Attorney Steve® Internet Law Essentials - Domain Disputes and Punitive Damages - Arizona

Introduction

GoDaddy is located in Scottsdale Arizona.  They sell a ton of the internet domains that are sold in the United States and abroad.  Thus, when a domain bully seeks to obtain your domain (reverse cybersquatter) and loses badly in a WIPO domain dispute arbitration proceeding ("UDRP"), an administrative proceeding, jurisdiction may properly lie in the State of Arizona.  

Here is some Arizona case law that may assist in bringing a case against a reverse domain bully to recover for damages, attorney fees, and even punitive damages in the right case.

Arizona and California Case Law (that may be on point) following a bad faith UDRP filing with WIPO or NAF

Here are the theories I researched (there may be others depending upon the facts of your case):

1. RDNH (reverse domain name hijacking).  Usually, the UDRP panel (if you had three instead of one panel member) will find that the complainant brought the domain dispute in bad faith and which amounted to an "abuse of the administrative proceeding."  Attorneys, especially those holding themselves out as experienced IP lawyers (copyright, trademark) may be held to a higher standard.
2. Tortious interference with contract or prospective business advantage (Where a complainant, by filing a meritless UDRP claim with no realistic chance of winning, may be found to have tortiously interfered with the GoDaddy contract with its users).  For example, the domain may have been taken out of your name, frozen or disabled for use, and transferred into another party's name).  This has the affect of causing or inducing GoDaddy to  not be able to provide you with the services you would otherwise be entitled to and to enjoy the full use and rights that comes with owning a domain name. 
3. Wrongful institution of civil proceedings (some lawyers may go "over the top" and file the UDRP arbitration with WIPO or or NAF just to harass or intimidate a person or competitor and cause them to incur legal fees). This can also be actionable.
4. Aiding and abetting (this is recognized in AZ and used to tie others in, including any business partners at the law firm that filed the UDRP who had knowledge of the frivolous action, and agreed or acquiesced to its filing after being put on notice of the frivolity of the complaint. Partners in a law firm can generally be held liable for the business actions of the other.

The reason courts appear willing to treat this as wrongful institution with an admin proceeding as opposed to a civil suit is due to the rise in arbitration clauses and non-lawsuit cases noting that the harm is still the same to the person on the other side.  Punitive damages also appear proper in Arizona for “ill will, embarrassment, harassment, etc., which appears to be a lower standard than you may find in California (in California you must prove malice or oppression, a higher standard in my opinion.  However, you need facts pointing to the ill-will and discovery and depositions can help show the bad motives especially against a competitor who files a meritless UDRP arbitration complaint).  

Here are a few cases worth noting that may apply:

1. Arnoldo vs. Coogan (doctor accused of wrongful death obtained 8 mil judgment). 
2. Dent v. Lottto (court awards over 250k in attorney fees)
3. GoForIt vs. Digimedia (Texas case) RDNH and tortious interference case
4. Nienstedt – 133 AZ 354 - exposing one to attorney fees
5. Filing suit to obtain collateral advantages - Morn – 152 AZ 167 (motives may be inferred), also see Rondelli 120 AZ 489
6. If a Defendant argues they had a "litigation privilege" to file an abusive UDRP action that can also be challenged (in general the litigation privilege is a qualified privilege, meaning if you abuse you lose it).  See Giles 195 AZ 358
7. Emotional duress, humiliation, inconvenience, and anxiety recoverable – See Crackel 208 AZ 264
8. CA case recognizing administrative proceedings as the potential for wrongful initiation of proceeding cause of action - See Hardy vs. Vial 
9. Also another AZ case regarding punitive damages standard – See Nelson v. Cail – spite, ill-will, reckless or indifference to Plaintiff's interests deemed sufficient as a standard for assessing punitive damages

Can there be malicious prosecution in an administrative proceeding (such as a WIPO or NAF arbitration)?

In California, there is the case of Hardy vs. Vial which recognizes an administrative proceeding as being grounds for malicious prosecution.  In fact, the restatement of torts recognizes it - and the restatement is often cited in court decisions In Arizona.  The restatement notes that this is a majority position since the injury that occurs by being forced into defending a frivolous and malicious action is the same whether it is an arbitration proceeding or a federal court lawsuit.  Moreover, where Arizona law may not establish a point of law clearly, the AZ courts may also look to neighboring laws such as California.

Note, the cause of action is known as Wrongful Institution of a Civil Proceeding ("WICP").  Click to review our detailed blog on this matter.  Asd noted in the Hardy case:

"Plaintiff was discharged from his employment as a professor at Long Beach State College as the result of charges made by defendants, and, after reinstatement to his position by the State Personnel Board, he commenced this action for damages for malicious prosecution. He named as defendants seven persons, hereafter referred to as the school defendants, who are officials of the college or of the state Department of Education, and three persons, Vial, Pond, and Egolf, who apparently have no connection with the college or the department. General demurrers of Vial and the school [48 Cal.2d 580] defendants were sustained without leave to amend, and plaintiff has appealed from the ensuing judgments.

The remaining two defendants are not involved on this appeal.The allegations of the complaint may be summarized as follows: Defendants wrongfully, maliciously and without probable cause conspired to accuse plaintiff falsely of gross immorality and unprofessional conduct during the period of his employment for the purpose of procuring his dismissal. In pursuance of the conspiracy, defendants Vial, Pond, and Egolf, aided and abetted by the other defendants, made and filed with the college affidavits which charged plaintiff falsely with the commission of acts of a base and depraved nature. By reason of the acts alleged in the affidavits plaintiff was dismissed from his employment at the college effective March 27, 1953. After a hearing the State Personnel Board found that the charges were untrue and that the grounds for the dismissal were not sustained by the evidence. The board revoked the dismissal and ordered defendant Simpson to return plaintiff to his position at the college. No review of the board's decision was sought, and plaintiff was returned to his position.  It is the general rule that a malicious prosecution action may be founded upon a proceeding before an administrative body."

Section 680 of the Restatement of Torts declares:

"One who initiates or procures the initiation of civil proceedings against another before an administrative board which has power to take action adversely affecting the legally protected interests of the other, is subject to liability for any special harm caused thereby, if (a) the proceedings are initiated:

(i) without probable cause to believe that the charge or claim on which the proceedings are based is well founded (for example, I would argue if a UDRP panel finds their was a bad faith abuse of an administrative proceeding)

and

(ii) primarily for a purpose other than that of securing appropriate action by the board (I would argue where there is a finding of Reverse Domain Name Hijacking that tells you what their purpose was - to get a domain for free by being a trademark bully)

and

(b) the proceedings have terminated in favor of the person against whom they are brought. (ex. even if you WIN the UDRP arbitration proceeding, there can be a cause of action).  Why?  Because it normally costs you money and other special damages to defend the Complainant's frivolous position.

(In accord, Melvin v. Pence, 130 F.2d 423, 425 et seq. [76 App.D.C. 154, 143 A.L.R. 149]; National Surety Co. v. Page, 58 F.2d 145, 148; Dixie Broadcasting Corp. v. Rivers, 209 Ga. 98 [70 S.E.2d 734, 740-741]; Rivers v. Dixie Broadcasting Corp., 88 Ga.App. 131 [76 S.E.2d 229, 233]; Ranier's Dairies v. Raritan Valley Farms, 19 N.J. 552 [117 A.2d 889, 895-896]; see Toft v. Ketchum, 18 N.J. 280 [113 A.2d 671, 673-674, 52 A.L.R.2d 1208], cert. den. 350 U.S. 887 [76 S.Ct. 141, 100 L.Ed. 782]; 143 A.L.R. 157.)

Contact a Domain Dispute Law Firm

That is what I found with a cursory search and will hopefully help point one in the right direction.  If you need help with a domain dispute, ICANN issue, UDRP defense with WIPO (World Intellectual Property Organization) or NAF (National Arbitration Forum) or with a case of reverse domain bullying, including accompanying trademark cancellation issues that may apply, and typosquatting or social media handle squatting, call us at (877) 276-5084 or fill out our contact form and we will contact you.  

We recently defended and won a case involving NOT ONE but TWO LAW FIRMS firms trying to obtain MY domain name by filing a WIPO dispute.  The 3-panel majority decision found the Complainant engaged in a bad faith abuse of the administrative procedure and RDNH.  A despicable move by two self-proclaimed IP lawyers.