In Opposition to ZACR’s motion to dismiss, which was filed on 10th May 2016 , DCA Trust Lawyers argue that contrary to what ZACR states, DCA has adequately stated claims against ZACR for declaratory relief, intentional interference with contract, aiding and abetting fraud, and unfair competition, and argued that the Court should deny ZACR’s motion to dismiss based on those claims.
ZACR Aided and Abated Fraud
Although not titled as a separate cause of action, DCA has adequately alleged a claim for aiding and abetting fraud, page 22 of DCA’s Opposition [PDF] says the filing. The test is whether the facts, as alleged, support any valid claim entitling the plaintiff to relief, not necessarily that intended by the plaintiff. Johnson v. City of Shelby, Miss 135 S.Ct. 346, 346 – 347 (2014); Alvarez v. Hill, 518 F.3d 1152, 1158 (9th Cir. 2008). “In California, liability may be imposed on one who aids and abets the commission of an intentional tort, including fraud, if the person
(a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or
(b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.” Marcelos v. Dominguez, No. C-08-00056 WHA, 2008 U.S. Dist. LEXIS 91155 at *24 – *25 (N.D. Cal. July 18, 2008) (internal citations and quotations omitted).
DCA has shown that ZACR aided and abetted ICANN under both prongs, argues DCA and with regard to the first test, says DCA
“by alleging that ICANN “conspired” with ZACR to commit fraudulent acts, DCA has alleged that ZACR had knowledge of ICANN’s fraud. FAC ¶84. Moreover, as an applicant itself, ZACR knew of the contents of the Guidebook and ICANN’s bylaws, which DCA alleges promise noninterference with an application by a competitor and review of applications pursuant to the same agreement, rules, and procedures. Id. ¶74. ZACR knew that ICANN’s representations were false, as ICANN unfairly assisted ZACR from the beginning of the application process and throughout the application review”.
DCA also argues to satisfy the second test saying .
“For the reasons just explained, ZACR gave substantial assistance to ICANN in committing intentional misrepresentation through its insistence on selecting ZACR’s application instead of DCA’s. This assistance included ZACR’s improper involvement in the GAC process, its campaigning to ICANN and the AUC against DCA, and its entering into a registry agreement with ICANN during the IRP process. ZACR’s actions in and of themselves constituted intentional interference with contract, as described in section IV.B., supra, and anti-competitive behavior, as explained in Section IV.D., infra. The forementioned allegations have put ZACR on sufficient notice of the nature of the claim against it and are therefore plead with sufficient particularity”
ZACR engaged in unlawful, unfair, and fraudulent business acts or practices
Under the UCL, DCA also states a claim alleging that ZACR engaged in “unlawful, unfair, and fraudulent business acts or practices” under the “unfair” and “fraudulent prongs of Cal. Bus. & Prof. Code section 17200.
DCA has alleged that ZACR engaged in unlawful practices through its claim for intentional interference with contract against ZACR and its claim (though not separately stated) that ZACR aided and abetted ICANN in its fraud. See e.g. FAC ¶¶83-95, and 108-114.
Under section 17200, a “fraudulent” practice is defined more broadly than common law fraud and only requires a showing that “members of the public are likely to be deceived.” Multimedia Patent Trust v. Microsoft Corp., 525 F.Supp.2d 1200, 1217 (S.D. Cal. 2007). Rule 9(b) requirements do not apply where common law fraud is not the basis of a UCL claim. Multimedia, 525 F.Supp.2d at 1217.
Therefore, DCA has also stated a claim pursuant to section 17200’s “fraud” prong. DCA has alleged that
- ZACR has made misrepresentations with regard to its application and campaigned against DCA’s application, which makes it likely that the public will be deceived with respect to the validity of ZACR’s application as compared to DCA’s. FAC ¶¶28, 31, 32, 45, 48, 91.
- DCA, a member of the public, has alleged that it has been harmed due to ZACR’s deceptive actions.
- The U.S. government, representative of the U.S. people, has been harmed by ZACR’s actions by encouraging the government’s contractor (ICANN) to act inconsistently with its duties under the contract. DCA’s RJN Ex. 2.
While ZACR finally argues that DCA’s UCL claim is deficient because it seeks disgorgement of profits obtained by Defendants which ZACR argues is not restitutionary. DCA clarifies saying “the case ZACR cites to, Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (2003), was decided before the California Supreme Court case of Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (Cal. 2011). Kwikset explains that alleging an economic injury in the form of lost customers and sales revenue is sufficient to satisfy standing under UCL and that whether a party will ultimately be unable to prove damages does not mean a UCL claim is inadequate. Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 335-336 (Cal. 2011); Luxul Tech Inc. v. Nectarlux, LLC, 78 F.Supp.3d 1156 (N.D. Cal.”
Moreover, states DCA, discovery will likely reveal facts allowing DCA to allege that ZACR has taken potential customers from it and damaged its reputation – as an example, ZACR’s website already suggests that it will be the operator for .Africa.