United States District Court, E.D. Texas, Sherman Division
AMENDED MEMORANDUM OPINION AND ORDER
L. MAZZANT, JUDGE
procedural history in this case is needlessly complicated.
Plaintiff Domain Protection, LLC filed a Motion for
Preliminary Injunction (Dkt. #54), seeking to stop Defendant
Sea Wasp, LLC from blocking its access to domain names in its
possession. The corresponding response and reply were timely
filed but a sur-reply was not. Sea Wasp subsequently filed
two motions seeking leave to file a sur-reply (Dkt. #79; Dkt.
#83) and one to file additional briefing (Dkt. #120). Domain
Protection opposes these efforts, and moves to strike one of
the motions for leave (Dkt. #81).
the Court does not appreciate Sea Wasp's failure to
timely file its briefs, in the interest of justice, the Court
will consider the late-filed briefs nevertheless. The Court
has thus considered all pleadings filed in connection with
the motion for preliminary injunction, which will be granted.
internet is “an electronic communications network that
connects computer networks and organized computer facilities
around the world.” Internet, Merriam-Webster,
visited July 11, 2019). To access a website, users must
connect their home computer to the one hosting the site. This
can be accomplished by typing the website's
“Internet Protocol Address” (the “IP
Address”)-a string of numbers that identifies the
computer where the website is housed-into Internet Explorer
or another web browser. See IP Address, Tech Terms
https://techterms.com/definition/ipaddress (last visited July
11, 2019) (listing “126.96.36.199” as an example).
But IP addresses may be difficult to remember. As a result,
website owners typically obtain an alpha-numeric
“domain name” that users can also type to reach
their website, such as google.com. Put simply, an “IP
address, ” is comparable to a nine-digit phone number
and a “domain name” is comparable to the name
saved on a cell phone for that number.
can secure the rights to use a particular domain name in one
of two ways. It can register a brand-new domain name with a
“registrar, ” the party responsible for
maintaining the registration of domain names. Or, it can
purchase an existing domain name from the party who has
registered that name-also known as the
“registrant” or “registered name
holder.” Registered name holders can earn money from
their domain names by selling them or directing them to
placeholder sites where ads are placed and monetized.
Protection is the registered name holder for over 50, 000
domain names (the “Domain Names”). Sea Wasp is
the registrar over those names. This suit concerns whether
Sea Wasp is encroaching on Domain Protection's
proprietary interest in the Domain Names by turning the
executive lock on them, which prevents Domain Protection from
selling the Domain Names or updating their registration
information. Sea Wasp insists that Domain Protection lacks
any proprietary interest in the Domain Names in light of a
dispute over their ownership.
summary on how Domain Protection came into possession of the
Domain Names may be helpful at this point. In 2014, three
parties filed suit in the Northern District of Texas against
Jeffrey Baron and one of his companies for misappropriating
their domain names. The court found Baron to be a vexatious
litigator and, on this basis, appointed a receiver (the
“Receiver”) over his assets while the dispute was
pending (Dkt. #54, Exhibit 15). The court also placed assets
belonging to Novo Point, LLC (“Novo Point”) and
Quantec, LLC (“Quantec”) (collectively, the
“LLCs'”), two limited liability companies
with ties to Baron (Dkt. #54, Exhibit 13), in the
Receiver's custody. The LLCs' assets included the
appeal, Baron argued that the court lacked jurisdiction to
enter the receivership order, and the Fifth Circuit agreed.
This prompted the district court to unwind the receivership
(the “Unwind Order”) (Dkt. #54, Exhibit 17).
Assets held in Baron's name would be returned to him. But
it was not immediately apparent whom to return the LLCs'
assets to in light of a dispute over who could properly act
for them. Without resolving the dispute, the court directed
the Receiver to return the Domain Names to Lisa Katz, the
Local Operations Manager for the LLCs. Katz was entrusted to
manage the LLCs' assets, including the Domain Names,
until the dispute over control of the LLCs was resolved (Dkt.
#54, Exhibit 14 at pp. 4-5 n.2; Dkt. #54, Exhibit 17).
Baron-affiliates Mike Robertson and David McNair (the
“Baron Affiliates”) tried to induce the registrar
over the Domain Names, fabulous.com (“Fabulous”),
into giving them control of the Domain Names anyway. But the
Receiver intervened, instructing Fabulous to handover the
Domain Names to Katz, pursuant to the Unwind Order (Dkt. #54,
Exhibit 17). Katz then assumed control over the Domain Names.
explains that the LLCs had racked up substantial debt while
they were under receivership, prompting “creditors [to]
threaten to place the LLCs in bankruptcy for
liquidation.” (Dkt. #54, Exhibit 31 at p. 2). To
prevent this, Katz assigned the Domain Names to Domain
Protection, a company where she is also manager. The plan was
for Domain Protection to liquidate the Domain Names as needed
to pay off the LLCs' debts (Dkt. #54, Exhibit 31 at p.
2). But Baron had contemporaneously filed suits in Texas and
Australia challenging Katz's possession of the LLCs'
assets. This prompted Fabulous to place an “executive
lock” on the Domain Names while these actions were
pending, which prevented Domain Protection from liquidating
the Domain Names during the duration of the suits.
suit was successful (Dkt. #54, Exhibit 9; Dkt. #54, Exhibit
12). In August 2017, after the suits had been dismissed,
Domain Protection asked Fabulous to restore its access to the
Domain Names. Sea Wasp purchased Fabulous roughly at the same
time. While the Parties dispute what immediately followed,
they agree that, “[a]t least between January 28, 2018
to February 11, 2018, there was not an ‘Executive
Lock' on the [D]omain [N]ames.” (Dkt. #42 at p.
Domain Protection began managing the affairs over the Domain
Names shortly after. It started by replacing Bidtellect as
the advertisement revenue manager (the “Advertising
Domain Names on receipt of a “concerning” letter
from Bidtellect (Dkt. #54 at p. 10). Bidtellect was
apparently exasperated with the series of disputes over the
Domain Names and proposed certain non-negotiable terms to
continue their contractual relationship. Domain Protection
responded by terminating its contract with Bidtellect,
contracting with a new Advertising Manager, and updating the
registration information for the Domain Names accordingly.
This involved updating the Domain Names'
“nameserver records, ” which ensured that, when a
user typed a Domain Protection domain name in a web browser,
the user would be directed to a placeholder website hosted by
the new Advertising Manager.
February 2018, two or three weeks after the lock was removed,
Baron filed another suit (the “Underlying
Dispute”) challenging Katz's authority to transfer
the Domain Names. See In re Payne, No. 16-04110
(Bankr. E.D. Tex. 2018). Domain Protection believes that
Baron filed this suit simply to lock the Domain Names
indefinitely, citing correspondence to that effect from
Baron's attorneys (see Dkt. #54, Exhibit 28).
Sure enough, Sea Wasp responded by reverting the changes
Domain Protection had made to the Domain Names'
nameserver records and turning the executive lock back on.
Domain Protection notes that Robertson, one of the Baron
Affiliates who tried to take control of the Domain Names in
violation of the Unwind Order, is now a principal or
“key person” at Sea Wasp (Dkt. #54, Exhibit 31 at
Protection has brought claims against Sea Wasp for
interference with contract, civil conspiracy, conversion, and
respective violations of the Texas Theft Liability Act and
the Stored Communications Act. Domain Protection alleges
that, by turning the lock back on, Sea Wasp is encroaching on
its proprietary interests in the Domain Names since it cannot
transfer them or update their nameserver records. Sea Wasp,
however, insists that it can and must place a lock on the
Domain Names while a dispute is pending, citing its
obligations as a registrar accredited with the Internet
Corporation for Assigned Names and Numbers
(“ICANN”). ICANN-registrars must comply with the
Registrar Accreditation Agreement (the “Accreditation
Agreement”), which instructs them to maintain the
status quo once a dispute arises (Dkt. #54, Exhibit 2 at p.
5). According to Sea Wasp, this means that it cannot allow
Domain Protection to transfer the Domain Names while a
dispute is pending. Domain Protection counters that
ICANN's dispute resolution policy requires registrars to
transfer domain names on “written or appropriate
electronic instruction from [the registrar] to
take such action”-even after a dispute
has started (Dkt. #54, Exhibit 2 at p. 5) (emphasis in
Protection now seeks a preliminary injunction, claiming it
will suffer “irreparable harm” if it cannot sell
or monetize the Domain Names. Domain Protection has $2, 000
in its account, cannot afford to pay renewal costs for all of
the Domain Names, and cannot receive emails since the Domain
Names are directed to a site hosted by Bidtellect-the
Advertising Manager whose contract Domain Protection had
seeking a preliminary injunction must establish the following
elements: (1) a substantial likelihood of success on the
merits; (2) a substantial threat that plaintiffs will suffer
irreparable harm if the injunction is not granted; (3) that
the threatened injury outweighs any damage that the
injunction might cause the defendant; and (4) that the
injunction will not disserve the public interest. Nichols
v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008).
“A preliminary injunction is an extraordinary remedy
and should only be granted if the plaintiffs have clearly
carried the burden of persuasion on all four
requirements.” Id. Nevertheless, a movant
“is not required to prove its case in full at a
preliminary injunction hearing.” Fed. Sav. &
Loan Ins. Corp. v. Dixon, 835 F.2d 554, 558 (5th Cir.
1985) (quoting Univ. of Tex. v. Comenisch, 451 U.S.
390, 395 (1981)). The decision whether to grant a preliminary
injunction lies within the sound discretion of the district
court. Weinberger v. Romero-Barcelo, 456 U.S. 305,
The Status Quo
Wasp argues that the Court should deny Domain
Protection's request for a preliminary injunction because
it seeks to modify the status quo. As an initial matter,
plaintiffs can seek a preliminary injunction that alters the
status quo, even if such requests require a stronger showing.
See Justin Indus., Inc. v. Choctaw Secs., L.P., 920
F.2d 262, 268 n.7 (5th Cir. 1990) (explaining that plaintiffs
seeking such relief must “show a clear entitlement to
the relief under the facts and the law”).
Domain Protection is not seeking to alter the status quo,
regardless. The Fifth Circuit has long held that, for
purposes of a preliminary injunction, the status quo refers
to the “last uncontested status of the parties.”
Yeargin Const. Co. v. Parsons & Whittemore Ala. Mach.
& Servs. Corp., 609 F.2d 829, 831 (5th Cir. 1980)
(citing Wash. Capitols Basketball Club, Inc. v.
Barry, 419 F.2d 472, 476 (9th Cir. 1969)). The Fifth
Circuit's decision in Lake Charles Diesel, Inc. v.
Gen. Motors Corp. is illustrative. 328 F.3d 192, 193-95
(5th Cir. 2003). There, the defendant terminated a contract
for the sale of automotive repair parts, prompting the
plaintiff to sue and move for a preliminary injunction. The
Fifth Circuit found that the plaintiff's attempt to
nullify the contract termination did not amount to a change
in the status quo. Id. at 196. The Fifth Circuit
reasoned that, by issuing the preliminary injunction, the
district court was merely maintaining the status quo-the
continuation of the contract. Id. That is, the Fifth
Circuit recognized the last uncontested status of the
parties' relations leading up to the suit as the
status quo. See id.
Protection seeks to maintain the last uncontested status
leading up to the dispute here. The Parties agree that: (1)
the Domain Names were subject to an executive lock while the
suits in Texas and Australia were pending; (2) the executive
lock was removed for a (short) period after these suits were
dismissed, which allowed Domain Protection to make certain
changes to the Domain Names' nameserver records; (3) Sea
Wasp reversed the changes and placed the lock back on after
the Bankruptcy Court action was initiated; and (4) Domain
Protection responded by filing this suit and motion. The last
uncontested status, then, is the period in which no lock had
been placed on the Domain Names. Because Domain Protection is
not attempting to modify the “status quo, ” the
Court will not apply the stricter standard applicable to
motions for preliminary injunction seeking to do so.
Substantial Likelihood of Success
plaintiff seeking a preliminary injunction must present a
prima facie case of his substantial likelihood to succeed on
the merits. Health Scis., LLC v. Vascular Health
Scis., 710 F.3d 579, 582 (5th Cir. 2013) (citing
Janvey v. Alguire, 647 F.3d 585, 595-96 (5th Cir.
2011)). This does not require the plaintiff to establish its
entitlement to summary judgment. See Byrum v.
Landreth, 566 F.3d 442, 446 (5th Cir. 2009). The
plaintiff, instead, must only “present a prima facie
case.” Daniels Health, 710 F.3d at 582.
Protection has met this standard as to its claim for
violation of the Texas Theft Liability Act (the
“TTLA”). The TTLA provides a civil cause of action
for theft, as defined by the Texas Penal Code. Tex. Civ.
Prac. & Rem. Code ...