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Wilson & Haubert, PLLC v. Yahoo! Inc.

United States District Court, N.D. California

April 4, 2014

WILSON & HAUBERT, PLLC, Plaintiff,
v.
YAHOO! INC., Defendant.

ORDER DENYING DEFENDANT'S MOTION TO REQUIRE PLAINTIFF TO POST AN UNDERTAKING TO SECURE COSTS

EDWARD M. CHEN, District Judge.

I. INTRODUCTION

Before the Court is Defendant Yahoo! Inc.'s motion, pursuant to California Civil Procedure Code section 1030, to require Plaintiff Wilson & Haubert, PLLC to post an undertaking to secure its anticipated costs in defending this action. The Court finds this matter suitable for disposition without a hearing and thus VACATES the hearing on the motion set for April 10, 2014. The Court hereby DENIES the motion.

II. FACTUAL & PROCEDURAL BACKGROUND

Plaintiff Wilson & Haubert, PLLC - a small business based in Arkansas - filed the instant putative class action alleging that Yahoo! Inc.'s ("Yahoo") "Localworks" service did not operate as represented by Yahoo. Localworks is an "internet marketing tool offered by Yahoo! that purports to drive new leads [to the enrollee's business] by pushing your listing and expanded content out to 40 key directories across the web.'" Complaint ¶ 10 (Dkt. No. 1). In addition, the service "purports to correct inconsistent information and missed marketing opportunities across all listed directories, '" thus making it "easy to correct errors and push new information out to those directories so your content is always up to date.'" Id.

On November 6, 2013, Plaintiff alleges it visited the Localworks home page, where it was prompted to enter information related to its business for a "free scan" to determine whether its information was "accurately listed in the web directories covered by a Localworks subscription." Id. ¶ 12. The scan reported over 100 inaccuracies relating to Plaintiff in the various web directories linked to Localworks. Id. ¶ 13. Plaintiff was informed that purchasing the Localworks services would "fix everything, " paying the $89.97 quarterly fee by credit card. Id. ¶ 14. Plaintiff then filled out a personalized template which noted necessary changes to various websites. Id. ¶ 15. Localworks confirmed receipt of these changes the same day. Id.

Four days later, Plaintiff checked Yahoo's "Marketing Dashboard" - a Localworks feature that allowed enrollees to view the status of their listings in the directories - and was notified that its "listings had been published on all of the directories, with the possible exception of Bing and City Search." Id. ¶ 16. However, when Plaintiff manually checked directories, many of them did not display any listing for Plaintiff. Id. ¶ 17. Accordingly, Plaintiff alleges that Yahoo's representations that it had identified and corrected errors regarding Plaintiff's business information on 40 sites, enrollment in Localworks did not actually provide these benefits. Id. ¶ 18. In fact, two weeks after enrolling in Localworks, Plaintiff alleges that the same "free scan" he ran two weeks earlier identified 122 errors in various web directories. Id.

Plaintiff's class action complaint asserts 5 causes of action: (1) Breach of contract; (2) unjust enrichment; (3) two causes of action for violation of the California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq. (for both fraudulent business acts and practices and fraud/false advertising); and (4) false advertising in violation of Cal. Bus. & Prof. Code § 17500, et seq.

Yahoo has filed a motion to require an undertaking by Plaintiff to secure its reasonably anticipated costs pursuant to California Code of Civil Procedure section 1030. The bulk of Yahoo's motion is directed at establishing that there is a reasonable probability that it will prevail on the merits. First, Yahoo argues that Plaintiff does not have standing to pursue its claim because it did not enter into a contract for Localworks service - rather, an individual named "Wilson Dennis K" entered into the contract. Dkt. No. 22, at 6; Bhusan Decl. ¶ 5 (Dkt. No. 22-1). Second, Yahoo argues that Localworks would have worked for Plaintiff, but for the mistake in entering the name "Wilson Dennis K" as the account name when signing up for Localworks. Dkt. No. 22. Yahoo contends that Plaintiff altered its account name subsequent to the initiating this lawsuit upon realizing that the complained of injury was caused by its own - and not Localworks' - error. Ultimately, Yahoo seeks to have this Court order Plaintiff to post a $22, 000 bond to cover its anticipated costs in defending this action.

In its opposition, Plaintiff attempts to refute Yahoo's factual assertions. First, Plaintiff has introduced exhibits showing that a Brandon M. Haubert, listed as an attorney at Wilson & Haubert, PLLC, signed up for Localworks on November 6, 2013 and not a "Wilson Dennis K." Dkt. No. 28-1.[1] It has additionally provided screenshots of the "marketing dashboard" that lists the account as belonging to "Wilson & Haubert, PLLC." Dkt. No. 28-2. Further, there is a November 12, 2013 email from Yahoo to Mr. Haubert which states, in part, "Congratulations! Your Yahoo! Local Enhanced Listing for Wilson & Haubert, PLLC has been posted." Dkt. No. 28-3. Finally, Plaintiff have filed a declaration by Mr. Haubert which, in part, states that he has not "altered the listing information for the Yahoo! Localworks account associated with Wilson & Haubert, PLLC at any point subsequent to the filing of the above captioned action." Haubert Decl. ¶ 3 (Dkt. No. 28-4). Plaintiff has also filed examples of web directories for which there is no apparent entry for Wilson & Haubert, PLLC. Dkt. No. 28-5. This evidence, Plaintiff argues, demonstrates that: (1) It committed no error in signing up for Localworks; and (2) Localworks has not performed the promised services to this day.

Yahoo disputes much of this evidence. For instance, Yahoo has introduced a screenshot for the Wilson & Haubert PLLC account showing that a number of third party websites have received Plaintiff's information, which Yahoo argues demonstrates that Localworks did work as anticipated. Yahoo further argues that Plaintiff's exhibits and declarations show that Brandon Haubert, and not Plaintiff, entered into the Localworks contract, therefore depriving Plaintiff of standing.

III. DISCUSSION

The Ninth Circuit has addressed the framework for the relief sought herein:

There is no specific provision in the Federal Rules of Civil Procedure relating to security for costs. However, the federal district courts have inherent power to require plaintiffs to post security for costs. "Typically federal courts, either by rule or by case-to-case determination, follow the forum state's practice with regard to security for costs, as they did ...

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