Bitseller Expert Limited v. Verisign Inc., 1:19-cv-01140

Background

Accuracy (a British Virgin Islands company) owned the domain <radaris.com>; Bitseller (a Cyprus company) operated the website hosted at that domain.
In a separate class action (Huebner), the Northern District of California entered a default judgment directing transfer of certain “Subject Domain Names,” expressly including radaris.com, to the class plaintiffs.
EuroDNS (the registrar) refused to transfer; the Huebner plaintiffs asked Verisign (the .com registry) to effect the transfer; Verisign changed the registry record on February 26, 2018 and the site went offline.
Accuracy and Bitseller filed an emergency motion in the California case; the California court amended its order and plaintiffs regained control of the domain shortly thereafter.
Plaintiffs then sued Verisign in the Eastern District of Virginia for conversion and trespass to chattels; Verisign moved to dismiss, arguing it reasonably relied on a facially valid court order and thus had lawful justification.
The Virginia court held, as a matter of law, that Verisign reasonably relied on the default judgment order, negating the wrongful-conduct element of the torts, and granted the motion to dismiss.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Subject-matter jurisdiction (diversity)	Plaintiffs did not plead citizenship details for Accuracy and Bitseller or the John Doe defendants.	Declarations show plaintiffs are foreign (aliens) and defendants are U.S. citizens, creating complete diversity under §1332(a)(2).	Court found a prima facie showing of complete diversity and exercised jurisdiction.
Whether Verisign reasonably relied on the California default judgment	The Default Judgment was ambiguous or invalid as to radaris.com; Verisign should have investigated, sought clarification, or given notice before transferring.	The Default Judgment unambiguously named radaris.com and directed registries to transfer; Verisign was entitled to rely on a facially valid court order.	Court held the order was clear and enforceable on its face; Verisign reasonably relied and compliance furnished lawful justification, defeating conversion/trespass claims.
Choice of law (Virginia v. California substantive law)	California law should apply because Huebner plaintiffs were in California and transfer related to that action.	Virginia law applies because the registry is in Virginia and the last act occurred there.	Court declined to resolve the choice-of-law question because the result (dismissal) follows under either state’s law.
Validity of the Default Judgment (jurisdiction over foreign registrant)	The California court lacked jurisdiction over a foreign registrant and the order was therefore invalid; reliance was unreasonable.	The Default Judgment was final and facially authorized transfer of radaris.com, so third parties could rely on it.	Court treated the judgment as valid and final on its face at the time Verisign acted; reliance was reasonable.

Key Cases Cited

Wheeling Hosp., Inc. v. Health Plan of the Upper Ohio Valley, Inc., 683 F.3d 577 (4th Cir. 2012) (standard for facial subject-matter-jurisdiction challenges)
Kerns v. United States, 585 F.3d 187 (4th Cir. 2009) (distinguishes facial and factual jurisdictional attacks)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state plausible claim to avoid dismissal)
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) (federal courts apply state choice-of-law rules)
Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273 (4th Cir. 2009) (lex loci delicti for tort choice-of-law analysis)
Quillen v. Int'l Playtex, Inc., 789 F.2d 1041 (4th Cir. 1986) (place of last act governs lex loci delicti)
W.R. Grace Co. v. Local Union 759, 461 U.S. 757 (1983) (public policy requires obedience to facially valid judicial orders)
Hawkins v. i-TV Digitalis Tavkoziesi zrt., 935 F.3d 211 (4th Cir. 2019) (characterizing foreign entities for diversity jurisdiction)