.Africa: US Court grants Injunction to DCA Trust, says Balance of Equities tips in favor of DCA

Preliminary Injunction Photo Courtesy
Preliminary Injunction, Photo Courtesy

On April 12, 2016, a United States District Court in Central District Of California has granted DCA Trust a Preliminary Injunction on the .Africa gTLD, the decision was made for case no. 16-CV-00862 RGK (JCx) [PDF],  DotConnectAfrica Trust v. Internet Corporation for Assigned Names and Numbers & ZA Central Registry.

This will be the second win after a March 4th 2016 ruling that granted an Ex Parte Application for TRO (DE [20]) Interim Relief that ICANN should hold off from delegating the .AFRICA generic top-level domain (gTLD) for ZA Central Registry (ZACR).

In the introduction, the court recalls how

“In 2010, however, AUC sent a letter informing DCA that it has “reconsidered its approach” and “no longer endorses individual initiatives in this matter related to continental resource.” (FAC ¶ 24, ECF No. 10.) The Guidebook states that a government may withdraw its endorsement only if the conditions of its endorsement have not been satisfied.

From the Independent Review Process (IRP),

“the geographic name evaluator ICC failed to inform DCA of any such problems. Therefore DCA assumed that its endorsements from AUC and UNECA were sufficient.”

After the IRP, “ICANN restarted DCA’s application from the beginning and re-reviewed its endorsements. In September 2015, during the second review, ICANN issued clarifying questions regarding DCA’s endorsements, which it did not raise during the initial evaluation of these same endorsements. The DCA requested an extended evaluation, hoping to gain insight on what was wrong with its application. Rather than providing clarification, ICANN merely restated the same questions allegedly as a pretext to deny DCA’s application – then denied DCA’s application in February 2016. Soon thereafter, ICANN began the process of delegating .Africa to ZACR.”

The Court ruled gave the following reasons considered to determine granting Plaintiff’s Motion for Preliminary Injunction.

A. Likelihood of Success on the Merits

  1. The Release Does Not Bar DCA’s Claim at This Time.

As a preliminary matter, ICANN argues that DCA, by submitting a New gTLD Program application, is bound by the terms in the Applicant Guidebook,..[Cont’d]…ICANN further argues that, if the Release is found to violate Section 1668, the Court should limit its unenforceability to DCA’s claims sounding in fraud…..the Court disagrees.  ICANN fails to recognize that the alleged conduct giving rise to this claim is intentional. Specifically, DCA alleges that ICANN intended to deny DCA’s application after the IRP proceeding under any pretext and without a legitimate reason. (FAC ¶ 59, ECF No. 10.) DCA claims that “the process ICANN put Plaintiff through was a sham with a predetermined ending – ICANN’s denial of Plaintiff’s application so that ICANN could steer the gTLD to ZACR.” (FAC ¶ 60, ECF No. 10.)

The evidence suggests that ICANN intended to deny DCA’s application based on pretext. Defendants have not introduced any controverting facts. As such, the Court finds serious questions regarding the enforceability of the Release due to California Civil Code § 1668. Because the Court finds serious questions regarding the enforceability of the Release due to California Civil Code § 1668, the Court need not address DCA’s arguments regarding unconscionability or procurement by fraud.   

  1. There Are Serious Questions as to the Merits of DCA’s Ninth Claim.

… DCA contends that ICANN violated the IRP Decision by restarting the geographic name evaluation, which it had already passed, rather than permitting the application to resume at the delegation phase….[Cont’d]…. Despite ICANN’s contention, the evidence presents serious questions pointing in favor of DCA’s argument ….[Cont’d]…. It is clear the decision that ICANN violated its bylaws by failing to fairly review DCA’s application is binding ….[Cont’d]…. Because the IRP is presumably in place to effect dispute resolution, and the IRP provided no explanation or acknowledgment that its decision was merely advisory, the Court finds serious questions on this issue.

B. Likelihood of Irreparable Harm,

As DCA points out, without preliminary relief, DCA will lose the opportunity to fairly have its application reviewed by ICANN. If DCA loses this opportunity, DCA will suffer irreparable harm because .Africa can be delegated only once, and only by ICANN. (Bekele Decl., Ex. 3 Application Terms and Conditions ¶ 3, ECF No. 17.) Further, only one entity can operate .Africa. (Bekele Decl., Ex. 3 at 4-2, ECF No. 17.) DCA has sufficiently demonstrated that, due to the unique nature of .Africa, it will likely suffer irreparable harm without preliminary relief.

Moreover, on March 4, 2016, the Court issued a temporary restraining order precluding ICANN from delegating the rights to .Africa until the Court rules on the present motion. (Order Granting TRO, ECF No. 27.) In that Order, the Court found that without a TRO, ICANN would have immediately delegated the rights to .Africa. (Order Granting TRO, ECF No. 27.) The Court finds no evidence indicating a change in circumstances. It is reasonable to believe that without a preliminary injunction, ICANN will immediately delegate the rights to .Africa to ZACR, causing DCA to suffer irreparable harm.

The Court thus finds that without relief, DCA will likely suffer irreparable harm.

C. Balance of Equities

The balance of equities tips in favor of granting the preliminary injunction. Without a

preliminary injunction, DCA will lose the opportunity to obtain rights to .Africa because ICANN will likely delegate the rights to ZACR prior to the conclusion of this action, and these rights can be delegated only once. DCA has invested much time and money in the application process under the representation that the process would be unbiased and fair. Although DCA may be able to recover certain funds through litigation, such as the application fee, the opportunity to obtain the rights to .Africa would be forever gone. ICANN’s position, however, will be no different if it delays delegating the rights to .Africa. Thus, the balance of equities tips sharply in DCA’s favor.

 D. The Public Interest Favors Granting Preliminary Injunction

The public interest favors granting a preliminary injunction ….[Cont’d]….The evidence supporting ICANN’s argument is a declaration of Moctar Yedaly, the head of the Information Society Division of the AUC’s Infrastructure and Energy Department. (Yedaly Decl. ¶ 11, ECF No. 40.) The AUC’s relationship with ZACR, and its interest in preventing the delay of issuing rights to .Africa creates a conflict of interest. Therefore, on this point, the Court accords little weight to the Yedaly Declaration. On balance, the Court finds it more prejudicial to the African community, and the international community in general, if the delegation of .Africa is made prior to a determination on the fairness of the process by which it was delegated.  

For the reasons stated, the Court finds the public interest favors granting the preliminary injunction.

 E. Implementing the “Sliding Scale” Approach

…the Court finds “serious questions” going toward DCA’s likelihood of success on the merits and a balance of hardships that tips sharply in DCA’s favour…..[Cont’d]…. As such, the Court GRANTS a preliminary injunction barring ICANN from delegating the rights to .Africa until this case is resolved.

DCA Trust submitted its first Amended Complaint (“FAC”) on 26 February 2016, Plaintiff DotConnectAfrica Trust (“DCA”) filed a against Defendants Internet Corporation for Assigned Names and Numbers (“ICANN”), and ZA Central Registry (“ZACR”) (collectively “Defendants”) alleging the following claims: (1) Breach of Contract; (2) Intentional Misrepresentation; (3) Negligent Misrepresentation; (4) Fraud & Conspiracy to Commit Fraud; (5) Unfair Competition (Violation of Cal. Bus. & Prof. Code. § 17200); (6) Negligence; (7) Intentional Interference with Contract; (8) Confirmation of IRP Award; (9)Declaratory Relief (that ICANN follow the IRP Declaration and allow the DCA application to proceed through the delegation phase of the process); (10) Declaratory Relief (that the registry agreement between ZACR and ICANN is null and void and that ZACR’s application does not meet ICANN standards); and (11) Declaratory Relief (that the covenant not to sue is unenforceable, unconscionable, procured by fraud and/or void as a matter of law and public policy) https://www.icann.org/resources/pages/dca-v-icann-2016-01-26-en

DotConnectAfrica Trust is represented in this legal proceeding by Brown, Neri, Smith and Khan LLP, 11766 Wilshire Blvd., Suite 1670 Los Angeles, CA 90025

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