Court: Court of Appeals for the Ninth Circuit; February 26, 2010; Federal Appellate Court
John Zuccarini, a judgment debtor with numerous Internet domain names, is appealing a decision from the Northern District of California where DS Holdings, LLC (DSH), the assignee of a judgment against him, sought to levy his domain name holdings. The district court appointed a receiver to manage and auction some of these domain names to satisfy the judgment. Zuccarini argues that the Northern District is not the appropriate venue for this action and challenges the appointment of the receiver. The background reveals that Office Depot previously obtained a judgment against Zuccarini in December 2000 under the Anticybersquatting Consumer Protection Act for his registration of "offic-depot.com." After Office Depot could not collect on the judgment, it assigned it to DSH, which registered the judgment and conducted discovery, discovering over 248 domain names owned by Zuccarini, including more than 190 .com domains. The domain name system is explained, detailing how domain names are structured, registered, and maintained, with VeriSign serving as the registry operator for .com and .net domains. The court ultimately affirms the lower court's actions.
Companies known as 'registrars' register domain names with registries on behalf of domain name owners, maintaining ownership records. Ownership transfer of a domain name requires registrar action. 'Registrants' are the individuals or companies that own these domain names and interact with registrars, who in turn interact with registries. VeriSign acts as the registry for .com and .net domains, headquartered in Mountain View, California.
During discovery, DSH discovered that the registrars for Zuccarini's .com and .net domains were based in the U.S., Germany, and Israel. DSH sought a turnover order from the district court to compel these registrars to transfer ownership of certain .com domain names from Zuccarini to DSH, but the court denied the request based on California Civil Procedure Code § 699.040, which prohibits ordering third parties to turn over property. Subsequently, DSH moved for the appointment of a receiver to sell the domain names and use the proceeds to satisfy the judgment, which the district court granted. Zuccarini appealed this decision.
The jurisdiction for the appeal is established under 28 U.S.C. § 1292(a)(2), allowing for appeals from interlocutory orders appointing a receiver. The standard of review for such orders is for abuse of discretion, while legal interpretations are reviewed de novo. DSH did not contest the court's personal jurisdiction over Zuccarini but argued for quasi in rem jurisdiction over Zuccarini's intangible property located in the Northern District of California. This type of jurisdiction, also known as attachment jurisdiction, allows a court to assert authority over property to establish ownership in unrelated disputes. The domain names in question were not part of the underlying litigation against Zuccarini.
A district court can assert quasi in rem jurisdiction over property within its borders, and this jurisdiction can apply to intangible assets. Due process requires a sufficient relationship among the defendant, the forum, and the litigation, which is met in this case by the prior judgment against Zuccarini. The court can take action to realize on a debt in a state where the defendant has property, regardless of whether that state has original jurisdiction over the debt.
In Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., the court elucidates the application of federal and state laws regarding the enforcement of judgments under Federal Rule of Civil Procedure 69. Rule 69(a) directs district courts to adhere to state law for procedures related to executing judgments, including garnishment, mandamus, contempt, and receiver appointments, unless a federal statute applies. Specifically, Rule 66 governs the appointment of receivers in federal court, allowing for the administration of an estate by a receiver to align with historical practices or local rules. The court notes that while Rule 66 is a federal statute and takes precedence over conflicting state laws, it lacks provisions for the location of receiver appointments in execution cases, necessitating reliance on state law.
The California Civil Procedure Code § 695.010(a) states that all property of a judgment debtor is subject to enforcement, while § 699.710 allows for property to be levied under a writ of execution to satisfy a judgment. Additionally, § 708.620 permits the appointment of a receiver to enforce a judgment if it is deemed reasonable for fair satisfaction of the judgment, but does not specify the location for such appointments. Instead, § 699.510(a) clarifies that a writ of execution should be directed to the county where the levy is to be made, with execution issued by the court clerk upon the judgment creditor's application.
Domain names are considered intangible property under California law, as established in Kremen v. Cohen. Although the California Court of Appeal in Palacio Del Mar Homeowners Ass'n, Inc. v. McMahon ruled that domain names do not qualify as property subject to a turnover order due to the inability to take them into custody, it acknowledged the general classification of domain names as intangible property. The court's interpretation of California Civil Procedure Code § 699.040, which requires property to be levied upon through custody, does not apply to § 708.620, which allows for the appointment of receivers. Thus, domain names can be subject to a writ of execution.
Determining the location of intangible property, such as domain names, is context-dependent and may vary for different legal purposes. The Anticybersquatting Consumer Protection Act (ACPA) specifies that in rem jurisdiction over domain names is established in the judicial district where the domain name registrar or registry is located. While the current case is not an ACPA action, the statute supports the notion that domain names are personal property situated where the relevant registrar or registry is found.
Both parties present practical arguments regarding the interests of "justice and convenience" in the context of domain name ownership and jurisdiction. Zuccarini contends that attachments should target registrars, as they inform registries of domain ownership, and asserts that all .net and .com domain names under VeriSign’s control are located in the district of VeriSign's headquarters. DSH acknowledges that ownership transfer instructions must go through registrars but emphasizes that registrars are intermediaries. The registry ultimately controls the database and reflects any ownership changes. DSH argues that requiring judgment creditors to initiate lawsuits in multiple locations where registrars are based would hinder their ability to levy on domain names. Based on the persuasive language of the ACPA and practical considerations for executing judgments, the court concludes that, under California law, domain names are considered located where the registry is situated for quasi in rem jurisdiction purposes. The court also notes that domain names could similarly be deemed located at the registrar's location. Consequently, since VeriSign’s headquarters is in the Northern District of California, the district court possesses quasi in rem jurisdiction over domain names registered with VeriSign for appointing a receiver to aid in executing judgment against their owner. The judgment is affirmed. Additionally, it is noted that amendments to the rule regarding money judgment execution took effect on December 1, 2008, with no substantive changes, only stylistic updates.
