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Darnaa, LLC v. Google, Inc.

United States District Court, N.D. California

May 16, 2017

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

          ORDER DENYING MOTION TO ALTER THE JUDGMENT

          WILLIAM ALSUP, UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         In this action claiming breach of the implied covenant of good faith and fair dealing, judgment has been entered against plaintiff. Plaintiff now moves to alter the judgment pursuant to FRCP 59(e). For the reasons stated below, the motion is Denied.

         STATEMENT

         The facts of this case have been set forth in a prior order and need not be repeated in detail herein (Dkt. No. 79). Briefly, this action involves a dispute about a music video that plaintiff Darnaa, LLC, posted on defendant YouTube, LLC's website and promoted on various platforms such as Internet, print, and radio ads, all in March 2014. Defendant Google Inc. is Darnaa's parent company. Defendants removed the video later that month due to alleged violations of its terms-of-service agreement to which Darnaa indicated its assent upon creating an account with YouTube. Specifically, defendants removed the video because Darnaa allegedly violated the prohibition on using automated systems to artificially inflate video view counts on the YouTube website.

         After an order dismissed Darnaa's initial action in Los Angeles County Superior Court pursuant to a forum-selection clause in the terms-of-service agreement, Darnaa filed the instant action against Google in federal court in San Jose, where it was assigned to Judge Ronald Whyte. Judge Whyte twice dismissed Darnaa's complaint, each time with leave to amend (Dkt. No. 56; Dkt. No. 26). The first amended complaint added YouTube as a defendant (Dkt. No. 29).

         In November 2016, upon Judge Whyte's retirement, the action was reassigned to the undersigned. Less than two weeks later, Darnaa moved for partial reconsideration of Judge Whyte's decision (both initially and upon a prior request for reconsideration) that various provisions in the YouTube terms-of-service agreement could be enforced (Dkt. No. 59). (Darnaa contended those provisions were unconscionable.) An order denied Darnaa's request for leave to move for partial reconsideration of the ruling “twice stated by Judge Whyte” (Dkt. No. 60).

         Shortly thereafter, Darnaa filed its second amended complaint, asserting a single claim for breach of the covenant of good faith and fair dealing (Dkt. No. 62). Defendants moved to dismiss, contending, inter alia, that a limitation-of-liability clause in the terms-of-service agreement precluded Darnaa's sole surviving claim. The provision at issue stated, in pertinent part “in no event shall YouTube . . . be liable to [Darnaa] for any direct, indirect, incidental, special, punitive, or consequential damages resulting from . . . any interruption or cessation of transmission to or from [YouTube's] services” (Second Amd. Compl., Exh. 1 § 10) (original in all caps).

         Darnaa contended that limitation-of-liability provision could not be enforced under California Civil Code Section 1668, which provides “all contracts which have for their objective, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law” and unenforceable.

         After full briefing and oral argument, an order dismissed the complaint on that theory, without leave to amend (Dkt. No. 79). Judgment followed (Dkt. No. 80).

         Darnaa now moves to alter the judgment pursuant to FRCP 59(e). This order follows full briefing and oral argument.

         ANALYSIS

         Pursuant to FRCP 59(e), a motion to alter the judgment can only be granted if the district court is presented with newly discovered evidence, the district court committed clear error, or if there is an intervening change of law. Ybarra v. McDaniel, 656 F.3d 984, 998 (9th Cir. 2011). The court of appeals will find clear error only upon “a definite and firm conviction that a mistake has been committed.” United States v. Ruiz-Gaxiola, 623 F.3d 684, 693 (9th Cir. 2010). If a court “got the law right” and “did not clearly err in its factual determinations, ” then clear error was not committed - even if another reasonable judicial body “would have arrived at a different result.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1331 (9th Cir. 2011). Here, Darnaa claims the order dismissing its second amended complaint erroneously declined to apply Section 1668 to its claim for breach of the implied covenant of good faith and fair dealing.

         The order dismissing Darnaa's claims cited binding and persuasive California law in holding (1) that a breach of the implied covenant of good faith and fair dealing is “nothing more than a cause of action for breach of contract” and (2) that Section 1668, by its own terms, only applies to a contract claim when the contract in question is unconscionable or insulates the contractor from its own fraud. Food Safety Net Services v. Eco Safe Sys. USA, ...


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