The Class Action Filed Against Network Solutions & ICANN Relies on Erroneous Facts

The Internet are abuzz over the class action supposedly filed by the law firm Kabateck Brown Kellner, LLP.  Thus far, we have been unable to confirm that anything has been filed in the U.S. District Court, Central District of California as stated by class counsel. We were able to obtain a copy of the complaint, signed by counsel but with no case number, which you can view here.

Many lawyers who specialize in internet law are intersted to see what theories of liability have been alleged against Network Solutions and ICANN. While there are many people hoping that this class action goes a long way and brings Network Solutions to its knees, the case may be dismissed rather quickly since lead counsel appears to have plead erroneous facts as the foundation of liability against Network Solution.

• CHRIS McELROY is the named plaintiff.  It appears that this might be the same gentleman listed at Circle ID here with a partial description of  "Chris McElroy AKA NameCritic has been involved in Internet Marketing since 1995."

Allegations in the Complaint include:

• 20. It is defendant Network Solutions' policy and practice to immediately register for itself any and all domain names that consumers inquire about through its website. Although Network Solutions still offers to sell the domain name to the consumer (or anyone else who is willing to pay Network Solutions' grossly inflated registration fee), it has ensured through this practice that only it can register the domain name, effectively creating a monopoly for itself.

Actually, it is a 4 day monopoly at best since a failure to register in that time frame results in a deletion of the domain at the registry by NSI.

• 21. A consumer who inquires as to the availability of a domain name through Network Solutions, and who is told that the domain name is available but then balks at the grossly inflated price that Network Solution seeks to charge for registering the domain name is left with little recourse. Should the consumer seek to register the domain name through another, cheaper domain name registrar, that registrar will report (after querying the domain name registry) that the domain name is not available, which of course it is not since it is now registered to Network Solutions.

• 22. Network Solutions never informs consumers that it will immediately purchase for itself any domain name that a consumer shows interest in by searching for the availability of the domain name through Network Solutions.

This is an interesting allegation repeated throughout the Compliant.  It is not accurate since this 'lack of notice' only lasted a short while.  Once the internet community took NSI to task between January  7 and 9, 2008, Network Solutions updated their approach and provided notice on their web site to consumers that it woudl be reserving all searched domains, as analyzed here.  Could it be that the law firm filing the Complaint never saw the  notice provision telling web site users that any searches would result in NSI 'reserving" the domain for 4 days?

• 23. Network Solutions never informs consumers that simply by inquiring as to the availability of a domain name through Network Solutions, a consumer will, effectively grant Network Solutions the sole right - to the exclusion of all other domain name registrars -to sell that domain name.

Hmmm:  There it is again. Erroneous facts make for short lived lawsuits.  NSI does inform customers of its reserve policy. Now, I know what you are thinking.  Consumers may not read the notice. The notice might not be legally adequate.  But there is definitely notice.  It will be difficult for class counsel to undue the real  harm here.  Since the entire class action appears premised on 'no notice'  a court may not look favorably on an requested amendment of the complaint to plead 'inadequate notice', which is a much tougher argument anyway. 

• 27. Network Solutions is able to perpetuate this course of misconduct only through the acquiescence, tacit approval and participation of ICANN. The agreement between ICANN and the domain name registrars includes provisions for an Add Grace Period (AGP). The AGP allows a domain name registrar to avoid paying a registration fee for domain names canceled within five days of registration.

There is nothing illegal about the AGP.  The use of the AGP for cybersquatting purposes is illegal, not the policy itself.  I can not imagine that any court would conclude that the policy itself could result in consumer protection liability... unless of course plaintiffs draw a judge who knows nothing about the internet, ICANN or  ... :-) 

• 29. ICANN was, and is, aware of Network Solutions' actions and continued to permit Network Solutions fraudulent abuse of the AGP for its own gain and to the detriment of consumers.

If this is a basis for liability, then ICANN has BIG problems.  ICANN also allows the AGP to be used by cybersqutters. Just becasue ICANn controls the internet does not make it liable for everything that goes on there.  The concept that ICANN is liability for all alleged downstream abuses of its policies is tough on these facts.  I was expecting to see an allegation that Network Solutions was somehow violating it accreditation agreement with ICANN (Such as 3.7.4) and, thus, ICANN had an obligation to step in.

• 41. Common Questions of Law and Fact Predominate: a. Whether Network Solutions failed to disclose to consumers the material fact that when a consumer searches for the availability of a domain name on Network Solutions' website, they will be prevented from registering the domain name with any other domain name registrar;

This is the first common question listed. Could counsel be suing for the few days that NSI reserved domains without providing notice?   Whoops.  The complaint states that Plaintiff attempted to determine if a domain was available on January 31, 2008 and had it reserved by NSI.  This is well after NSI changed its site to provide notice. I really think counsel is unaware that notice is provided on the NSI web site.

• FIRST CAUSE OF ACTION - FRAUDULENT CONCEALMENT - (Against Defendant Network Solutions)

Again, premised on the erroneous 'no notice' argument.   

• SECOND CAUSE OF ACTION - AIDING AND ABETTING- (Against Defendant ICANN).

This cause of action is premised on the notion that the AGP by ICANN is somehow inherently unlawful.  As much as it would make a lot of people happy to see this lawsuit succeed, I just don't see that happening. 

The best case scenario for Plaintiff is a judge who does not understand the internet or an amendment of the pleading to somehow argue that the notice Network Solution provided about its reservation policy was somehow inadequate (given the obvious fact that neither class plaintiff nor class counsel noticed it, there might by an open window there) as opposed to the erroneous argument that it was non-existent.