Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-02935/USCOURTS-cand-3_16-cv-02935-9/pdf.json

Nature of Suit Code: 365
Nature of Suit: Personal Injury - Product Liability
Cause of Action: 28:1332 Diversity-Personal Injury

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JANE DOE 1 and JANE DOE 2,

Plaintiffs,

 v.

XYTEX CORPORATION, a Georgia

Corporation, XYTEX CRYO

INTERNATIONAL, LTD., a Georgia

Corporation, MARY HARTLEY, an

individual, J. TODD SPRADLIN, an

individual, and DOES 1–25, inclusive,

Defendants. /

No. C 16-02935 WHA

FINDINGS OF FACT AFTER

EVIDENTIARY HEARING

AND ORDER DENYING

DEFENDANTS’ MOTION

TO TRANSFER AND GRANTING

IN PART AND DENYING IN

PART STAY OF DISCOVERY

INTRODUCTION

In this product-liability action involving the sale of human semen for artificial

insemination, one defendant moved to enforce a forum-selection clause in the usage agreement

on its website. An order rejected defendant’s argument that they had provided reasonable

notice of the usage agreement but allowed discovery into whether plaintiffs had actual notice of

the agreement. The parties’ briefs following that discovery revealed inappropriate conduct at

the deposition of one of the plaintiffs by counsel for both sides, so the Court held an evidentiary

hearing to complete the testimony then invited supplemental briefing. 

After the evidentiary hearing, while the supplemental briefing proceeded, defendant

brought this motion to stay discovery pending review of its petition to consolidate this action

with several others in multi-district litigation. 

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For the Northern District of California

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To the extent stated below, defendants’ motion to transfer is DENIED, and their motion

to stay discovery is GRANTED IN PART AND DENIED IN PART.

STATEMENT

Plaintiffs Jane Doe 1 and Jane Doe 2, a same-sex couple, are San Francisco residents. In

2004, they registered to use xytex.com, a website operated by defendant Xytex Corporation. 

Xytex, through its website, sold human semen for use in artificial insemination.

Xytex Corporation posted a written “Site Usage and Information Agreement” on its

website. That agreement could be accessed from xytex.com by first pulling down a menu

labeled “About Us” on the main toolbar of the website, then selecting the “Site Usage” button

that appeared in that menu. The “About Us” menu appeared second in a toolbar of six menus,

including “Home,” “Patient Section,” “Physicians Info,” “Become a Donor,” and “XTS: Xytex

Tissue Services.” The toolbar appeared in the same location on every page of the site.

An image of the front page of the website as it appeared at the time in question is

reproduced below (Gannon Decl., Exh. B at *002):

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The following is an image of the “About Us” pull-down menu (Gannon Decl., Exh. C

at 1):

Users could browse the website and register for and purchase Xytex’s services without

regarding or affirmatively consenting to the terms of the agreement. Users of Xytex’s website

and services purportedly assented to the terms of the site-usage agreement simply by “using,

viewing, transmitting, caching, storing and/or otherwise using the Site, the services or functions

offered in or by the Site and/or the contents of the Site in any way . . .” (Scholer Decl., Exh. B.,

Section I).

Section XV of the agreement included a choice-of-law and forum-selection provision, as

follows:

This Agreement shall be governed by and construed in accordance

with the laws of the State of Georgia, without giving effect to any

principles of conflicts of law. You agree that any action at law or

in equity arising out of or relating to the terms of this Agreement

shall be filed only in the state or federal courts located in

Richmond County, Georgia and you hereby consent and submit to

the personal jurisdiction of such courts for the purposes of

litigating any such action.

The “Patient Section” of Xytex’s website included a “Frequently Asked Questions”

page. One response on that page directed patients to “access [Xytex’s] website and thoroughly

review [its] services” (ibid.).

After registering, plaintiffs reviewed the profiles of the sperm donors listed on Xytex’s

website and selected Donor #9623, whose profile stated he held a bachelor’s degree, a maser’s

degree, and that he had been working toward a Ph.D. Jane Doe 1 underwent an artificial

insemination procedure using sperm from Donor #9623 in approximately 2005 and gave birth to

a child, P.S., who is now nine years old.

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In April 2015, plaintiffs read an article that described a lawsuit against Xytex involving

Donor #9623, which lawsuit claimed that the donor’s profile was false and included material

omissions regarding the donor’s education, mental health, and criminal history. In April 2016,

plaintiffs commenced this action alleging that Xytex breached various duties and contractual

obligations by failing to verify the information in Donor #9623’s profile.

Xytex moved to transfer the action to the Southern District of Georgia based on the

forum-selection clause in the agreement on its website. An order held that Xytex had not given

reasonable notice of the agreement so the forum-selection clause within it could only be

enforceable if plaintiffs had actual notice of the agreement. The record on Xytex’s motion did

not adequately address that question, so the parties were invited to conduct discovery on that

issue (as well as the actual appearance of the website in 2004). Specifically, the order allowed

Xytex to conduct four-hour depositions of each plaintiff.

Xytex deposed both plaintiffs. All agree that Doe 2 did not have actual knowledge of

the site-usage agreement on Xytex’s website, because she deferred to Doe 1’s decisions

regarding the website. At Doe 1’s initial out-of-court deposition, counsel for Xytex spent

approximately one hour laying foundation regarding Doe 1‘s usage of Xytex’s website, in the

hope of implying actual knowledge of the site-usage agreement.

Throughout the deposition, plaintiffs’ counsel made speaking objections, advancing

their interpretation of the scope of discovery allowed by the order. Specifically, plaintiffs’

counsel the contended the deposition could only directly address Doe 1’s actual knowledge of

the site-usage agreement. Plainly, plaintiffs’ counsel were incorrect — Xytex was entitled to

lay foundation regarding Doe 1’s broader experience on the Xytex website to trigger her

memory, establish a basis from which one could infer she had knowledge of the site-usage

agreement, or develop impeachment material. 

Plaintiffs’ counsel’s objections came to a head when they said, on the record and in the

presence of the witness, “just ask her if she ever saw the site usage agreement and she will say

no, she never saw the site usage agreement” (Doe 1 Dep. at 5–6). This constituted witness

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coaching and interfered with defense counsel’s attempt to go behind an obviously lawyerprepared narrative.

For their part, counsel for defendant ambushed Doe 1 with questions about a 2015 siteusage agreement, although order directed the deposition of Doe 1 “on the issue of actual

knowledge of the site-usage agreement and the forum-selection clause therein prior to

purchasing” the sperm from Xytex and on “the appearance of the website in 2004” (Dkt. No. 27

at 8). Xytex had never mentioned the 2015 agreement in its motion to transfer. 

Doe 1 testified that she could not recall which parts of the Xytex website she

specifically read but that she had not viewed the site-usage agreement (Doe 1 Dep. at 120–39).

In light of the foregoing, defendants asked for an opportunity to conduct a second

deposition or for an inference that Doe 1 had actual knowledge of the site-usage agreement. 

Instead, an order set an evidentiary hearing at which defendants could conduct direct

examination of both plaintiffs with the judge presiding (Dkt. No. 40). Both sides behaved at the

evidentiary hearing.

Xytex only called Doe 1 to testify at the evidentiary hearing. She testified that she

visited Xytex’s website on the recommendation of a friend and in part because she wanted the

donor to remain anonymous and separate from the parent-child relationship (as compared to a

sperm donation from a friend, who would likely remain a part of the child’s life). Doe 1

browsed the website primarily with the goal of finding a donor that matched her criteria, but she

also sought information about how long Xytex had been in business, its process for screening

for diseases, inter alia (Doe 1 Dep. at 10, 33).

Doe 1 acknowledged she did not know where the information she sought would be

located on Xytex’s website when she first visited. She testified that she focused on the “Patient

Section” of the website and expected she could find the answers she needed, since she was a

patient. She perused the Frequently Asked Questions page within that section, but could not

recall reading the response directing her to thoroughly review Xytex’s services (Doe 1 Dep. at

22, 30–35).

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The parties submitted supplemental briefs following the evidentiary hearing with

argument about the evidence from the deposition and the testimony at the hearing. Although

the briefing schedule invited the parties to reply to the other’s supplemental brief, neither did

so.

* * *

In September, Xytex separately moved to transfer this action and five others for

coordinated or consolidated pretrial proceedings before the Judicial Panel on Multidistrict

Litigation. The hearing on the motion before the JPML is scheduled for December 1. Xytex

now moves to stay discovery in this action pending the decision by the JPML. Fact discovery

in this action closes on July 31, 2017.

This order follows full briefing, an evidentiary hearing, and supplemental briefing on the

motion to transfer and full briefing on the motion to stay.

ANALYSIS

1. MOTION TO TRANSFER.

Xytex seeks to enforce the forum-selection clause in its site-usage agreement and to

transfer this action to the District of Georgia. Notwithstanding the choice-of-law provision in

the agreement, both sides apply California law, not Georgia law, to the question of whether any

agreement was ever formed.

“[W]here there is no evidence that the website user had actual knowledge of the

agreement, the validity of the browsewrap agreement turns on whether the website puts a

reasonably prudent user on inquiry notice of the terms of the contract.” Nguyen v. Barnes &

Noble Inc., 763 F.3d 1171, 1177 (9th Cir. 2014). A prior order held that Xytex’s website failed

to put a reasonably prudent user on inquiry notice of the terms of its site-usage agreement. 

Thus, the only question is whether our plaintiffs had actual knowledge of the agreement. It is

Xytex’s burden to prove knowledge of the the agreement. Ibid.

Xytex argues that Doe 1’s testimony at her deposition and at the evidentiary hearing

demonstrate that she had actual knowledge of the site-usage agreement. Specifically, it argues

that she browsed Xytex’s website with the goal of finding answers to numerous questions (in

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addition to her primary goal of finding a donor), and she did not know where those answers

resided on the website. Thus, Xytex argues, she must have become aware of the site-usage

agreement as she became acquainted with the layout of the website. Nevertheless, Doe 1

testified, as she did at her deposition, that she sought answers via the “Patient Section” of the

website. Nothing in Doe 1’s testimony, however, suggested she ever viewed or learned of the

site-usage agreement.

Xytex argues that “Doe 1 had constructive notice of the Site Usage agreement, because

she had to have looked at the primary header tabs” (Def.’s Supp. Br. at 4). But the primary

header tabs included no indication whatsoever of an agreement that purported to govern Doe 1’s

usage of Xytex’s website and services. Xytex further argues, “the only way for Doe 1 to obtain

answers about Xytex experience, warranties, background and primary contact information

required her to see the Site Usage tab” (ibid.). But that is mere attorney argument. Nothing in

the record supports the contention that Doe 1 could only have obtained contact information

about Xytex by browsing the site in a manner that displayed the Site Usage menu option nested

within the About Us option. In fact, certain contact information was available on the Frequently

Asked Questions page and the Payment Options page, both located in the Patient Section

(Gannon Decl., Exh. B at *041, *052). In any case, the label “Site Usage” did not adequately

indicate the contractual nature of the page to which it linked — it simply indicated that it linked

to information about how to use Xytex’s website. Thus, even if Doe 1 saw the menu beneath

the “About Us” primary tab and the “Site Usage” menu option, that would do nothing to

establish her knowledge of the site-usage agreement.

Xytex alternatively argues that plaintiffs’ counsel’s speaking objections and outright

coaching at Doe 1’s deposition warrant the inference that Doe 1’s testimony would otherwise

have indicated that she did have actual knowledge of the site-usage agreement. This argument

has more traction. In light, however, defendants’ counsel’s questioning outside the scope of the

designated subject of the deposition, and in light of the evidentiary hearing on the issue of

actual notice of the 2004 site-usage agreement, the Court was able to assess Doe 1’s credibility

and to ensure that her testimony was not improperly influenced by her counsel. This procedure

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gave defendants a full and fair opportunity to develop their record. No further remedy is

warranted.

Finally, Xytex argues that Doe 1’s lack of memory about the agreement must be due to

the fact that its terms were immaterial to her decision, rather than the fact that Doe in fact never

had actual notice of the agreement. That is mere attorney argument. There is simply nothing in

the record from which to infer that Doe 1 ever browsed the About Us tab, much less viewed the

page behind the Site Usage menu option. Defendants’ hypothetical explanation for Doe 1’s

lack of memory cannot make up for the lack of basis to infer that she ever knew the facts

purportedly forgotten.

This order finds that neither Doe 1 nor Doe 2 had actual knowledge of the 2004 siteusage agreement. Xytex’s motion to transfer is therefore DENIED.

2. MOTION TO STAY DISCOVERY.

Xytex also moves to stay discovery pending a decision by the JPML on Xytex’s petition

to consolidate this action in an MDL with five other actions proceeding across the country. It

argues that a stay is warranted pursuant to the Court’s inherent power to “control the disposition

of the causes on its docket with economy of time and effort for itself, for counsel and for

litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936); see also Clinton v. Jones, 520

U.S. 681, 707 (1997).

A complete stay of discovery is not warranted. We are still in the early stages of

discovery, and the only discovery taken so far pertained to Xytex’s motion to transfer. The

Court is sympathetic to the possibility that discovery in this case may ultimately be duplicated

in the consolidated proceedings should an MDL be instituted, but there remains considerable

discovery unique to our plaintiffs that will not be duplicated in any MDL proceedings. The

work has to be done at some point, and it might as well be now. 

Out of deference to the JPML, however this order postpones any discovery relating only

to Donor #9623 and how Xytex processed his donor information until after the JPML decision

or December 30, 2016, whichever comes first. However, plaintiffs may propound ten simple

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interrogatories on any subject (no subparts) and there shall be no stay as to answering them.

Otherwise, discovery may go forward on all other subjects.

CONCLUSION

Defendants’ motion to transfer is DENIED, and their motion to stay discovery is

GRANTED IN PART AND DENIED IN PART. 

IT IS SO ORDERED.

Dated: December 1, 2016. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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