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Baldinos Lock & Key Service, Inc. v. Google, LLC

United States District Court, District of Columbia

January 11, 2018

BALDINO'S LOCK & KEY SERVICE, INC., et al., Plaintiffs,
v.
GOOGLE LLC, et al., Defendants.

          MEMORANDUM OPINION

          TREVOR N. MCFADDEN UNITED STATES DISTRICT JUDGE.

         In 2014, Baldino's Lock & Key Service, Inc. (Baldino's) brought suit against Google LLC and two online directories in the United States District Court for the Eastern District of Virginia. The suit alleged that the defendants had violated the Lanham Act and the Racketeer Influenced and Corrupt Organizations Act (RICO) by listing numerous scam locksmiths on their websites, thus harming the plaintiff's business. Baldino's Lock & Key Serv., Inc. v. Google, Inc., 88 F.Supp.3d 543, 546 (E.D. Va. 2015). The district court dismissed the case, reasoning that the defendants enjoyed immunity under the Communications Decency Act (CDA) as providers of an “interactive computer service” against a suit trying to hold them “liable for content originating with a third-party information content provider, ” and that each count independently failed to state a claim. Id. at 546-47. The Fourth Circuit affirmed the district court's decision without mention of the CDA, since Baldino's had abandoned all RICO claims on appeal, and the Lanham Act claim failed because the district court had “correctly determined” that the “locksmiths who generated the information that appeared on Defendants' websites are solely responsible for making any faulty or misleading representations.” Baldino's Lock & Key Serv., Inc. v. Google Inc., 624 Fed.Appx. 81, 82 (4th Cir. 2015).

         The instant suit relies on similar factual allegations, but with a slightly different array of defendants, plaintiffs, and claims. This time, the suit names search engine providers Google, Yahoo! Inc., and Microsoft Corporation (the Providers) as defendants. Baldino's is now the lead plaintiff in a putative class action, joined by licensed locksmiths from around the country (the Locksmiths), who allege that the Providers are burying legitimate locksmiths under scam locksmiths in search results on the Providers' websites, forcing legitimate locksmiths to pay for premium advertising slots or face the reality of an eroding customer base. First Am. Compl. 8-9 (Compl.). The Locksmiths allege violations of the Lanham Act and the Sherman Antitrust Act, and assert five state law causes of action. In an effort to avoid a repeat outcome, the Locksmiths emphasize that the Providers create mapping information based on scam locksmiths' allegedly false location claims, contending that the Providers have thus created original content not immunized by the CDA. Nonetheless, the Providers move to dismiss, claiming that they enjoy immunity under the CDA for seven of the eight counts, that all counts independently fail to state a claim, and that claim preclusion bars Baldino's allegations against Google. Defs.' Mot. Dismiss i, 4-24. For the reasons that follow, I conclude that CDA immunity bars all of the Locksmiths' claims except for breach of contract, and that the Locksmiths have failed to adequately plead that claim. Accordingly, all counts will be dismissed.

         I. BACKGROUND

         The Locksmiths allege that the Providers control 90% of “organic and map internet search[es] originating in the United States.”[1] Compl. 8. “‘Organic' search results are the unpaid list of links displayed . . . ordinally ranked by their respective ‘relevanc[e]' to a consumer's search term.” Id. According to the complaint, the Providers “knowingly and deliberately flood organic search results [for] queries such as ‘locksmith' . . . with scam locksmith listings” that they know to be fictitious and fraudulent, thus forcing the Locksmiths to pay for advertising highlighted earlier in searches for “locksmith” and related terms. Id. at 8-9.

         According to the complaint, scam locksmiths operate without required licensing, and they “usually lack the experience and specialized tools needed . . . tell[ing] the customer the problem is worse than expected and [then] tak[ing] some drastic, destructive action (like drilling out the caller's lock).” Id. at 13. Exorbitant payment is often required. Id. Because “[l]ocation-based internet search . . . is the primary means by which prospective customers seek locksmith services, ” these “[s]cam locksmiths publish hundreds or thousands of unique websites targeting nearly every heavily populated geographic location . . . around the country, ” portraying themselves as locally-based businesses when they often actually operate via call-centers that dispatch mobile, non-licensed scam locksmiths. Id. at 12-13. In contrast, the Locksmiths allege that they are licensed and/or registered to perform their trade pursuant to the requirements of their respective jurisdictions. Id. at 3-8, 11-12. Because states publish public lists of licensed locksmiths and registered businesses, the Locksmiths allege that the Providers have actual knowledge of which locksmiths are scammers. Id. at 17-18.

         The Locksmiths allege that the Providers not only re-publish information generated by the scam locksmith websites, but also “enhance those listings . . . by creating brand new original content not found on the original web sites.” Id. at 16. Specifically, the Providers' “original content includes fictitious addresses, photos, map locations, and map pinpoints for scam locksmiths as well as driving directions to and from the fictitious locations.” Id. at 19. For example, “if a scam locksmith states that it is located in Falls Church, Virginia, but gives no location information, the search engine will create a map and arbitrarily place a pinpoint someplace in Falls Church. The map and pinpoints are created entirely by the search engine provider, not by ‘another.'” Opp. to Defs.' Mot. Dismiss 5 (Opp.).

         By thus burying legitimate locksmiths under scam listings that appear legitimate and local, the Locksmiths allege that the Providers have caused “a large number of formerly viable locksmiths” to go “out of business entirely, ” while the Plaintiffs themselves “have lost 30-60% of their gross revenue since 2009 in the specific business arena of outbound consumer service calls.” Compl. 9. And since the Providers not only list the scammers, but also allow scam locksmiths to themselves purchase advertising, the Locksmiths allege that the Providers pressure them to pay for expensive advertising. Id. at 30. If the Providers banned scam locksmiths from their search results, the licensed Locksmiths aver that they would likely appear among the first local results. Id. at 29.

         Furthermore, the Locksmiths allege that the Providers collude in adopting this policy towards the scam locksmiths, thus abusing their monopoly power and restraining trade in violation of federal antitrust laws. Id. at 26-28. The Providers also allegedly violate the Lanham Act by making false representations pertaining to the scam locksmiths, and commit five violations of state law: fraud, tortious interference with an economic advantage, unfair competition, breach of contract, and conspiracy. Id. at 28-37. The Locksmiths seek injunctions that would require the Providers to stop publishing the scam locksmiths' information in jurisdictions where licensing is required, as well as damages, attorney fees, and costs associated with the litigation. Id. at 37-38.

         Baldino's originally filed this suit on its own behalf in December 2016. In January 2017, the Court granted leave to amend the complaint. The first amended complaint, currently operative, added 13 new locksmiths and the class action allegations. Microsoft successfully moved to stay the claims against it made by Baldino's and Joe East Enterprises pending a decision on the motion to dismiss, on the ground that contracts with those parties arguably required that all such claims be decided in arbitration. The Providers now jointly move to dismiss the remaining claims.

         II. LEGAL STANDARDS

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim crosses from conceivable to plausible when it contains factual allegations that, if proved, would ‘allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Banneker Ventures, LLC v. Graham, 798 F.3d 1119, 1129 (D.C. Cir. 2015) (alteration omitted) (quoting Iqbal, 556 U.S. at 678). In undertaking this inquiry, a court will “accept all the well-pleaded factual allegations of the complaint as true and draw all reasonable inferences from those allegations in the plaintiff's favor.” Id.

         III. ANALYSIS

         A. Immunity Under the Communications ...


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