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Atigeo LLC v. Offshore Limited

United States District Court, Ninth Circuit

January 22, 2014

ATIGEO LLC, et al., Plaintiffs,
v.
OFFSHORE LIMITED, D et al., Defendants.

ORDER DENYING MOTION TO DISMISS AND MOTION TO STRIKE

JAMES L. ROBART, District Judge.

I. INTRODUCTION

This matter comes before the court on Defendants' motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) and special motion to strike under California's anti-SLAPP statute (where "SLAPP" stands for "strategic lawsuits against public participation"). ( See Mot. (Dkt. # 31-1); Joinder (Dkt. # 32).) Plaintiffs Atigeo, LLC ("Atigeo") and Michael Sandoval bring claims against Defendants under 15 U.S.C. § 1125(d) for cybersquatting and under California law for libel. ( See generally Compl. (Dkt. # 1).) Having considered the submissions of the parties, the balance of the record, and the relevant law, and deeming itself fully advised, [1] the court DENIES Defendants' motions.

II. FACTS

Plaintiffs' complaint makes the following allegations. Atigeo is a software company that markets products and services in fields such as healthcare and social media. (Compl. ¶ 14.) Atigeo is the sole owner of the trademark "ATIGEO." ( Id. ¶ 15.) This mark, U.S. Trademark Reg. No. 3, 908, 344, was issued in January, 2011, for identifying, among other things, pattern-recognition software and internet search engine advertising. ( Id. ) Atigeo also owns the domain name "atigeo.com, " which Atigeo uses to advertise its products under the Atigeo trademark. ( Id. ¶ 16.) Mr. Sandoval is the CEO and Chairman of Atigeo. ( See Sandoval Dec. (Dkt. # 35) ¶ 1.)

Defendant Dennis Montgomery is a former employee of one of Atigeo's former subsidiaries, Opspring LLC ("Opspring"). ( Id. ¶ 32.) Mr. Montgomery and his son-inlaw Defendant Istvan Burgyan own and control Defendant companies Offshore Limited D ("Offshore") and Demaratech LLC. (Compl. ¶¶ 5, 6, 9.)

In 2012, Mr. Montgomery approached Mr. Sandoval to request that Mr. Sandoval and/or Atigeo invest in Mr. Montgomery's "new business venture." ( Id. ¶ 29.) Mr. Sandoval declined to provide investment capital to Mr. Montgomery. ( Id ) As a result, Mr. Montgomery threatened, "if you're not with me, you're against me" and left Mr. Sandoval with the warning that others who had crossed him had "learned the hard way." ( Id. )

After this encounter, Defendants registered the domain name "atigeo.co, " and began operating websites under this and other domain names. ( Id . ¶ ¶ 21, 31, 32.) On each of these websites, Defendants posted the following statements:

(a) Atigeo billed a client for "nonexistent development work."
(b) "Edra Blixseth placed $7 mil into [Atigeo] accounts as pre-divorce' money. Michael Sandoval agree[d] to escrow and shelter' the money for Edra Blixseth."
(c) Michael Sandoval took all of Edra Blixseth's "sheltered" money.
(d) Plaintiffs own three lots on Lake Washington "purchased with Blixseth money without their consent or knowledge."
(e) "Michael Sandoval, with the help of his controller, took the [Blixseth] money to purchase the property on Lake Washington in 2006 without the knowledge or consent of Edra Blixseth. Michael Sandoval admitted to the wrongdoing in March 2007 after being confronted with the evidence by Edra Blixseth and her associates."
(f) Plaintiffs "still owe the Blixseth estate $8 [million]."

( Id. ¶ 22.)

Plaintiffs allege that these statements are false, and that Defendants registered the "atigeo.co" domain name and posted these statements in retaliation for Mr. Sandoval's refusal to invest in Mr. Montgomery's business venture. ( Id. ¶¶ 23, 31.) Plaintiffs also allege that Defendants' misuse of the "atigeo.co" domain name confuses Atigeo's customers and business partners searching for Atigeo's website, tarnishes the goodwill associated with Atigeo's trademark, and harms Atigeo's business. ( Id. ¶¶ 38-42, 49-50.)

Mr. Sandoval's testimony, which is relevant to Defendants' motion to strike, provides additional backstory. Mr. Montgomery was hired by Opspring in April, 2006. (Sandoval Dec. ¶ 10.) At that time Atigeo and Edra Blixseth were both investors in Opspring. ( Id. ¶ 10.) In 2007, Atigeo and Ms. Blixseth ended their business relationship and Ms. Blixseth assumed sole operation of Opspring. ( Id. ¶ 11.) Opspring's business later failed. ( Id. ) In the aftermath of the failure, Ms. Blixseth and Mr. Montgomery filed for bankruptcy. ( Id. ) At some point, Ms. Blixseth and her husband, Timothy Blixseth, filed for divorce. ( Id. ) Mr. Sandoval further testifies that Mr. Montgomery threatened him with retaliation if he did not invest with Mr. Montgomery and that each of Defendants' statements about him and Atigeo identified in the complaint are false. ( Id. ¶¶ 7, 8, 15, 16.)

Mr. Montgomery, for his part, testifies that he "created the subject websites to alert the public as to the fraudulent and misleading business practices of Michael Sandoval and his company, Atigeo" and that it was his "hope to prevent further individuals from being victimized or injured from these deceptive business practices."[2] (Montgomery Dec. (Dkt. # 37) ¶ 9.)

Plaintiffs originally filed this action in the United States District Court in the Central District of California on July 15, 2013. ( See generally Compl.) The parties later stipulated to transfer the case to this court "for the convenience of parties and witnesses" as prescribed in 28 U.S.C § 1404(a), (b). (Stip. Transfer (Dkt. # 19.) The case was transferred to the Western District of Washington on September 17, 2013. (Transfer Order (Dkt. # 20).)

III. ANALYSIS

Defendants now bring (1) a motion to dismiss Plaintiffs' anti-cybersquatting claim for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), and (2) a special motion to strike Plaintiffs' libel claim under California's anti-SLAPP statute. Each motion is discussed in turn below.

A. Motion to Dismiss

1. Timeliness

To begin, Plaintiffs argue that Defendants' motion is untimely because Defendants have not yet filed an answer and this motion was filed after the deadline for responsive pleadings had past. (Resp. (Dkt. # 34) at 1); see generally Fed.R.Civ.P. 12. Apparently, after Defendants missed the parties' stipulated deadline for responsive pleadings, Plaintiffs agreed not to file for default as long as Defendants filed an answer by September 18, 2013. ( See Stip. Extend (Dkt. # 18); Jones Dec. (Dkt. # 31-2) at ¶¶ 2-6, Ex. A, B, C.) Defendants attempted to file a motion to dismiss in the Central District of California on September 19, 2013, but that court struck the motion as moot in light of the pending transfer. ( See Re-Filing (Dkt. # 31) at 2; Resp. at 32.) Defendants re-filed the same motion in this court on October 30, 2013. ( See Re-Filing; Mot.)

Plaintiffs maintain that Defendants' motion to dismiss is untimely because the parties' out-of-court agreement only extended the time to file an answer, not the time to file a motion to dismiss. (Resp. at 12, 18.) However, the Ninth Circuit "allows a motion under Rule 12(b) any time before the responsive pleading is filed"-not just within the 21-day window for responsive pleadings. Aetna Life Ins. Co. v. Alla Med. Servs., Inc., 855 F.2d 1470, 1474 (9th Cir. 1988); see also Bechtel v. Liberty Nat. Bank, 534 F.2d 1335, 1341 (9th Cir. 1976) ("[I]f an extension of time has been allowed for filing a responsive pleading, logic and reason would appear to dictate that the extension should apply to a motion as well."). Accordingly, as long as a party is not in default, courts have considered late motions to dismiss even when no responsive pleading has been filed and no extension for filing granted by the court. See, e.g., Buzayan v. City of Davis, 2:06-CV-1576-MCE-DAD, 2009 WL 514201 (E.D. Cal. Feb. 26, 2009); Smith v. Wrigley, 1:06-CV-0886-AWI-WMW-HC, 2008 WL 2225627, at *1 ...


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