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Go Daddy 'negligent' in handing over ownership of accounts

US judges say domain registrar's conduct 'caused concern'

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Companies that register the names of websites can be held responsible for wrongly transferring their ownership, a US appeals court has ruled.

The judges rejected an appeal from Go Daddy, a domain name registrar and web hosting company, after it had argued that a court had been wrong to rule that it was responsible for handing over the ownership of websites and email accounts belonging to Jeff, Mark and Jill Eysoldt.

"We affirm the trial court's judgment," the appeal court judges ruled.

In the original trial, a jury ruled that Go Daddy had invaded the Eysoldts' privacy and denied their ownership rights to website domain names and email accounts, according to the appeal court papers. The jury ordered Go Daddy to pay the Eysoldts compensation for their wrongdoing. The domain registrar later successfully argued that it should not have to pay extra damages because there was no malice in its actions, the court papers said.

The Eysoldts had registered a number of websites and email addresses under one Go Daddy account registered to Jeff Eysoldt, the court papers said.

Jeff Eysoldt began a business relationship with the owners of Proscan Imaging to operate cosmetic surgery centres called Rejuvenate Aesthetic Laser Centres and registered the doman myrejuvenate.com through his Go Daddy account, the court papers said.

When the relationship turned sour, one of Proscan's owners, Ruth Wallace, phoned Go Daddy, whose call-centre employee, Daniel Baranowsky, helped Wallace enter in details so she could claim ownership of the myrejuvenate.com domain name, the court papers said.

"Baranowsky walked Wallace through every step that she needed to complete to take control of all of [Jeff Eysoldt's Go Daddy account], including all the domain names and email accounts that Jeff had paid for over the years," the court papers said.

"Baranowsky knew that he was transferring complete control of all the domain names to Wallace, even though she had only inquired about Myrejuvenate.com, and that Jeff would be completely excluded from his own account," the judges said.

"When Wallace discovered that Jeff and his family's websites and email accounts were included in the account that Baranowsky had given her control over, she sent an email to Baronowsky asking him to transfer everything but Myrejuvenate.com back to Jeff," the court said.

"Baranowsky did not do so. Instead, he ignored the email. Go Daddy never allowed Jeff to access the account and never returned control of his and his family's websites or email accounts," the court said.

The judges rejected all the points made by Go Daddy in its appeal, including its assertion that the jury was wrong to award compensation because the Eysoldt's had only suffered economic loss.

"The economic-loss doctrine generally prevents recovery of damages in [the law of] tort [wrongdoing] for purely economic loss. The Eysoldts argue that it only applies in negligence cases, not in cases involving intentional torts. We agree," the appeal judges ruled.

The judges also rejected Go Daddy's argument that no compensation should be paid because the Eysoldts had signed up to its terms of service.

The judges rejected the Eysoldts' appeal to reinstate the award of extra damages.

"Much about Go Daddy's conduct causes us concern, particularly Baranowsky's inaction when Wallace emailed him and asked him to return to Jeff everything in the account but Myrejunenate.com," the judges said in their ruling.

"Nevertheless, reckless or intentional conduct is not sufficient to justify the imposition of punitive damages. [The Eysoldts] must show more than the elements of an intentional [wrongful act]. They must demonstrate that the 'wrongdoing is particularly gross or egregious'," the judges ruled.

"We overrule the Eysoldts' assignment of error," the judges said.

Copyright © 2011, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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