Register.com Settles Class Action Suit

Michael Zurakov filed a lawsuit based on Register.com’s practice of initially pointing newly registered domain names to a “Coming Soon” Page, which informs Internet users that the domain name has been recently registered by Register.com and provides hyperlinks to some of Register.com’s services, as well as the services of others. Plaintiff alleged that Register.com’s pointing of domain names to the Coming Soon Page was not adequately disclosed to him, and improperly deprived him of the benefits of the domain name he registered.
On April 13, 2001, Register.com filed a motion to dismiss the Complaint, denying any violation of law and claiming that the page was provided as a benefit to registrants in accordance with standard industry practices. On July 25, 2001, The Supreme Court, New York County, issued an order dismissing the Complaint in its entirety. Plaintiff appealed.

On April 22, 2003, the Appellate Division of Supreme Court, New York County issued an opinion upholding the dismissal of Plaintiff’s claim for unjust enrichment, but reinstating his claim for breach of contract and deceptive trade practices. It held that: (1) agreement to register domain name conferred upon the registrant’s exclusive right to control the domain name, and (2) fact issues remained as to whether a reasonable consumer would have been aware that registration gave registrar right to use domain name for advertising purposes. The court noted that the defendant’s discretionary right to use the domain name did not insulate it from the duty of good faith and fair dealing. (Zurakov v. Register.Com, Inc. 760 N.Y.S.2d 13, N.Y.A.D. 1 Dept., 2003) http://www.courts.state.ny.us/reporter/slips/13230.htm

On August 12, 2003, Register.com issued a notice of Class Action Settlement and Hearing on its website(http://www.register.com/zurakov/notice.html), notifying all individuals and entities who paid for the registration of an internet domain name using Register.com, Inc.’s services during the period January 30, 1998 through March 6, 2001, of its settlement proposal and also giving opportunity to file a request for exclusion in case any member of the settlement class wishes to opt out from this settlement.

In its notice of class action settlement, Register.com agrees to provide each Class member with a certificate for $5.00 (five dollars) off the costs of Register.com’s domain name registration fees or renewal fees. Register.com also agrees to continue to expressly disclose in its Services Agreement its use of the “Coming Soon” Page. At the same time, Register.com agrees to pay Zurakov $12,500.00 for his services as the representative of the Settlement Class, as well as reasonable Class Counsel attorneys’ fees and costs in an amount not to exceed $642,500.00, subject to Court approval.

On November 3, 2003, the Court will consider approval of the proposed Settlement and determine whether the proposed Settlement is fair, reasonable, adequate and in the best interests of the Settlement Class; whether the Settlement Class has been adequately represented by Plaintiff and Class Counsel; and whether an order and final judgment should be entered approving the proposed Settlement.

Zurakov v. Register.Com, Inc. 760 N.Y.S.2d 13, N.Y.A.D. 1 Dept., 2003.

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