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Darnaa, LLC v. Google, Inc.

United States District Court, N.D. California

February 21, 2017

DARNAA, LLC, Plaintiff,
v.
GOOGLE INC. and YOUTUBE, LLC, Defendants.

          ORDER GRANTING MOTION TO DISMISS

          WILLIAM ALSUP UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         In this action claiming breach of the covenant of good faith and fair dealing, defendants move to dismiss the second amended complaint. For the reasons stated below, the motion is Granted.

         STATEMENT

         At all relevant times, defendant YouTube, LLC, a wholly-owned subsidiary of defendant Google Inc., operated an Internet service, also called YouTube, on which users could view and distribute digital videos. YouTube, LLC, required users seeking to distribute videos on the YouTube service to “electronically agree to” a terms of service agreement before posting any videos (Second Amd. Compl. ¶¶ 8, 13-14).

         Section 4(H) of the terms of service agreement prohibited the use of automated systems to access the video distribution service (id., Exh. 1 § 4(H)).

         Section 10 of the agreement provided a “Limitation of Liability” as follows (id. § 10) (emphasis in original):

IN NO EVENT SHALL YOUTUBE . . . 1BE LIABLE TO YOU FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES WHATSOEVER RESULTING FROM . . . (IV) ANY INTERRUPTION OR CESSATION OF TRANSMISSION TO OR FROM OUR SERVICES . . . [OR] (V) ANY ERRORS OR OMISSIONS IN ANY CONTENT OR FOR ANY LOSS OR DAMAGE OF ANY KIND INCURRED AS A RESULT OF YOUR USE OF ANY CONTENT . . . WHETHER BASED ON WARRANTY, CONTRACT, TORT, OR ANY OTHER LEGAL THEORY . . . .

         Section 14 included a choice-of-law provision selecting “the internal substantive laws of the State of California, without respect to its conflict of laws principles.” It also provided that any dispute would be “decided exclusively by a court of competent jurisdiction located in Santa Clara County, California” (id. § 14).[1]

         The final two sentences of Section 14 - which were also the final two sentences of the agreement - appeared in all capital letters, unlike the rest of that section (ibid.) (emphasis in original):

YOU AND YOUTUBE AGREE THAT ANY CAUSE OF ACTION ARISING OUT OF OR RELATED TO THE SERVICES MUST COMMENCE WITHIN ONE (1) YEAR AFTER THE CAUSE OF ACTION ACCRUES. OTHERWISE, SUCH CAUSE OF ACTION IS PERMANENTLY BARRED.

         This action concerns defendants' decision to remove our plaintiff's video from the YouTube website. The instant motion concerns: (1) whether this action can be considered timely within the one-year limitations period in Section 14 of the terms of service agreement by applying equitable tolling for the time during which our plaintiff pursued the instant claims in an action that was dismissed pursuant to the forum-selection clause and (2) whether the claims in the operative complaint are barred by limitations-of-liability clause in Section 10 of the terms of service agreement. This order first sets forth the underlying facts of the dispute and the procedural history.

         Plaintiff Darnaa, LLC, owned and operated an independent music label, which produced and promoted the recordings and performances of its clients pursuant to exclusive contracts in exchange for a share of its clients' revenue. Our plaintiff's namesake, a new and aspiring pop musician whose stage name was Darnaa, became a Darnaa, LLC's client. Darnaa's body of work included various music videos that Darnaa, LLC, made available for view on YouTube's website. This dispute concerns the music video for Darnaa's song titled “Cowgirl, ” which Darnaa, LLC, posted on the YouTube website on March 4, 2014, as part of an extensive promotional and advertising campaign in advance of the release of recordings of that song for sale in various online digital music stores. Darnaa, LLC, partnered with various third parties, including Clear Channel Communications, which operated an Internet radio platform. The promotional materials all used the specific uniform resource locator (“URL”) address assigned to the video on the YouTube service (Second Amd. Compl. ¶¶ 9-10, 27-28).

         On March 21, 2014, Darnaa, LLC, learned that defendants had removed the “Cowgirl” video from the YouTube service, such that users could no longer view the video. Darnaa, LLC, contacted defendants who stated that the video had been removed due to violations of Section 4(H) of the terms of service agreement, which prohibited automated systems to use the YouTube service to artificially inflate video view counts. Darnaa, LLC, explained the nature of its promotional efforts and asked that defendants restore the video to its original URL by the next week (id. ¶¶ 30-31).

         Defendants declined to restore the “Cowgirl” video to the YouTube service with the same URL. On April 7, 2014, Darnaa, LLC, commenced an action against Google in Los Angeles County Superior Court, alleging interference with prospective economic relations, and seeking injunctive relief restoring the video to the YouTube service at the same URL. Darnaa, LLC, sought a temporary restraining order on April 14, which Google opposed. The application for a temporary restraining order was denied on April 18 (id. ¶¶ 35-36, Exh. 3).

         On April 28, defendants restored the video to the YouTube service, but with a different URL. Clear Channel offered to promote the “Cowgirl” video at the new URL at no additional charge, but on April 30, defendants again removed the video (id. ¶¶ 32-33).

         In May 2014, Google moved to transfer venue to Santa Clara County Superior Court, seeking to enforce the forum-selection clause in Section 14 of the terms of service agreement. At a hearing on August 28, 2014 at which counsel for both sides appeared, Judge Michael Stern granted the motion. The minute order read as follows, in pertinent part (id., Exh. 4):

The motion is called and argued.
The motion is granted.
The Court orders this case dismissed without prejudice.
Plaintiff's counsel will re-file this action in Santa ...

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