Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 1 of 10 Page ID #:1
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`Thad M. Scroggins, Esq., SBN 299453
`THE LAW OFFICE OF THAD M. SCROGGINS
`155 N. Lake Ave., Suite 800
`Pasadena, CA 91101
`Tel: (626) 993-6715
`Fax: (626) 226-5594
`thad@scrogginsesq.com
`
`Attorneys for Plaintiff, ENGAGE BDR, LLC and Plaintiff, KENNETH KWAN
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`UNITED STATES DISTRICT COURT
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`CENTRAL DISTRICT OF CALIFORNIA
`WESTERN DIVISION - SPRING STREET COURTHOUSE
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`ENGAGE BDR, LLC, a California
`limited liability company; KENNETH
`KWAN, an individual;
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`Plaintiff,
`
`v.
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`GODADDY INC., a Delaware
`corporation; DOES 1 through 10,
`inclusive;
`
`Defendants.
`
`Case No.
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`2:21-cv-2014
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`Assigned to:
`
`COMPLAINT FOR:
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`1. NEGLIGENCE
`2. NEGLIGENT INTERFERENCE
`WITH PROSPECTIVE
`ECONOMIC ADVANTAGE
`3. UNFAIR AND FRAUDULENT
`BUSINESS PRACTICES
`4. BREACH OF IMPLIED
`COVENANT OF GOOD FAITH
`AND FAIR DEALING
`
`[DEMAND FOR JURY TRIAL]
`
`Plaintiff, ENGAGE BDR, LLC (hereinafter referred to as “Engage”) and Plaintiff,
`KENNETH KWAN, on behalf of Engage (hereinafter referred to as “Mr. Kwan”)
`(hereinafter collectively referred to as the “Plaintiffs”), by and through its undersigned
`attorney, alleges on knowledge as to its own acts and otherwise on information and belief
`as follows:
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`COMPLAINT
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`Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 2 of 10 Page ID #:2
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`THE PARTIES
`1.
`Engage is a California limited liability company with a principal place of
`business located at 8581 Santa Monica Blvd., #12, West Hollywood, CA 90069.
`2. Mr. Kwan is an individual who is a citizen of the United States and resides
`in Bangkok, Thailand.
`3.
`GODADDY INC. (hereinafter referred to as “Defendant” or “GoDaddy”), is
`a Delaware corporation with a principal place of business located at 14455 N. Hayden Rd
`#219, Scottsdale, AZ 85260, and is doing business in and with the state of California.
`4.
`The true names and capacities, whether individual, corporate, or otherwise of
`the defendants named in this complaint as Does 1 through 10, inclusive, are unknown to
`Plaintiffs. Plaintiffs are informed and believe, and on that basis allege, that each of said
`fictitiously named defendants is liable to Plaintiffs on the causes of action herein alleged
`and/or asserts some interests, legal or equitable, in the subject matter of this action, and
`therefore Plaintiffs sues said defendants by said fictitious names. Plaintiffs will move to
`amend this complaint when the true names and capacities of said fictitiously named
`defendants have been ascertained.
`5.
`Defendant and Does 1 through 10 are collectively referred to as “Defendant”
`herein.
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`JURISDICTION
`6.
`This Court has jurisdiction under 28 U.S.C. § 1332(a)(1) as the matter in
`controversy is between citizens of different states.
`7.
`This Court has jurisdiction under 28 U.S.C. § 1332(a) as the matter in
`controversy exceeds the sum or value of $75,000 exclusive of interest and costs.
`8.
`Engage is a limited liability company duly organized under the laws of
`California and is a citizen of California.
`9.
`The sole member of Engage is Engage BDR, Ltd. Engage BDR, Ltd. is
`organized under the laws of Australia and accordingly, is a citizen of Australia.
`/ / /
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`COMPLAINT
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`Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 3 of 10 Page ID #:3
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`10. Mr. Kwan is an individual who is a citizen of the United States and resides
`in Bangkok, Thailand.
`11. Defendant is a corporation organized and existing under the laws of Delaware
`and accordingly, is a citizen of Delaware.
`VENUE
`12. As the Central District of California is the district in which substantial part
`of the events or omissions giving rise to the claim occurred, venue is proper with this
`District pursuant to 28 U.S.C. § 1391(b)(2).
`13. Venue is also proper with this District pursuant to 28 U.S.C. § 1391(d).
`FACTUAL ALLEGATIONS
`14. Defendant is an American Internet domain registrar and web hosting
`company that is publicly traded on the New York Stock Exchange.
`15. On July 2, 2009, Mr. Kwan, on behalf of Engage, purchased the domain name
`“hahajk.com” (hereinafter referred to as the “Domain Name”) through Defendant for a
`period of five (5) years. Attached hereto as Exhibit A is a true and correct copy of the
`email receipt from Defendant acknowledging such purchase.
`16. On May 19, 2014, Mr. Kwan, on behalf of Engage, renewed the Domain
`Name with Defendant for a period of two (2) years. Attached hereto as Exhibit B is a true
`and correct copy of the email receipt from Defendant acknowledging such renewal.
`17. On July 2, 2016, Mr. Kwan, on behalf of Engage, renewed the Domain Name
`with Defendant for a period of five (5) years. Attached hereto as Exhibit C is a true and
`correct copy of the email receipt from Defendant acknowledging such renewal.
`18. On or about October 19, 2019, Defendant experienced a security breach that
`affected approximately 28,000 customer's hosting accounts including Mr. Kwan’s account
`in which he purchased and held the Domain Name.
`19. The aforesaid security breach lasted for a period of approximately six (6)
`months before detection by Defendant’s security team on April 23, 2020.
`/ / /
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`Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 4 of 10 Page ID #:4
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`20. On or about December 2019, GoDaddy transferred the Domain name out of
`Mr. Kwan’s account to a third party without his authorization or approval.
`21. Upon information and belief, DOES 1 – 10, and each of them,
`breached/hacked Defendant’s system and got into Mr. Kwan’s account and transferred
`multiple domain names off under that account, including but not limited to the Domain
`Name.
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`FIRST CAUSE OF ACTION
`(Negligence)
`22. Plaintiffs re-allege and incorporate herein by this reference, each and every
`allegation contained in paragraphs 1 through 21 of this Complaint as though fully set forth
`herein.
`23. At all relevant times herein alleged, Defendant was and is an American
`Internet domain registrar and web hosting company that is publicly traded on the New
`York Stock Exchange.
`24. At all relevant times herein alleged, Defendant registered and maintained the
`Domain Name.
`25. On or about October 19, 2019, Defendant experienced a security breach that
`affected approximately 28,000 customer's hosting accounts including Mr. Kwan’s account
`in which he purchased and held the Domain Name.
`26. The aforesaid security breach lasted for a period of approximately six (6)
`months before detection by the Defendant’s security team on April 23, 2020.
`27. On or about December 2019, Defendant transferred the Domain name out of
`Mr. Kwan’s account to a third party without his authorization or approval.
`28. Upon information and belief, DOES 1 – 10, and each of them,
`breached/hacked Defendant’s system and got into Mr. Kwan’s account and transferred
`multiple domain names off under that account, including but not limited to the Domain
`Name.
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`Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 5 of 10 Page ID #:5
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`29. Defendant, as registrar of the Domain Name, had the duties to Mr. Kwan to:
`a. provide adequate security for Mr. Kwan’s hosting account and the
`Domain Name;
`b. provide adequate security mechanisms to protect the Domain Name from
`an unauthorized transfer to a third party;
`c. to contact Mr. Kwan to obtain authorization to transfer the Domain Name
`to a third party;
`d. to contact Mr. Kwan to verify any request to transfer the Domain Name
`to a third party;
`e. to adequately warn Mr. Kwan of the possibility of an unauthorized
`transfer of the Domain Name to a third party;
`f. to otherwise exercise due care with respect to the matters alleged in this
`Complaint.
`30. Defendant, as registrar of the Domain Name, failed to meet the aforesaid
`duties that it owed to Mr. Kwan.
`31. As a direct and proximate result of the negligence and carelessness of
`Defendant as set forth above, the Domain name was transferred out of Mr. Kwan’s account
`to a third party without his authorization or approval.
`32. As a direct and proximate result of the negligence and carelessness of
`Defendant as set forth above, Plaintiffs’ economic relationships with their various partners
`with regard to the use of the Domain Name were, and continues to be, disrupted.
`33. As a direct and proximate result of the negligence and carelessness of
`Defendant as set forth above, Plaintiffs were damaged in a sum in excess of $75,000.
`SECOND CAUSE OF ACTION
`(Negligent Interference with Prospective Economic Advantage)
`34. Plaintiffs re-allege and incorporate herein by this reference, each and every
`allegation contained in paragraphs 1 through 33 of this Complaint as though fully set forth
`herein.
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`Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 6 of 10 Page ID #:6
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`35. Plaintiffs and their various partners were in economic relationships regarding
`the use of the Domain Name that would have resulted in an economic benefit to Plaintiffs.
`36. Defendant had a duty to maintain the registration of the Domain Name in Mr.
`Kwan’s account and not allow an unauthorized transfer of the Domain Name to a third
`party.
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`37. Defendant knew or should have known of Plaintiffs’ economic relationships
`regarding the use of the Domain Name.
`38. Defendant knew or should have known
`that Plaintiffs’ economic
`relationships regarding the use of the Domain Name would be disrupted if Defendant
`failed to act with reasonable care and fulfill its aforesaid duties to Plaintiffs.
`39. Defendant breached its duty to act with reasonable care by transferring the
`Domain name out of Mr. Kwan’s account to a third party without his authorization or
`approval.
`40. Defendant engaged in wrongful conduct by transferring the Domain name
`out of Mr. Kwan’s account to a third party without his authorization or approval.
`41. As a direct and proximate result of the actions and omissions by Defendant
`as set forth above, Plaintiffs’ economic relationships with their various partners regarding
`the use of the Domain Name were, and continues to be, disrupted.
`42. As a direct and proximate result of the actions and omissions by Defendant
`as set forth above, Plaintiffs were damaged in a sum in excess of $75,000.
`THIRD CAUSE OF ACTION
`Violation of Cal. Bus. & Prof. Code § 17200. ET SEQ.
`(Unfair and Fraudulent Business Practices)
`43. Plaintiffs re-allege and incorporate herein by this reference, each and every
`allegation contained in paragraphs 1 through 42 of this Complaint as though fully set forth
`herein.
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`Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 7 of 10 Page ID #:7
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`44. Pursuant to California Business & Professions Code, Section 17200, unfair
`competition is defined in part as “any unlawful, unfair or fraudulent business act or
`practice.”
`45. Pursuant to California Business & Professions Code, Section 17204, any
`person who engages, has engaged or proposes to engage in unfair competition may be
`enjoined in any court of competent jurisdiction. The court may make such orders or
`judgments, including the appointment of a receiver, as may be necessary to prevent the
`use or employment by any person or any practice which constitutes unfair competition, as
`defined in this chapter, or as may be necessary to restore to any person in interest any
`money or property, real or personal, which may have been acquired by means of such
`unfair competition.
`46. The conduct of Defendant described above herein was committed within the
`last three (3) years and constitutes unlawful, unfair and/or fraudulent business practices in
`violation of Section 17200 et seq. of the California Business and Professions Code in
`California common law.
`47. The conduct of Defendant was unlawful and unfair in that it failed to give
`Plaintiffs the use and benefit of the Domain Name. Furthermore, it disrupted Plaintiffs’
`economic relationships regarding the use of the Domain Name and/or Plaintiffs’ various
`partners regarding the use of the Domain Name.
`48. As a direct and proximate result of the wrongful acts of Defendant, Plaintiffs
`have suffered and will continue to suffer substantial pecuniary losses and irreparable
`injury to its business reputation and good will. As such, no remedy at law is adequate to
`compensate for the injuries inflicted by Defendant. Accordingly, Plaintiffs are entitled to
`temporary, preliminary and permanent injunctive relief.
`49. By reasons of such wrongful acts, Plaintiffs are and were, and will be in the
`future, deprived of the profits and benefits of said business relationships, agreements,
`transactions with various existing clients, perspective clients, developers and/or
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`Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 8 of 10 Page ID #:8
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`prospective developers, suppliers and Defendant has wrongfully obtained benefits and
`profits in a sum in excess of $75,000.
`FOURTH CAUSE OF ACTION
`(Breach of Implied Covenant of Good Faith and Fair Dealing)
`50. Plaintiffs re-allege and incorporate herein by this reference, each and every
`allegation contained in paragraphs 1 through 49 of this Complaint as though fully set forth
`herein.
`51. The Agreement entered into between Mr. Kwan and GoDaddy when Mr.
`Kwan purchased the Domain Name on behalf of Engage imposed upon Defendant an
`implied covenant of good faith and fair dealing requiring that Defendant not do anything
`that would injure the rights of Mr. Kwan and Engage to receive the benefits of the
`Agreement.
`52. Plaintiffs are informed and believe and based thereon allege that by reason
`of the transferring of the Domain Name out of Mr. Kwan’s account to a third party without
`his authorization or approval, Defendant has breached the implied covenant of good faith
`and fair dealing.
`53. The actions by Defendant were undertaken with fraud, malice and/or
`oppression, and/or with a conscious disregard of the rights of Plaintiffs, and, therefore,
`Plaintiffs are entitled to an award of exemplary and punitive damages against Defendant.
`54. As a direct and proximate result of the actions of Defendant, Plaintiffs have
`suffered general, direct, consequential, special, and incidental damages, including the
`expenditure of attorney’s fees, those damages all in a sum in excess of $75,000.
`PRAYER FOR RELIEF
`WHEREFORE, Plaintiffs pray for judgment against Defendant as follows:
`A. FIRST CAUSE OF ACTION (Negligence)
`1. For all general, direct, consequential, special, and incidental damages in a sum in
`excess of $75,000;
`2. For the costs of suit incurred herein;
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`Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 9 of 10 Page ID #:9
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`3. For Pre- and Post-Judgment Interest as allowed by law;
`4. For Attorney's fees, as permitted by law;
`5. For such other and further relief as the court deems just and proper.
`B. SECOND CAUSE OF ACTION (Negligent Interference with Prospective
`Economic Advantage)
`1. For all general, direct, consequential, special, and incidental damages in a sum in
`excess of $75,000;
`2. For the costs of suit incurred herein;
`3. For Pre- and Post-Judgment Interest as allowed by law;
`4. For Attorney's fees, as permitted by law;
`5. For such other and further relief as the court deems just and proper.
`C. THIRD CAUSE OF ACTION (Unfair and Fraudulent Business Practices)
`1. For disgorgement of any improper profits received by Defendant as a result of its
`improper conduct, in a sum in excess of $75,000;
`2. For injunctive relief to ensure compliance with Cal. Bus. & Prof. Code § 17203;
`3. For punitive and exemplary damages in a sum to be proven at trial;
`4. For the costs of suit incurred herein;
`5. For Pre- and Post-Judgment Interest as allowed by law;
`6. For Attorney's fees, as permitted by law;
`7. For such other and further relief as the court deems just and proper.
`D. FOURTH CAUSE OF ACTION (Breach of Implied Covenant of Good Faith
`and Fair Dealing)
`1. For all general, direct, consequential, special, and incidental damages in a sum in
`excess of $75,000;
`2. For punitive and exemplary damages in a sum to be proven at trial;
`3. For the costs of suit incurred herein;
`4. For Pre- and Post-Judgment Interest as allowed by law;
`5. For Attorney's fees, as permitted by law;
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`Case 2:21-cv-02014 Document 1 Filed 03/04/21 Page 10 of 10 Page ID #:10
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`6. For such other and further relief as the court deems just and proper.
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`Plaintiff demands a jury trial on all issues so triable pursuant to Fed. R. Civ. P. 38
`and the 7th Amendment to the United States Constitution.
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`Dated: March 4, 2021
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`THE LAW OFFICE OF THAD M. SCROGGINS
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`
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`By:
`
`
`
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`/s/ Thad M. Scroggins
`Thad M. Scroggins, Esq.
`Attorney for Plaintiff,
`ENGAGE BDR, LLC and
`Plaintiff, KENNETH KWAN
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