RingCentral, Inc. v. Nextiva, Inc.
- Nathanael Cousins
- 5:19-cv-02626
- U.S. District Court · Northern District of California
- 10
In RingCentral v. Nextiva, Judge Cousins granted defendants’ motion to dismiss all claims, allowing RingCentral to amend its complaint.
RingCentral, Inc., Nextiva, Inc., UnitedWeb, Inc., and the Doe defendants named in the amended complaint. RingCentral’s claims were dismissed with leave to amend, subject to the court’s deadline and restriction on adding claims or parties.
What happened
RingCentral, Inc. sued Nextiva, Inc., UnitedWeb, Inc., and Doe defendants, alleging a campaign involving fake online reviews, websites, and a lookalike domain name that harmed RingCentral’s business.
The court found that RingCentral had not identified specific economic relationships or losses, specific allegedly false review statements and resulting damages, or facts plausibly linking Nextiva or UnitedWeb to the lookalike domain. It also found that the unfair-competition claim depended on those insufficient claims and allegations focused on harm to RingCentral rather than competition.
Judge Cousins granted defendants’ motion to dismiss with leave to amend. RingCentral was required to file any second amended complaint by March 20, 2020, and could not add new claims or parties without further court permission.
The detailed version
- RingCentral, Inc. v. Nextiva, Inc. · No. 5:19-cv-02626
- Nathanael Cousins
- Feb. 28, 2020
Background
RingCentral sued Nextiva, UnitedWeb, and 17 Doe defendants. It alleged that Nextiva and UnitedWeb conducted an internet campaign using fake online personas to post poor reviews of RingCentral and positive reviews of Nextiva. RingCentral also alleged that defendants registered domain names with false contact information, created websites that appeared to belong to legitimate businesses, and registered “ringcetrnal.com,” which resembled RingCentral’s “ringcentral.com” domain.
RingCentral’s first amended complaint asserted claims for interference with prospective economic advantage, trade libel, trademark infringement and cybersquatting, and unfair competition under California law. Nextiva and UnitedWeb moved to dismiss under Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim, or alternatively requested a more definite statement.
Court’s Analysis
Interference with prospective economic advantage. The court held that RingCentral had not adequately alleged an economic relationship with a specific third party that had a probable future benefit. Its general allegation that defendants steered potential customers away from RingCentral was insufficient because it assumed that prospective customers would have chosen RingCentral. The court granted the motion to dismiss this claim with leave to amend.
Trade libel. The court explained that trade libel requires a false statement of fact, identification of the specific statements, and specific financial loss. RingCentral listed websites and domain names that allegedly posted false reviews but did not provide the allegedly false statements or enough detail to identify them. It also did not allege specific facts explaining the financial damages caused by the statements. The court granted the motion to dismiss the trade-libel claim with leave to amend.
Trademark infringement and cybersquatting. RingCentral asserted this claim against “DOE 19” and alleged that defendants or their agents registered “ringcetrnal.com.” The court found that RingCentral needed to clarify whether it intended to assert the claim against Nextiva or UnitedWeb and needed facts plausibly suggesting that either company was responsible for the domain registration. The court concluded that the alleged use of fake companies to seed reviews was only consistent with, rather than sufficient to establish, responsibility for the domain. It granted the motion to dismiss this claim with leave to amend.
Unfair competition. RingCentral alleged violations of the unlawful and unfair prongs of California’s Unfair Competition Law. The court held that the unlawful-prong claim failed because the underlying trade-libel, trademark-infringement, and cybersquatting claims were insufficient. It held that the unfair-prong claim also failed because RingCentral’s allegations focused on harm to itself, did not identify an antitrust-law violation, and did not show the type of harm to competition required by the governing standard. The court granted the motion to dismiss the unfair-competition claim with leave to amend.
UnitedWeb’s liability. RingCentral alleged that Nextiva was wholly owned by UnitedWeb. The court considered public records from the Arizona Secretary of State and found that they showed UnitedWeb was not a shareholder of Nextiva, contradicting RingCentral’s allegation. Because RingCentral relied largely on the alleged parent-subsidiary relationship to impose liability on UnitedWeb, the court granted the motion to dismiss UnitedWeb. The dismissal was with leave to amend because a parent-subsidiary relationship was not the only possible basis for liability and the complaint contained some facts suggesting that UnitedWeb could potentially be liable for Nextiva’s actions.
Disposition
The court granted defendants’ motion to dismiss with leave to amend. If RingCentral intended to amend, it had to file a second amended complaint by March 20, 2020. The court also ordered that RingCentral could not add new claims or parties without further leave of the court.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.