26, 2020, Sea Wasp filed Defendant Sea Wasp LLC's Reply in Support of its Motion for Attorneys' Fees Under the Texas Theft Liability Act (Dkt. #398). On April 2, 2020, Domain Protection filed Plaintiff Domain Protection's Sur-Reply in Opposition to Sea Wasp's Motion for Attorneys' Fees Under the Texas Theft Liability Act (Dkt. #401).

On March 5, 2020, Sea Wasp filed the third and final post-trial motion: Defendants' Motion for Entry of Final Judgment (Dkt. #391). Defendants claim that they are entitled to a final judgment holding that: (1) the Individual Defendants are not liable and Domain Protection takes nothing on all claims against them; (2) Domain Protection failed to prove any damages on any of its claims and thus takes nothing on all claims; (3) Sea Wasp is the prevailing party under the TTLA and is therefore entitled to attorneys' fees and expenses reasonably incurred; and (4) pursuant to Rule 54(d), Defendants are the prevailing party in this matter and are entitled to costs (Dkt. #391). On March 19, 2020, Domain Protection filed Plaintiff Domain Protection's Response to the Defendants' Motion for Entry of Final Judgment (Dkt. #397). Domain Protection agrees that it is appropriate to enter final judgment, but counters that the final judgment should: (1) grant judgment in favor of Domain Protection pursuant to 18 U.S.C. § 2707(a)(1); (2) grant judgment in favor of Domain Protection on its claim of conversion and adjudicate that Domain Protection is entitled to control over the Domain Names; (3) grant judgment in favor of Domain Protection on its claim of tortious interference with existing contract; (4) grant judgment in favor of Domain Protection for Sea Wasp's violation of the TTLA; (5) enter judgment in conformity with a ruling that Domain Protection is entitled to statutory relief under § 2707(c) for $1,000 per violation of the SCA; and (6) grant a permanent injunction against Sea Wasp (Dkt. #397). On March 26, 2020, Defendants filed Defendants' Reply in Support of Their Motion for Entry of Final Judgment(Dkt. #399). On April 2, 2020, Domain Protection filed Plaintiff Domain Protection's Sur-Reply in Opposition to Sea Wasp's Motion for Entry of Final Judgment (Dkt. #400).

LEGAL STANDARD

I. Standing

"Different standards apply when a litigant challenges standing on a FED. R. CIV. P. 12(b) motion than on a motion for summary judgment under FED. R. CIV. P. 56." Cramer v. Skinner, 931 F.2d 1020, 1024 (5th Cir. 1991). Federal Rule of Civil Procedure 12(b)(1) authorizes dismissal of a case for lack of subject matter jurisdiction when the district court lacks the "statutory or constitutional power to adjudicate the case." Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998); accord FED. R. CIV. P. 12(b)(1). If a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the Court will consider the jurisdictional attack under Rule 12(b)(1) before addressing any attack on the legal merits. Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). In deciding the motion, the Court may consider "(1) the complaint alone; (2) the complaint supplemented by the undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the [C]ourt's resolution of disputed facts." Lane v. Halliburton, 529 F.3d 548, 557 (5th Cir. 2008) (quoting Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996)). The Court will accept as true all well-pleaded allegations set forth in the complaint and construe those allegations in the light most favorable to the plaintiff. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) ("At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we 'presum[e] that general allegations embrace those specific facts that are necessary to support the claim.'") (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 889 (1990); Truman v. United States, 26 F.3d 592, 594 (5th Cir. 1994)). Once a defendant files a motion todismiss under Rule 12(b)(1) and challenges jurisdiction, the party invoking jurisdiction has the burden to establish subject matter jurisdiction. See Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980). The Court will grant a motion to dismiss for lack of subject matter jurisdiction only if it appears certain that the claimant cannot prove a plausible set of facts to support a claim that would entitle it to relief. Lane, 529 F.3d at 557.

When the defendant moves...