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East TX Jury Renders Take-Nothing Verdict in Domain Address Battle

February 10, 2020 Natalie Posgate

A federal jury in Sherman has delivered a take-nothing defense verdict for domain name company Sea Wasp LLC, which had been sued by one of its customers. 

The verdict, entered last Tuesday, marks the end to three months of chaos for Bradley Arant lawyers Rob Sayles and Mark Strachan after the owners of Sea Wasp hired them on the case just this past November. 

Sea Wasp is a domain name registrar company: It manages the reservation of domain names by other companies. In 2017, Sea Wasp purchased certain assets from Australia-based company Dark Blue Sea, including 700,000 domain names. Of those, 90,000 belonged to Domain Protection, the plaintiff in this case. 

Domain Protection’s litigation against Sea Wasp stems from underlying disputes with third parties over the ownership of some of the domain names. Sea Wasp’s predecessor company had issued an executive lock on the domain names while the underlying litigation was underway, which prevented Domain Protection from liquidating the assets.

Domain Protection claim that Sea Wasp interfered with its business when Sea Wasp restored an executive lock on the domain names after more litigation surfaced. When Domain Protection filed suit in 2018, it alleged that Sea Wasp violated the Texas Theft Liability Act and Stored Communications Act, and that Sea Wasp tortiously interfered with Domain Protection’s business. 

Domain Protection argued Sea Wasp owners Gregory Faia and Vernon Decossas were also liable, so part of the legal dispute focused on piercing the corporate veil. 

While U.S. District Judge Amos Mazzant did find liability against Sea Wasp before the case proceeded to trial, the jury still needed to determine what damages, if any, should be awarded to Domain Protection and whether the corporate veil would be pierced.

Sayles said that his side explained to the jury that putting an executive lock in place allowed Sea Wasp to remain neutral during the underlying disputes. Sayles said his side also presented evidence that Sea Wasp placed all revenue generated by the domain names in an account for Domain Protection to benefit from. Sayles said this directly challenged Domain Protection’s damages model, which totaled $510,000, and undermined the claim that Sea Wasp pocketed the money for itself.

After two days of evidence and one hour of deliberation, the jury decided to award Domain Protection zero damages. And before jury deliberation began, the defense successfully argued that Faia and Decossas should be dismissed from the lawsuit. 

“We were proud to represent and defend our individual clients as well as Sea Wasp in this case,” Sayles said. “We think the jury did a great job of listening to the evidence and coming to the conclusion that Domain Protection had not been damaged by Sea Wasp’s conduct. We’re pleased with the verdict.”

Sayles added that the win was particularly gratifying due to the late addition of him and Strachan in the case.

“Jumping into a case shortly before trial creates unique challenges,” he said. “Our team worked hard on short notice.”

Sayles said attorneys’ fees is an issue still pending in the litigation. In this instance, attorneys’ fees are allowable to the prevailing party for claims tied to the Texas Theft Liability Act. Although his side has not yet briefed the issue, Sayles said their position is that Domain Protection is not the prevailing party because “you’re not the prevailing party if you win liability but don’t show any damages.”

Dallas attorneys Gary Schepps and Herbert Smith, who represent Domain Protection, did not respond to a request for comment. 

Sea Wasp’s trial team also included Louisiana lawyer David Vinterella of Faia and Associates, who also serves as the company’s general counsel. 

Natalie Posgate

Natalie Posgate covers pro bono work, public service and diversity within the Texas legal community.

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