Cooley

Michael G. Rhodes
+1 415 693 2181
rhodesmg@cooley.com

October 12, 2018

Gilda R. Turitz
Turitz Dispute Resolution
Four Embarcadero, Suite 1400
San Francisco, CA 94111
Re: LegalForce RAPC Worldwide, P.C. vs. LegalZoom.com, Inc.,
Case No. 01-18-0001-5162
Dear Arbitrator Turitz:

On September 21, LegalForce RAPC Worldwide, P.C. ("RAPC") filed its Statement of
Claim ("SoC") against LegalZoom.com, Inc. ("LegalZoom"). The sprawling SoC—which
spans 63 pages and includes 255 paragraphs and 111 exhibits—asserts nine causes of
action. However, RAPC cannot prevail on five of its nine claims as a matter oflaw.
RAPC's meritless (and persistent) attempt to expand this action controverts the purpose
of arbitration—i.e., to resolve disputes in a "fair, efficient, and economical".manner. (R-
21.) There is nothing efficient or economical about RAPC asserting claims upon which it
cannot prevail. The AAA rules, however, empower an arbitrator to "take such steps as
deemed necessary or desirable to achieve a fair, speedy and cost-effective
resolution." (L-3.) This includes allowing a party to file a dispositive motion if it "is likely
to succeed and dispose of or narrow the issues in the case." (R-33.) A dispositive motion
for judgment on the pleadings is warranted here.'
Regardless of any facts it may uncover through discovery, RAPC's second, third, fourth,
sixth, and eighth causes of action are deficient as a matter of law. Allowing RAPC to
move forward with these legally deficient claims, which no amendment can save, will
unnecessarily increase the costs and complexity of this arbitration. In order fo streamline
the issues, LegalZoom hereby requests leave to file a dispositive motion for judgment on
the pleadings, limited to these five causes of action, for the following reasons.
Count II: Conspiracy to Restrain Trade, Sherman Act, 15 U.S.C.§ 1
RAPC's second cause of action asserts a violation of the Sherman Act Section 1, which
requires proof "1) that there was a contract, combination, or conspiracy; 2) that the
agreement unreasonably restrained trade under either a per se rule of illegality or a rule
of reason analysis; and 3)that the restraint affected interstate commerce." Bhan v. NME
Hosps., Inc., 929 F.2d 1404, 1410 (9th Cir 1991). RAPC's claim demonstrates that it
cannot carry this burden for at least three reasons.
First, RAPC's Section 1 claim is deficient because LegalZoom cannot have an anti-
competitive agreement with the alleged co-conspirators as a matter of law. RAPC claims
that LegalZoom conspired with the USPTO, the State Bar of California, and Beaumont

LegalZoom reserves the right to serve further requests to file dispositive motions later in this proceeding.

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Gilda R. Turitz
October 12, 2018
Page Two
Legal, "a United Kingdom law firm that was acquired by [LegalZoom] in 2015." (SoC
¶ 142-43.)
As to the USPTO and the State Bar of California, RAPC claims that "[LegalZoom]
conspires with the USPTO and the State Bar of California to restrain trade by
RAPC and other lawyer-practitioners by continuing to unlawfully use non-attorneys
knowing that[LegalZoom] will be treated differently from RAPC and lawyers for no
legitimate governmental purposes." (SoC ¶ 149.) Even if this were true, however,
this so-called conspiracy would be immune from liability under the Noerr-
Pennington doctrine. Any "conspiracy" between LegalZoom and these
governmental entities could only arise from LegalZoom's efforts to persuade the
governmental entities to permit its operations, which is the exact type of conduct
immunized by Noerr-Pennington. Through Noerr-Pennington, "the Supreme Court
has exempted from the antitrust laws certain concerted efforts to influence
government officials regardless of anticompetitive purpose." In re Airport Car
Rental Antitrust Litig., 693 F.2d 84, 86 (9th Cir. 1982). This is because "citizens
m ust be immune from some forms of liability for their efforts to persuade
government officials to adopt policy or perform their functions in a certain way."
Kottle v. Nw. Kidney Ctrs., 146 F.3d 1056, 1059(9th Cir. 1998). Therefore, where
a party seeks to influence government decision making—like LegalZoom allegedly
did here—it cannot be liable under the Sherman Act. See id. at 1059-60; Mercy-
Peninsula Ambulance, Inc. v. San Matep Cfy., 592 F. Supp. 956, 965-67 (N.D.
Cal. 1984)(Noerr-Pennington immunized private ambulance providers accused of
conspiring with a county to refuse certification as paramedics to any ambulance
personnel other than those employed by defendants).
2. As to Beaumont Legal, RAPC claims that LegalZoom conspired with Beaumont
Legal to restrain trade in the years 2015 to 2017, i.e. after LegalZoom acquired it.
(SoC ¶ 166.) However, it is black letter law that the coordinated acts of a parent
and its wholly owned subsidiary cannot, in the legal sense contemplated by
Section 1 of the Sherman Act, constitute a combination or conspiracy. Copperweld
Corp. v. Indep. Tube Corp., 467 U.S. 752, 759, 777(1984).
Second, RAPC does not (and cannot) claim that there was any prohibited restraint of
trade. "Because even beneficial business contracts and combinations restrain trade to
some degree, § 1 has been interpreted to prohibit only those contracts or combinations
that are `unreasonably restrictive of competitive conditions."' Int'I Norcent Tech. v.
Koninklijke Philips Elecs. N.V., 2007 WL 4976364, at *5(C.D. Cal. Oct. 29, 2007)(quoting
Standard Oil Co. v. United States, 221 U.S. 1, 58 (1911)). Certain restraints—such as
price-fixing or bid-rigging, which are not at issue here—are considered "per se"
anticompetitive. All other restraints are judged under the rule of reason, which focuses
"on the actual effects that the challenged restraint has had on competition in a relevant
market." Bhan, 929 F.2d at 1410.
Here, RAPC claims that LegalZoom, the USPTO, and the State Bar restrain trade by
allegedly permitting LegalZoom to "use non-attorneys" to file trademark applications.
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Gilda R. Turitz
October 12, 2018
Page Three
(SoC ¶ 149.) Increased competition from LegalZoom, however, is not a restraintof trade.
It is the opposite. An increase in competition—even if it harms some competitors—does
not violate the Sherman Act. Les Shockley Racing, Inc, v. Nat'l Hot Rod Assn, 884 F.2d
504, 508 (9th Cir. 1989)("[S]ection one claimants must plead and prove a reduction of
competition in the market in general and not mere injury to their own positions as
competitors in the market."). Indeed, "[i]t can't be said often enough that the antitrust laws
protect competition, not competitors." United Sfates v. Syufy Enters., 903 F.2d 659, 668
(9th Cir. 1990). Because there has been no reduction in competition, there is no harm
to competition, and no basis for an antitrust claim.
Finally, RAPC lacks standing to assert an antitrust claim because it has not suffered any
alleged "antitrust injury, which is to say injury of the type the antitrust laws were intended
to prevent and that flows from that which makes defendants' acts unlawful." Am. Ad
Mgmt., Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051, 1054 (9th Cir. 1999)(quoting Atl.
Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990)). In order to establish
antitrust injury, RAPC must show that its "loss stems from acompetition-reducing aspect
or effect of the defendant's behavior." Atl. Richfield, at 495 U.S. at 344. Because any
injury that RAPC allegedly suffered is due to increased competition from LegalZoom, it
is not antitrust injury.
Count III: Monopoly to Restrain Trade, Sherman Act, 15 U.S.C.§ 2
RAPC's third cause of action is for unlawful monopoly in violation of the Sherman Act
Section 2. To prevail on its claim, RAPC must prove that LegalZoom: (1) possesses
monopoly power in the relevant market and (2)willfully acquired or maintained that power.
Image Tech. Servs., Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1202 (9th Cir. 1997).
RAPC must also prove antitrust injury. Id. RAPC, however, cannot prove any of these
elements as a matter of law.
First, RAPC's SoC demonstrates that LegalZoom does not have monopoly power in a
relevant market. A relevant market "is the group of sellers or producers who have the
`actual or potential ability to deprive each other of significant levels of business."' Rebel
Oil Co. v. Atlantic Richfield Co., 51 F.2d 1421, 1434 (9th Cir. 1995). RAPC defines the
relevant market as "private online trademark filing services." (SoC ¶ 181.) But this cannot
be a proper market definition because it excludes entities that RAPC acknowledges
compete with LegalZoom and RAPC, such as law firms. (SoC ¶ 172 ("[LegalZoom's]
business model competes with law firm trademark services").)
Second, even if RAPC's market definition were proper, RAPC cannot prove that
LegalZoom has monopoly power in the market for "private online trademark filing
services" because of low barriers to entry. RAPC "must show that new competitors face
high market barriers to entry and that current competitors lack the ability to expand their
output to challenge a monopolist's high prices." Image Tech Servs. v. Eastman Kodak
Co., 125 F.3d 1195, 1208 (9th Cir. 1997). But there are numerous other "private online
trademark filing services" that compete with LegalZoom and RAPC, as RAPC well knows
because it has sued them too. See LegalForce RAPC Worldwide, P.C. et al, v.
Trademark Engine LLC, et al., 17-cv-7303(N.D. Cal.); LegalForce RAPC Worldwide, P.C.
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Gilda R. Turitz
October 12, 2018
Page Four

et al. v. TTC Business Solutions, LLC, et al., 17-cv-7318 (N.D. Cal.); LegalForce RAPC
Worldwide, P.C., et a/. v. FileMy LLC, et al., 17-cv-7331 (N.D. Cal.); LegalForce RAPC
Worldwide, P.C., et al. v. Trademarks Information International LLC, et al.; 17-cv-7354
(N.D. Cal.); LegalForce RAPC Worldwide, P.C. et al. v. DeMassa, 18-cv-0043(N.D. Cal.);
LegalForce RAPC Worldwide, P.C. et al. v. Cheie, et al., 18-cv-0127 (N.D. Cal.);
LegalForce RAPC Worldwide, P.C. et al. v. MyCorporation Business Services, Inc., et al.,
18-cv-0142(N.D. Cal.). The presence of these numerous other competitors, all of which
need little more than a website to provide their services, is compelling proof that there are
low barriers to entry.

Third, RAPC cannot prove the second element of its claim: "the use of monopoly power
`to foreclose competition, to gain a competitive advantage, or to destroy a competitor."'
Image Tech Servs., 125 F.3d at 1208. RAPC does not clearly articulate how LegalZoom
allegedly misused its purported monopoly power. (See SoC ¶ 183("Through the conduct
described herein, [LegalZoom] willfully maintained that monopoly power by
anticompetitive and exclusionary conduct").) In any case, RAPC nowhere identifies any
"use" of monopoly power—i.e. conduct that could not happen if LegalZoom did not have
a monopoly. For example, RAPC complains about LegalZoom's acquisition of Beaumont
Legal (SoC ¶ 182), its use of non-attorneys to file trademark applications (SoC ¶ 149),
and that LegalZoom "terminated" its registration as a legal document assistant (SoC
¶ 189). None of these actions, and nothing else complained of in the SoC, is dependent
on monopoly power. Without any use of monopoly power, much less any misuse of it,
LegalZoom cannot be liable under Section 2.

Finally, forthe reasons discussed above, RAPC cannot prove that it has suffered antitrust
injury. This too forecloses its monopolization claim.

Count IV: California False &Misleading Advertising ("FAL")

RAPC asserts an FAL claim as a competitor to LegalZoom. (See SoC ¶ 201 (alleging
i njury from lost "business opportunities" "taken away" by LegalZoom); see also id. ¶ 200
("Consumers have purchased [LegalZoom]'s services instead of RAPC's services as a
result of their deception.").) However, "a competitor plaintiff must be able to allege its
own reliance on allegedly false misrepresentations to establish standing under the FAL."
A White &Yellow Cab, Inc. v. Uber Techs., /nc., 2017 WL 1208384, at *9(N.D. Cal. Mar.
31, 2017). RAPC cannot prevail on this claim because RAPC did not rely on, and was
not misled by, any of LegalZoom's purportedly false advertisements. Rather, RAPC's
position is that consumers relied upon, and were misled by, LegalZoom's purportedly
false advertisements. (See, e.g., SoC ¶ 51 (alleging "the alt text displayed . ..deceives
customers"); id. ¶ 200 ("[LegalZoom]'s advertisements are likely to and actually have
deceived consumers.")(all emphasis added).) This is inadequate as a matter of law for
RAPC to prevail on its FAL claim.

Count VI: Consumer Legal Remedies Act("CLRA")

RAPC asserts a violation of the CLRA on behalf of Team Messaging Solutions, Inc. (SoC
¶¶ 217, 219, Exhibit 91.) The underlying purpose of the CLRA is "protect consumers
against unfair and deceptive business practices and to provide efficient and economical
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Gilda R. Turitz
October 12, 2018
Page Five
procedures to secure such protection." Cal. Civ. Code § 1760 (emphasis added).
Accordingly, it provides a private right of action to "[a]ny consumer who suffers any
damage as a result of the use or employment by any person of a method, act, or practice
declared to be unlawful by Section 1770" of the CLRA. Cal. Civ. Code § 1780(emphasis
added). The CLRA defines a consumer as "an individual who seeks or acquires, by
purchase or lease, any goods or services for personal, family, or household purposes."
Cal. Civ. Code § 1761(d).
Both RAPC and Team Messaging Solutions, Inc. are businesses. Neither purchased
services from LegalZoom for "personal, family, or household purposes." Id. Neither fits
within the CLRA's definition of a consumer. RAPC is, therefore, legally precluded from
bringing a CLRA claim against LegalZoom, either directly or on behalf of Team Messaging
Solutions, Inc. See In re Myford Touch Consumer Litig., 2016 WL 7734558, at *24(N.D.
Cal. Sept. 14, 2016)(The CLRA "does not apply where the purchaser is an entity rather
than an individual, California Grocers Assn. v. Bank of America, 22 Cal. App. 4th 205,
217 (1994), or where an individual purchases] items for her business and not her own
use." (internal quotation marks omitted)).
Count VIII: Unjust Enrichment
RAPC asserts a claim for unjust enrichment based on the purported benefits "conferred
by claimant RAPC on behalf of customer Team Messaging Solutions, Inc." (SoC ¶ 228.)
However, RAPC cannot prevail on its claim for unjust enrichment because LegalZoom
was not unjustly enriched at RAPC's expense. Indeed, RAPC alleges that it was Team
Messaging Solutions, Inc.—not RAPC—that "suffered actual pecuniary harm in the form
of lost payments made to [LegalZoom]." (SoC ¶ 99, Exhibit 91.) Thus, there are no
circumstances under which RAPC can satisfy the basic elements of an unjust enrichment
claim because any benefit conferred on LegalZoom was conferred by Team Messaging
Solutions, Inc., not RAPC. See McBride v. Boughton, 123 Cal. App. 4th 379, 389(2004)
("[T]he fact that one person benefits another is not, by itself, sufficient to require
restitution. The person receiving the benefit is required to make restitution only if the
circumstances are such that, as between the two individuals, it is unjust for the person
to retain it."(emphasis added and original emphasis removed)); Peterson v. Cel/co P'ship,
164 Cal. App. 4th 1583, 1593-96(2008)(rejecting plaintiffs' argument that "they need not
allege any actual damage to state an unjust enrichment claim").

For the reasons stated above, LegalZoom respectfully requests that the Arbitrator grant
its request to file a dispositive motion as to counts two, three, four, six, and eight in order
to streamline the issues and allow the arbitration to proceed more efficiently.
Sincerelyi

Michael G. ho es

Cooley LLP 101 California Street 5th Floor San Francisco, CA 94111-5800
t:(415)693-2000 f: (415)693-2222 cooley.com