Biragov v. Dreamdealers USA LLC

Background

Alexander Biragov and Rentarace, Inc. sued Dreamdealers USA, LLC and Pheenix Inc. over the transfer of the domain name www.exoticracing.com. The plaintiffs alleged federal claims for reverse domain-name hijacking and declaratory relief concerning lawful use of the domain and trademark infringement. They also asserted state-law claims for tortious interference with a contract, deceptive business practices, breach of contract, and unjust enrichment.

The dispute followed an earlier Nevada state-court case in which Dreamdealers sued Biragov and Rentarace over the same domain and alleged trademark violations and deceptive trade practices. The Nevada court issued temporary and preliminary injunctions requiring transfer of the domain to Dreamdealers and restricting use of Dreamdealers’s marks. In September 2019, the Nevada court granted Dreamdealers summary judgment on trademark infringement, false designation, cybersquatting, trademark dilution, and deceptive trade practice claims. It permanently barred Biragov and Rentarace from registering, trafficking in, or using domain names containing Dreamdealers’s marks or confusingly similar variations. Biragov and Rentarace did not appeal.

Motion and Issue Preclusion

Dreamdealers moved to dismiss on several grounds, including lack of personal jurisdiction, preclusion by the Nevada case, failure to state a claim, improper venue, and forum non conveniens. The court chose to address issue preclusion, a rule that prevents a party from relitigating an issue that was already decided in a final judgment. Applying Nevada law, the court explained that the party seeking preclusion had to show that the issues were identical, the earlier ruling was final and on the merits, the parties were the same or legally connected, and the issues were actually and necessarily litigated.

The court found all four requirements satisfied. The Nevada case and the federal claims in this case concerned the same issues about the domain, including whether Rentarace’s registration and use of the domain infringed Dreamdealers’s trademark rights and whether the domain should be returned. The Nevada court had entered final summary judgment on the merits, Biragov and Rentarace were parties to that case, and the relevant issues had been litigated there.

The plaintiffs argued that the earlier case was not fully and fairly litigated because Biragov had represented himself and the Nevada court allegedly did not consider his written position. The court rejected that argument. It held that a party’s lack of a lawyer does not remove the preclusive effect of a final judgment, and it found that the Nevada court had held hearings, provided notice, and considered Biragov’s declaration and briefing.

The court characterized dismissal based on issue preclusion as a non-merits dismissal for purposes of deciding whether to address jurisdiction. It therefore did not decide whether it lacked personal jurisdiction over the case and did not address the Rooker-Feldman doctrine, which Dreamdealers had not raised. The court also did not reach Dreamdealers’s other dismissal arguments.

State-Law Claims and Jurisdiction

The court determined that it lacked diversity jurisdiction over the state-law claims against Dreamdealers because the complaint did not allege the citizenship of Dreamdealers’s members, and the plaintiffs did not show that more than $75,000 was legally in controversy. The complaint identified $1,701 paid for the domain and $1,513 in court fees. The plaintiffs also identified $30,000 in lost profits and attorney’s fees, but the court concluded that those damages were tied to the barred federal reverse-domain-hijacking claim and, even if counted, would not reach $75,000 when added to the other amounts.

The court concluded that it had supplemental jurisdiction because the state and federal claims involved the same core facts. But after dismissing all federal claims against Dreamdealers at the pleading stage, it declined to exercise that discretionary jurisdiction. It dismissed the state-law claims against Dreamdealers without prejudice to refiling in state court.

Disposition

The court granted Dreamdealers’s motion to dismiss. It dismissed the plaintiffs’ federal claims against Dreamdealers with prejudice and their state-law claims against Dreamdealers without prejudice. It denied Dreamdealers’s request for sanctions and attorney’s fees. The Clerk was directed to terminate Dreamdealers from the case; the opinion states that claims against Pheenix remained, and Pheenix had not appeared or been properly served.