Opinion
DOCKET NO. 00-CV-0319E(F)
Opinion Filed: October 25, 2000
Terrence P. Naples, Esq., Eggertsville, NY, Bruce P. Golden, Esq., Chicago, IL, ATTORNEY'S FOR THE PLAINTIFF.
Zconnexx Corp. Zconnexx America Swirsky Goldstein Pozios — Stuart Mark Riback, Esq., c/o New York, NY, Tinari Gallo — Bennett G. Feldman, Esq., Coral Gables, FL, ATTORNEYS FOR THE DEFENDANT.
MEMORANDUM and ORDER
Plaintiffs Deleo and Internet Yellow Pages Network, Inc. ("Internet Yellow Pages") filed this action April 18, 2000 claiming, inter alia, that defendants conspired to deprive plaintiffs of the right to use "yellowpage.net" as an Internet domain name. Presently before this Court is plaintiffs' motion for a preliminary injunction enjoining defendants Zconnexx Corporation ("Z-Canada") and Zconnexx America, Inc. ("Z-America") from using such domain name and a motion for a change of venue to the Southern District of Florida by defendants Z-Canada, Z-America, Swirksy, Pozios and Goldstein (collectively "the Zconnexx defendants"). Both motions will be denied.
According to defendants, an Internet domain name is a unique name that identifies one or more Internet Protocol ("IP") addresses. August 23, 2000 Pozios Decl. ¶ 7. IP addresses serve as the "means by which the sites [a person choses] * * * to view can be located and the data pages returned to [such person's data] browser." Id. at ¶ 5. Usually expressed as a string of numbers separated by dots, an IP address may be paired with words as a convenient way for a person to remember such address. Ibid. In this case, such pairing results in "yellowpage.net" becoming the equivalent of "'209.203.209.5', the primary IP address maintained by Zconnexx * * *." Ibid. "To obtain a domain name, an individual or entity files an application with Network Solutions, Inc. ["NSI"] * * * listing the domain name the applicant wants." Id. at ¶ 9. At all times germane to this action, NSI "was the sole registrar of Internet domain names and the sole means of registering a website." Ibid. Once approved, NSI "puts the domain name combination in its database in conjunction with the correct IP address." Id. at ¶ 10. "NSI then routes Internet users who enter a certain domain name combination to the registrant's computer." Ibid.
Z-America, a Delaware corporation, is a wholly owned subsidiary of Z-Canada, a Canadian corporation organized pursuant to the laws of the Province of Ontario.
It is edifyingly helpful to clarify the business relationships existing among the parties and particularly among the plaintiffs and defendants Yellow Pages Network, Inc., Tinari and Gallo. According to the Complaint, plaintiff Deleo assigned 50% of has interest in Internet Yellow Pages to Tinari in March 1997 "with the result that Deleo and Tinari became equal owners of [Internet Yellow Pages]." Compl. ¶ 14. Soon thereafter, plaintiff Internet Yellow Pages' "computer operations were relocated to 751 Park of Commerce Drive, Boca Raton, Florida * * * where they were administered by Tinari and Gallo." Id. ¶ 15. Defendants Tinari and Gallo, on the other hand, incorporated defendant Yellow Pages Network, Inc., a Nevada corporation, January 21, 1998 and no interest therein has ever been held by either plaintiff. Id. ¶ 23-26; Plaintiffs' Response Ex. 4. Defendant Yellow Pages Network also conducted its business at the Zconnexx defendants' offices in Boca Raton although it is alleged that its premises are located separate and apart from any offices maintained by plaintiffs. See Zconnexx defendants' Answer ¶¶ 16, 20; Tinari and Gallo Answer ¶ 7. Finally, when Z-Canada acquired said domain name, it gave "employment contracts to Tinari and Gallo as founders of [Z-America]." August 23, 2000 Pozios Decl. ¶ 16. Z-America was incorporated April 29, 1999 and became authorized to transact business in Florida sometime in May 1999. Plaintiffs' Response Ex. 7.
Plaintiffs are engaged "in the business of providing business listings similar to yellow pages telephone directories on the [I]nternet and providing [I]nternet services, web site creation services and domain hosting services." Compl. ¶ 17. Formed March 19, 1996 as a New York corporation, Internet Yellow Pages alleges that, prior to May 1999, said domain name had been registered with Network Solutions, Inc. in its name and for its own benefit. August 9, 2000 Deleo Certification ¶ 5. Internet Yellow Pages claims that it held such domain name "without interference for almost two years before it was misappropriated and stolen." Id. ¶ 6. Such domain name is currently registered to Z-Canada via a May 1999 transfer from Yellow Pages Network. Zconnexx defendants' Opp'n Exs. 3, 4, 8. In support of their motion for a preliminary injunction, plaintiffs assert: (1) that Internet Yellow Pages "registered the domain name * * * in 1997 and never transferred, sold, or otherwise disposed of it"; (2) that Yellow Pages Network was never the registrant of such domain name; (3) that Z-Canada "became listed as the registrant and owner" of such domain name by way a transfer from Yellow Pages Network; and (4) that Z-Canada claims registration of such domain name "by way of a transfer from a party that never owned it." Plaintiffs' Mem. of Law at 1-2.
In order to obtain a preliminary injunction, plaintiffs must "demonstrate (1) that [they] will be irreparably harmed in the absence of an injunction, and (2) either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits of the case to make them a fair ground for litigation, and a balance of hardships tipping decidedly in [plaintiffs'] favor." Brewer v. West Irondequoit Cent. School Dist., 212 F.3d 738, 743-744 (2d Cir. 2000). "An even more rigorous standard — requiring a 'clear' or 'substantial' showing of likelihood of success — applies where '(i) an injunction will alter, rather than maintain, the status quo, or (ii) an injunction will provide [movants] with substantially all the relief sought and that relief cannot be undone even defendants] prevail at a trial on the merits.'" Forest City Daly Housing v. of No. Hempstead, 175 F.3d 144, 149-150 (2d Cir. 1999) (quoting Tom Doherty Assocs. v. Saban Ent., Inc., 60 F.3d 27, 33-34 (2d Cir. 1995)). It bears repeating that, should plaintiffs carry only the lesser burden of demonstrating sufficiently serious questions going to the merits of the case as to make them a fair ground for litigation, plaintiffs "must make a greater showing of irreparable injury by demonstrating that the balance of hardships is decidedly tipped in their favor." 13 James Wm. Moore et al., Moore's Federal Practice ¶ 65.22[5][b][iv] (citing Jack Kahn Music v. Baldwin Piano Organ, 604 F.2d 755 (2d Cir. 1979). Plaintiffs have satisfied neither criterion.
Firstly, plaintiffs have not demonstrated a likelihood of success on the merits. To sustain their trademark infringement/dilution claim under the Lanham Act, 15 U.S.C. § 1051 et seq., or their related claim under the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d)(1), plaintiffs are required to show, inter alia, that they had rights in the contested domain name. In this regard, this Court notes that plaintiffs overstate the effect of what they deem to be "proof" that Internet Yellow Pages owned the contested domain name. Rather, their submissions belie such assertion. For example, plaintiffs argue that NSI's "certification states that [Internet Yellow Pages] was the registrant of the [contested] domain name * * * for almost two years starting September 17, 1997." Plaintiffs' Mem. of Law at 3. An examination of such certification reveals that, in fact, the domain name was registered in the name "The Internet Yellow Page Network," not Internet Yellow Pages Network, Inc. Id. Ex. A; August 8, 2000 Graves Decl. ¶ 9. Further, defendants have proffered a declaration from David Hill, the individual who registered the domain name in 1997, which states that he did so "on behalf of" Yellow Pages Network and not for any plaintiff. August 23, 2000 Hill Decl. ¶ 5. Such assertion finds additional support in that Hill was plainly listed as the "Administrative," "Technical" and "Billing" contact on the NSI "Domain Registration Agreement" during such time. See Zconnexx defendants' Opp'n Ex. 3 ("Domain Registration Agreement" listing David Hill as contact); July 20, 2000 Deleo Decl. Annex 5 (October 28, 1997 "Domain Registration/Renewal Invoice" addressed to David Hill). Defendants have also submitted a declaration from an officer of NSI which states that neither Internet Yellow Pages Network nor Deleo has ever been a registrant of the domain name. August 23, 2000 Graves Decl. ¶¶ 7-8. As of now, proof sufficient to sustain plaintiffs' burden that they will likely succeed on the merits is conspicuously absent.
See footnote 1, supra.
Such failure should not be construed as an indication that plaintiffs have not demonstrated sufficiently serious questions going to the merits of the case to make them a fair ground for litigation. They have. In this regard, this Court notes that "samples of a website" operated by plaintiffs in 1997 using the domain name have been submitted. See August 8, 2000 Deleo Decl. ¶ 10; Id. at Annex 1. Moreover, plaintiffs have submitted what is alleged to be a copy of the check used as payment to secure registration of the contested domain name from NSI. July 20, 2000 Deleo Decl. Annex 5. Such check facially indicates that Internet Yellow Pages paid for such registration and, if accurate, certainly raises serious questions going to the merits of the case to make them a fair ground for litigation. Nonetheless, in light of the following discussion on irreparable injury, this Court finds that the balance of hardships is not decidedly tipped in plaintiffs' favor and a preliminary injunction on such ground will not issue.
Secondly, plaintiffs have failed to show that they will be irreparably harmed in the absence of a preliminary injunction. "[T]he established test requires a showing of irreparable harm should the injunction not be granted." Chemical Bank v. Haseotes, 13 F.3d 569, 573 (2d Cir. 1994). In other words, plaintiffs must demonstrate "'an injury that is neither remote nor speculative, but actual and imminent' and that cannot be remedied by an award of monetary damages." Shapiro v. Cadman Towers, Inc., 51 F.3d 328, 332 (2d Cir. 1995) (quoting Tucker Anthony Realty Corp. v. Schlesinger, 888 F.2d 969, 975 (2d Cir. 1989)). While it has been argued that Internet Yellow Pages "is on the verge of ceasing business" and that the "goodwill it generated over the years by developing" the contested domain name "is rapidly being destroyed," there is simply nothing in the record which supports such assertions and which indicates that an award of monetary damages, if such is ultimately awarded, would be inadequate. For example, insofar as it is claimed that Internet Yellow Pages is about to cease its operations, other district courts in the Second Circuit have required that such allegation be supported by "concrete data" on the amount of lost business and "how close [such business] already is to business failure." E.g., Auto Sunroof of Larchmont v. American Sunroof, 639 F. Supp. 1492, 1494 (S.D.N.Y. 1986). Nothing of this sort is proffered by plaintiffs. Moreover and insofar as Internet Yellow Pages claims that its generated goodwill is in rapid descent, this Court notes that — not only have plaintiffs failed to demonstrate such objectively — before the filing of the instant motion over fifteen months had elapsed since plaintiffs last used the contested domain name and benefitted from the resulting Internet traffic. "Preliminary injunctions are generally granted under the theory that there is an urgent need for speedy action to protect the plaintiffs' rights" and a "[d]elay in seeking enforcement of those rights, however, tends to indicate at least a reduced need for such drastic, speedy action." Citibank, N.A. v. Citytrust, 756 F.2d 273, 275 (2d Cir. 1985). Although plaintiffs explained at oral argument that this delay was attributable to negotiations in which the parties engaged prior to the commencement of this lawsuit, the fact that such negotiations took place over an extended period of time belies any assertion of imminent and irreparable injury such that emergency relief is required. Consequently, plaintiffs have not carried their burden of demonstrating irreparable injury in the absence of a preliminary injunction.
Even if this Court were to assume, arguendo, that plaintiffs had met the aforementioned likelihood and irreparable injury standards, a preliminary injunction would not be warranted under the present circumstances. The Second Circuit Court of Appeals has stated, in no uncertain terms, that where "(i) an injunction will alter, rather than maintain, the status quo, or (ii) an injunction will provide [plaintiffs'] with substantially all the relief sought and that relief cannot be undone even if the defendant prevails at a trial on the merits," plaintiffs must demonstrate an even greater likelihood of success. Tom Doherty Assocs., at 33-34. As indicated in the opposition brief, there is no question but that the granting of such relief "would radically alter the status quo." Mein. of Law in Opp'n at 12. Given the fact that all domain names are of necessity unique and that all web traffic directed at the "yellowpage.net" domain name has gone through the Zconnexx defendants' servers since May 1999, enjoining the defendants' use thereof would effectively end the "online business directory and web-hosting service" associated with such domain name and would, in this Court's view, cause significant hardship. See August 23, 2000 Pozios Decl. ¶ 24; Mem. of Law in Opp'n at 23. The undersigned finds that, for the reasons outlined above, plaintiffs have not made such a clear or substantial showing of a likelihood of success that the burden demanded of them can be said to be satisfied.
Turning to the motion for a change of venue by the Zconnexx defendants, this Court notes that, despite their invocation of 28 U.S.C. § 1406 (improper venue transfer statute), nowhere in their submissions do such defendants specify how venue in this District is improper. Rather, they have sought a determination whether plaintiffs' action "is one that might have properly been brought in the [Southern District of Florida], and second, whether considering the convenience of the parties and witnesses and the interest of justice, a transfer [to such court] is appropriate." Zconnexx defendants' Mem. of Law at 5. Moreover, insofar as it appears plain to the undersigned that such action could have been brought in the Southern District of Florida, this Court limits its discussion to whether "the convenience of parties and witnesses" and "the interest of justice" require that this Court transfer the instant action. 28 U.S.C. § 1404(a).
Plaintiffs are New York residents. Compl. ¶¶ 1-2. Z-Canada, Swirksy, Pozios and Goldstein are all Canadian defendants and "[a]n alien may be sued in any district." 28 U.S.C. § 1391(d). Z-America is incorporated in Delaware and its principal place of business is in the Southern District of Florida. June 22, 2000 Pozios Aff. ¶ 12. Defendant Tinari and Gallo reside in the Southern District of Florida. Tinari and Gallo Ans. ¶¶ 3-4, 7. Defendant Yellow Pages Network, now defunct, is purported to have had its principal place of business in the Southern District of Florida. Compl. ¶ 10. Accordingly this action properly could have been commenced in the Southern District of Florida. See 28. U.S.C. § 1391.
It should also be noted that, prior to this Court's July 31, 2000 Order setting aside this Court's Clerk's default which was entered against defendants Tinari and Gallo, such defendants filed July 21, 2000 a "Memorandum of Law in Support of Motion of William J. Gallo III and Michael A. Tinari Motion for Change of Venue and Response to Zconnexx's Motion for Change of Venue." Such filing will accordingly be disregarded and stricken by this Court. Firstly, defendants Tinari and Gallo have not moved this Court for a change of venue. See Fed.R.Civ.P. 7(b)(a) ("An application to the court for an order shall be by motion * * *."). Secondly, there is simply no basis for entertaining such "response." According to this Court's Scheduling Notice dated June 29, 2000, papers in opposition to the Zconnexx defendants' motion for change of venue were to be "served and filed no later than July 21, 2000 and any reply papers [were to] be served and filed no later than July 26, 2000"; an examination of such defendants' filing reveals neither a paper in opposition to the Zconnexx defendants' motion nor a reply to plaintiffs' papers in opposition. Consequently, such "response" shall be stricken from the docket.
The purpose of 28 U.S.C. § 1404(a) "is to prevent the waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Van Dusen v. Barrack, 376 U.S. 612, 616 (1964). However, when entertaining a motion to transfer pursuant to section 1404(a), this Court should give plaintiffs' choice of forum substantial consideration, especially where, as here, plaintiffs reside "in the district where the suit was filed, and should be upheld by the court unless the following criteria weigh strongly in the [Zconnexx defendants'] favor — the convenience of the parties, the convenience of material witnesses, the relative means of the parties, the locus of operative fact and relative ease of access to sources of proof, attendance of witnesses, the required deference to the [plaintiffs'] forum choice, the availability of process to compel any unwilling witnesses, the desirability of having the case tried by the forum familiar with the substantive law to be applied, relative efficiency and cost and how best to serve the interests of justice, based on the totality of circumstances." Mason Tayler Med. Prods. Corp. v. Qwikstrip Prods., L.L.C., NO. 99-CV-0177E(SC), 2000 WL432807, at *9 (W.D.N Y Apr. 14, 2000); see also A. Olinick and Sons v. Dempster Bros., Inc., 365 F.2d 439, 444 (2d Cir. 1966) ("plaintiff's choice of venue is * * * entitled to substantial consideration").
Internal quotations marks omitted.
In support of their motion, the Zconnexx defendants argue, inter alia, that "none of the defendants [lives] in New York," that plaintiffs have strong ties to the Southern District of Florida, that defendants' witnesses all reside or work outside the Western District of New York, that "virtually all the operative events took place in the Southern District of Florida" and that this Court "does not have subpoena power over unwilling witnesses who reside in Florida." Zconnexx defendants' Mem. of Law at 8-11. Plaintiffs respond by noting that each is a New York State resident, that Internet Yellow Pages' principal office is in Buffalo, that it "has no office or personnel whatsoever in Florida," that Z-Canada is an Ontario corporation with its principal offices in Toronto, that Swirsky, Pozios and Goldstein reside in Canada, that the domain name "yellowpage.net" is currently registered to Z-Canada, that Yellow Pages Network is a now defunct Nevada corporation, that Z-America is a Delaware corporation and that only Tinari and Gallo reside in Florida. Plaintiffs' Reponse at 4-5. In other words, most of the party witnesses are no more than one hundred miles from the Western District of New York and are more than fourteen hundred miles from the Southern District of Florida. Id. at 5. "A move to Florida would only serve the conveniences of Tinari and Gallo." Ibid. Plaintiffs also argue that, insofar as the Zconnexx defendants have identified various non-party witnesses, the Zconnexx defendants' failure to discuss how such witnesses' testimony is material to the instant action bars their consideration. Id. at 6-8. Finally, plaintiffs point out that the overwhelming nature of the evidence in this case is such that it either is kept in Buffalo or Toronto or may easily be transferred "by a simple hook-up to the Internet." Id. at 9-11.
After a careful assessment of the parties' submissions with regard to the aforementioned factors — particularly the plaintiffs' choice of forum, the presence of many party-witnesses in Toronto and Buffalo and the relative ease with which any sources of proof may be delivered to this venue —, this Court finds that the Zconnexx defendants have failed to show that the convenience of parties and witnesses and the interest of justice require this Court transfer the instant action to the Southern District of Florida.
Accordingly, it is hereby ORDERED that plaintiffs' motion for a preliminary injunction is denied, that this Court's Clerk is directed to strike docket items 32 and 33, that the Clerk shall return such stricken materials to the filing parties and that the Zconnexx defendants' motion for change of venue is denied.