Friday, May 21, 2010
Court Awards $800,000 in Fees to Prevailing CAN-SPAM Act Defendant
By STEVEN M. ELLIS, Staff Writer
A federal magistrate in San Francisco has ordered a Northern California Internet service provider to pay over $800,000 in attorneys’ fees to an Internet marketing company in order to deter abuse of the CAN-SPAM Act’s private right of action for profit.
U.S. Magistrate Judge Joseph C. Spero of the Northern District of California on Wednesday said ASIS Internet Services acted unreasonably when it sued online marketer Azoogle based on little more than speculation that the company was behind some 10,000 deceptive and unsolicited e-mails ASIS received during a three-week period in 2005.
Noting that ASIS continued to litigate even as discovery turned up no evidence connecting Azoogle to the e-mails, previously initiated over 20 similar actions and sued over 20 defendants in its case against Azoogle, Spero wrote that the award was “necessary to deter [ASIS] and other plaintiffs hoping to profit from the CAN-SPAM Act from casting such a wide net.”
The act was passed by Congress in 2003 and its name is an acronym for “Controlling the Assault of Non-Solicited Pornography And Marketing.” It provides a limited right of action to “Internet access services” adversely affected by e-mails violating the act who can demonstrate that the defendant sent the e-mail at issue or paid another person to send it knowing it would violate the act.
Most of the other defendants settled with ASIS, but Azoogle—an online marketer through which “lead vendors” and providers channel leads to sellers of goods and services—fought the suit and obtained summary judgment and dismissal of all claims in 2008.
The district court, in a decision affirmed by the Ninth U.S. Circuit Court of Appeals, concluded that ASIS lacked standing because it could not show it suffered any adverse effect from the e-mails. The court also said there was no evidence from which a jury could reasonably conclude that Azoogle “procured” the emails.
Azoogle then sought costs and attorneys’ and expert’s fees, but ASIS argued that Azoogle, as a prevailing defendant, should not receive anything in light of the CAN-SPAM Act’s remedial purpose. It pointed to the standard applied in civil rights cases, set forth in Christiansburg Garment Co. v. EEOC (1978) 434 U.S. 412, which treats prevailing plaintiffs more favorably than prevailing defendants in determining whether fees and costs should be awarded.
The court, however, concluded that the even-handed approach articulated in Fogerty v. Fantasy, Inc. (1994) 510 U.S. 517, addressing a similar provision of the Copyright Act, should be applied, and that an award of sanctions was appropriate.
In Fogerty, former Creedence Clearwater Revival singer John Fogerty was sued for copyright infringement by the holder of a copyright on the band’s 1970 song “Run Through the Jungle” who claimed Fogerty’s 1985 tune “The Old Man Down the Road” was the same song with different lyrics.
Fogerty won and sought attorneys’ fees, and the U.S. Supreme Court ruled that prevailing defendants in copyright suits receive attorneys’ fees solely at the court’s discretion, just as prevailing plaintiffs do.
Applying Fogerty, Spero wrote that there was “no precise formula” for determining when the court should exercise its discretion, but he said sanctions were appropriate because ASIS acted unreasonably, even if it did not act in bad faith in initiating the litigation.
He also concluded that an award of fees “advances the interests of compensation to the extent that Defendant Azoogle was forced to defend itself against ASIS’s groundless claims, resulting in years of litigation and over a million dollars in attorneys’ fees.”
Spero rejected ASIS’s contention that the amount of hours billed by attorneys and their respective rates were unreasonable. However, he said Azoogle was not entitled to another $100,000 in fees for an expert because the CAN-SPAM Act does not provide for such an award.
The case is ASIS Internet Services v. Optin Global, Inc., 05-05124.
Copyright 2010, Metropolitan News Company