RingCentral, Inc. v. Nextiva, Inc.

Background

RingCentral and Nextiva compete in the cloud-based business communications market. RingCentral sued Nextiva over alleged tortious interference, defamation, trade libel, unfair competition, and cybersquatting under the federal Lanham Act. Nextiva asserted counterclaims for California unfair competition and false advertising under California law and false advertising under the Lanham Act. The opinion states that Nextiva’s trade-libel and intentional-interference counterclaims had previously been dismissed.

RingCentral alleged that Nextiva, through independent contractor Baruch Labunski and others, created fake online identities, registered domains using false information, operated fraudulent websites, and posted fake negative reviews of RingCentral and fake positive reviews of Nextiva. Nextiva alleged that RingCentral used misleading comparison and review webpages and manipulated review information.

Both sides moved for summary judgment. Summary judgment is a ruling without a trial that is proper only when the evidence shows no genuine dispute about a fact that could affect the result. The court must view disputed evidence in favor of the party opposing the motion.

RingCentral’s Motion on Nextiva’s Counterclaims

The court denied RingCentral’s motion in its entirety. It found genuine factual disputes concerning Nextiva’s remaining false-advertising and unfair-competition counterclaims, including disputes about RingCentral’s review webpage, the accuracy of the ratings, the role of third-party service BirdEye, causation, and economic injury.

The court did not analyze Nextiva’s theory based on RingCentral’s comparative-pricing webpage because Nextiva had notified the court that it no longer intended to pursue that theory and the issue was therefore moot.

Nextiva presented expert evidence that traffic to RingCentral’s webpages coincided with reduced Nextiva sales and that Nextiva might have lost market share and millions of dollars in profits. The court held that a jury should decide whether consumers relied on the allegedly false information, changed providers or chose a competitor, and caused Nextiva to lose potential profits.

The court also denied summary judgment on RingCentral’s defense that Nextiva had acted improperly under the unclean-hands doctrine. The court found factual disputes concerning that defense and held that they could not be resolved as a matter of law.

Nextiva’s Motion on RingCentral’s Claims

The court granted Nextiva’s motion in part and denied it in part. It granted the motion as to RingCentral’s defamation and trade-libel claims based on allegedly fake positive reviews of Nextiva. Those reviews concerned Nextiva alone and did not expressly or impliedly refer to RingCentral. The court also found that RingCentral had not shown that consumers reasonably understood the positive reviews as defamatory statements about RingCentral. The court rejected RingCentral’s argument that the reviews were actionable as part of a broader “defamatory scheme.”

The court denied summary judgment on RingCentral’s defamation and trade-libel claims based on fake negative reviews of RingCentral. It found that those reviews did concern RingCentral.

The court also denied summary judgment on RingCentral’s trade-libel claim based on disputes about causation and special damages. The court held that RingCentral had identified particular customers and transactions but that factual questions remained about whether those customers saw the allegedly fake reviews and whether the reviews materially influenced their decisions.

The court denied summary judgment on RingCentral’s claim for intentional interference with prospective economic advantage. It found factual disputes about whether the reviews caused harm, whether RingCentral suffered special damages, and whether Nextiva knew about the business relationships allegedly affected.

The court denied summary judgment on RingCentral’s California unfair-competition claim. RingCentral presented evidence creating a factual dispute about whether the alleged conduct was likely to happen again, including disputes about whether Nextiva had fully discontinued the conduct and whether its remedies were company-wide.

Finally, the court denied summary judgment on RingCentral’s cybersquatting claim. The parties did not dispute that Labunski registered the domain name “ringcetrnal.com” and created associated email addresses; they disputed whether his actions could legally be attributed to Nextiva. The court found enough evidence for a jury to determine whether Labunski acted as Nextiva’s agent with implied actual authority or whether Nextiva negligently supervised him. The court also denied Nextiva’s challenge to RingCentral’s standing because factual disputes remained about whether the conduct caused RingCentral reputational harm.

Disposition

The court denied RingCentral’s motion for summary judgment in its entirety. It granted in part and denied in part Nextiva’s motion for summary judgment. The only part granted was as to RingCentral’s defamation and trade-libel claims concerning allegedly fake positive reviews of Nextiva. The opinion leaves the remaining claims and counterclaims identified in the ruling for further proceedings.

Judge

The order was issued by United States Magistrate Judge Nathanael Cousins on June 17, 2021.