Office Depot Inc. v. Zuccarini — F.3d — 2010 WL 669263

Case Summary: Office Depot Inc. v. Zuccarini

1. Case Name:
Office Depot Inc. v. Zuccarini

2. Case Cite:
Office Depot Inc. v. Zuccarini, — F.3d —, 2010 WL 669263 (9th Cir. Feb. 26, 2010).

3. Facts of the case
DS Holdings (“DSH”) acquired a judgment debt owed to Office Depot. The debt is owed by Zuccarini and stems from a suit brought and won by Office depot. The suit alleged typo-squatting violations of the ACPA. Among the more than 248 domain names that Zuccarini had registered was offic-depot.com. The bulk of the other domain names did not pertain to the original ACPA case brought by Office Depot, but were sought by DSH in order to satisfy the judgment debt.

DSH’s first swing at the ball failed. They tried to get a California court to force the registrars to turn over the domain names but the court found that under state law, they could not compel third parties to turn over property, so DSH moved for appointment of a receiver in California (The domain names are part of the VeriSign? registry in California). The lower court found this approach compelling, and agreed to appoint a receiver to acquire and sell the domain names and give the proceeds to DSH to satisfy the judgment debt.

Zuccarini seeks to appeal this lower court ruling on the grounds that the Northern District of California is not the correct jurisdiction to levy upon his domain names and that appointment of a receiver was improper. Thus, the focus of the case is on the validity of the quasi in rem jurisdiction/execution over Zuccarini’s domain names.

First, the court provides some definitions and background regarding domain names. Notably, Zuccarini’s domain names were acquired through several registrars located in several countries. And that Zuccarini’s .com and .net domain names are held in a California based registry.

Second, the court discusses qir jurisdiction in detail, and identifies “intangible” property that is not part of the dispute at bar as type 2 qir property. The court shows that it has jurisdiction type 2 qir property located within the district’s borders. The court then discusses the federal rules (FRCP 69 and 66) describing procedures for executing on judgment. Ultimately the court finds that because FRCP 69 generally looks to state rules for execution, and because FRCP 66 (the rule governing receivers in federal court) is silent on the proper location for appointment of a receiver, that state rules apply and the proper place for appointment of the receiver is the county in which the property is located.

Next, the court discusses the issue of domain names as they relate to type-2 qir property (property subject to execution). They illustrate that the issue of whether domain names are intangible property has already been settled in the affirmative under the Kremen case and that it is still good law.

Finally, the court analyzes where domain names are located for the purposes of execution. It discusses the necessary “legal fiction” required to attach a situs to intangible property. Id. at *5. The court borrows from the ACPA to fill the gaps in state law. It finds that the ACPA to be compelling, and follows its reasoning that domain names are subject to quasi in rem jurisdiction in the judicial district where the registry is located.

4. Procedural Posture

Appeal from an order to appoint a receiver to take control of and auction off 190 of Zuccarini’s domain names.

5. Holding

"Given the persuasive but not controlling language of the ACPA, and the practicalities involved in bringing suit to execute judgments against owners of domain names, we conclude under California law that domain names are located where the registry is located for the purpose of asserting quasi in rem jurisdiction." Id. at *6 (emphasis added)

The lower court’s decision is affirmed.

6. Important Dicta

"Although the question is not directly before us, we add that we see no reason why for the purpose of bringing suit to execute judgments against their owners, domain names are not also located where the relevant registrar is located." Id. at *6.

7. Likely future importance or unanswered questions.

How do holdings such as this effect the following hypothetical situation: Judgment Debtor has domain names “located” in a California registry, and In a case where, for instance, the registry is located in California and the registrar is foreign. What happens when another judgment creditor goes to execute on the domain name in the jurisdiction of the registrar. Unlike real property and security interests/finance statements, there does not seem to be a “secretary of state” or “county courthouse” that a lien holder must file notice with once they perfect the lien. Although this case does not specifically deal with the issue, it makes me wonder what the notice implications are on someone buying or executing on domain names. Do you have to check the registry as well as the registrar before you buy a domain name? Is this addressed by statute somewhere already?


8. Critical Analysis

Once the court sorted out whether domain names are intangible property, it was just a matter of falling back to 105 year old authority to show that qir jurisdiction applies to the case. Neat.

Zuccarini’s argument that the registrars are the right place to go has some merits. It makes me wonder what the implications are on foreign registrars that have .com and .net customers. It seems as though allowing attachment in California for a foreign registered domain is like allowing California law to trump a foreign jurisdiction’s law (foreign meaning non-Californian law in this context).

Because of this holding, incorporating parts of the ACPA into California state law, and because VeriSign? is in California, and it is the company that is the TLD registry for .com and .net domain names, the California district courts should expect to see a lot more of this type of traffic. It will be the path of least resistance for people trying to execute against .com and .net domain names. Why go to all the trouble of executing on registrars that are scattered all over the place when you can do one stop shopping.

9. Blog Discussions:
1. I found this case via Eric Goldman’s twitter feed (http://twitter.com/ericgoldman)
2. After I started writing my entry, I found this interesting discussion of the case: http://blog.ericgoldman.org/archives/2010/03/ninth_circuit_f.htm

10. Free Source of Opinion:
1. http://www.ca9.uscourts.gov/datastore/opinions/2010/02/26/07-16788.pdf

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