Kremen v. Cohen

337 F.3d 1024 (9th Cir. 2003)

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Nature of the Case

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Facts

Kremen (P) was the owner of the domain name sex.com. He registered the name to his business, Online Classifieds, and listed himself as the contact. Con man Stephen Cohen (D) was doing time for impersonating a bankruptcy lawyer. He, too, saw the potential of the domain name. Once out of prison, D sent Network Solutions what purported to be a letter he had received from Online Classifieds. It claimed the company had been “forced to dismiss Mr. Kremen,” but “never got around to changing our administrative contact with the internet registration [sic] and now our Board of directors has decided to abandon the domain name sex.com.” Despite the letter’s transparent claims that a company called “Online Classifieds” had no Internet connection, Network Solutions made no effort to contact P. Instead, it accepted the letter at face value and transferred the domain name to D. When P contacted Network Solutions sometime later, he was told it was too late to undo the transfer. D went on to turn sex.com into a lucrative online porn empire. The letter was signed “Sharon Dimmick,” purported president of Online Classifieds. Dimmick was actually P’s housemate at the time; D later claimed she sold him the domain name for $1000. This story might have worked a little better if D hadn’t misspelled her signature. P sued D and several affiliated companies in federal court, seeking return of the domain name and disgorgement of D’s profits. The district court found that the letter was indeed a forgery and ordered the domain name returned to P. It also told D to hand over his profits, invoking the constructive trust doctrine and California’s “unfair competition” statute, Cal. Bus. & Prof. Code § 17200 et seq. It awarded $40 million in compensatory damages and another $25 million in punitive damages. P, unfortunately, has not had much luck collecting his judgment. The district court froze D’s assets, but D ignored the order and wired large sums of money to offshore accounts. His real estate property, under the protection of a federal receiver, was stripped of all its fixtures-even cabinet doors and toilets-in violation of another order. The court commanded D to appear and show cause why he shouldn’t be held in contempt, but he ignored that order, too. The district judge finally took off the gloves-he declared D a fugitive from justice, signed an arrest warrant and sent the U.S. Marshals after him. P then sued Network Solutions (D1) for mishandling his domain name, invoking four theories at issue here. He argues that he had an implied contract with D1, which it breached by giving the domain name to D. He also claims the transfer violated D1’s cooperative agreement with the National Science Foundation. His third theory is that he has a property right in the domain name sex.com, and D1 committed the tort of conversion by giving it away to D. Finally, he argues that Network Solutions was a “bailee” of his domain name and seeks to hold it liable for “conversion by bailee.” The district court granted summary judgment in favor of D1 on all claims. P appealed.