Monday's decision stems from a long-running suit over Internet marketing and the alleged conversion of traffic.
FriendFinder's AdultFriendFinder division, a competitor of Epic Cash’s EpicCams.com website, is accused of having used Zango’s services to have diverted traffic away from Epic Cash sites and converted Epic's business to its benefit.
Epic alleges that Zango had caused advertisements to appear when users attempted to access Epic's websites. The pop-up ads blocked the content on Epic's websites and promoted Zango's services, the suit said.
The suit, filed at Santa Clara Superior Court, moved on to the California Court of Appeals after FriendFinder appealed the lower court's decision denying its petition to force Epic Cash in arbitration because FriendFinder had affiliate deals with both Epic and Zango.
But on Monday the appeals court rejected FriendFinder's appeal, ruling the affiliate agreements forcing arbitration were outside the scope of arbitration causes.
"[B]ecause Epic's lawsuit was against not just Friendfinder but also [Zango], which was not a party to an arbitration agreement with Epic, and there was a risk of conflicting findings if Epic's lawsuit against that defendant proceeded in court while the Epic/FriendFinder dispute was arbitrated, the superior court had discretion to refuse to enforce the arbitration agreement," the court said in its decision.
Gary Kaufman of Los Angeles-based Kaufman Law Group, which represents Epic, said that Monday's ruling clears the way for the case to proceed in front of jurors.
“This is a big day for Epic Cash," Kaufman told XBIZ. "The court of appeal agreed with both Epic Cash and the superior court that this matter did not belong in arbitration. This now clears the way for Epic Cash to vindicate its claims before a jury and receive compensation for Zango and AdultFriendFinder’s wrongful acts.”
Epic Cash has asked for $750,000 in damages in the case filed at Santa Clara Superior Court.
FriendFinder officials did not immediately respond for comment on the suit.