## Facts

- Dale Mayberry registered the internet domain name “rl.com” in 1995 through Network Solutions and renewed the registration through July 24, 2005.
- Mayberry later lost control of the domain after registration information was changed without his authorization and the domain was transferred away from him through intermediary transferees.
- John Laxton ultimately acquired the domain and assigned it to North Bay Real Estate, Inc.
- Mayberry assigned his claimed rights in the domain to CRS Recovery, Inc., and Mayberry and CRS sued Laxton and North Bay under state-law theories including conversion, seeking return of the domain and damages.
- The key factual disputes included whether the initial removal from Mayberry occurred by theft (involuntary taking) or fraud (arguably voluntary transfer induced by deception), and what Laxton knew or should have known when purchasing the domain.
- The district court applied California substantive law and granted summary judgment for Mayberry/CRS.
- Laxton and North Bay appealed.

## Issues

1. Whether California or another state’s law (including Virginia) governed the ownership and conversion-related claims under the forum’s choice-of-law rules.
2. Whether summary judgment for Mayberry and CRS was proper under the governing law, given disputes over (a) theft versus fraud in the initial transfer and (b) Laxton’s potential status as an innocent purchaser for value without notice.

## Decision

- The Ninth Circuit affirmed the use of California law under California choice-of-law principles because the appellants failed to carry the burden to show that foreign law should apply.
- The Ninth Circuit reversed the summary judgment for Mayberry/CRS because genuine disputes of material fact remained on theft-versus-fraud characterization and on Laxton’s notice/knowledge relevant to any innocent purchaser defense.
- The case was remanded for further proceedings.

## Legal Principles

- A federal court hearing state-law claims applies the forum state’s choice-of-law rules; in California, courts use the governmental interest analysis rather than a strict place-of-wrong rule.
- Under California choice-of-law rules, the party seeking application of another state’s law bears the burden to show a true conflict and that foreign law should govern; failure to do so results in application of forum law.
- Under California law, a domain name may constitute an intangible property interest that can support a conversion claim.
- California recognizes an innocent purchaser for value defense to conversion where the purchaser lacks actual or constructive notice that the seller obtained the property through fraud.
- California distinguishes void title (from theft/involuntary transfer) from voidable title (from fraud in a voluntary transfer); this distinction can determine whether a later good-faith purchaser can acquire rights superior to the original owner.
- Whether the initial transfer was theft or fraud, and whether a purchaser had notice, are commonly fact-bound questions unsuitable for summary judgment when the record is disputed.

## Conclusion

The Ninth Circuit held that California law governed the dispute over ownership of the “rl.com” domain name, but it vacated summary judgment because unresolved factual disputes about the nature of the domain’s initial taking and the purchaser’s notice prevented judgment as a matter of law.


CRS Recovery, Inc. v. Laxton, 600 F.3d 1138 (9th Cir. 2010)