Tuesday, June 22, 2010
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Court: E-Mails From Multiple Domains Do Not Violate Spam Law
By STEVEN M. ELLIS, Staff Writer
Sending unsolicited commercial e-mail advertisements from multiple domain names for the purpose of bypassing spam filters does not violate California’s anti-spam law, the California Supreme Court unanimously ruled yesterday.
The justices held that a single e-mail with an accurate and traceable domain name neither contains nor is accompanied by “misrepresented…header information” merely because its domain name is “random,” “varied,” “garbled” or “nonsensical” when viewed in conjunction with domain names used in other e-mails.
Such an e-mail “makes no affirmative representation or statement of fact that is false…,” Justice Ming W. Chin wrote. “[T]he use of an accurate and traceable domain name in an e-mail cannot reasonably be understood to be an implied assertion that the source of that e-mail is different from the source of another e-mail containing a different domain name.”
Business and Professions Code Sec. 17529.5(a)(2) prohibits advertising in a commercial e-mail, commonly known as “spam,” if the advertisement “contains or is accompanied by falsified, misrepresented, or forged header information.”
Class Action
Craig E. Kleffman—then a recently admitted member of the State Bar, and currently a Los Angeles County deputy district attorney—filed a class action in California state court in 2007 alleging communications services provider Vonage violated the law by sending 11 unsolicited e-mail advertisements for its broadband telephone services using 11 different domain names, such as superhugeterm.com, urgrtquirkz.com, openwrldkidz.com and others.
Kleffman claimed all 11 domain names could be traced to a single physical address in Nevada where Vonage’s marketing agent was located, and that the “only reason” for using multiple domain names was “to mislead e-mail service providers and recipients, and their spam filters.”
He argued that use of “multiple domain names to bypass spam filters,” “failure” to use “a single domain name” in sending advertisements, and “failure to identify Vonage in the domain name from which the…advertisements were sent, i.e., through the use of a generic subdomain name such as adfor.vonage.com,” constituted “falsified and misrepresented header information.”
Vonage removed the case to the U.S. District Court for the Central District of California, where Judge Gary A. Feess held that the complaint failed to state a claim and that the federal CAN-SPAM Act preempted Kleffman’s Sec. 17529.5 claim.
Kleffman appealed to the Ninth U.S. Circuit Court of Appeals, which then asked the California Supreme Court to decide whether Vonage violated the state’s anti-spam law.
Not ‘Misrepresented’
Vonage argued that header information was not “misrepresented” within the statute unless it contained “a false misrepresentation of fact,” but Kleffman contended that the court should look to “other statutory claims in the false advertising sections of the Business and Professions Code” applying to advertising that, while accurate, tends to mislead or deceive.
He also argued that “misrepresent” should be construed according to its “ordinary” meaning in “lay” dictionaries—to give a “misleading representation or idea of something”—but Chin rejected both. The justice noted that the statutes to which Kleffman pointed used the term “misleading” rather than “misrepresented,” and that Sec. 17529.5(a)(2) was followed by another subdivision applying to e-mails “likely to mislead” a recipient.
Chin then rebuffed Kleffman’s argument that legislative history supported his position, and said that “a contrary conclusion would raise significant preemption problems.”
Differing Conclusion
That observation differs from the conclusion reached last year by the U.S. District Court for the Northern District of California in Asis Internet Services v. ConsumerBargainGiveaways, LLC 622 F. Supp.2d 935. There, Judge William Alsup concluded that the CAN-SPAM Act’s preemption exception for state laws prohibiting “falsity” and “deception” was not limited just to common-law fraud and other similar torts, but also excepted from preemption an internet service provider’s claim against online advertisers under Sec. 17529.5.
However, one of the plaintiffs in that case, Asis Internet Services, was last month ordered by a federal magistrate in San Francisco in ASIS Internet Services v. Optin Global, Inc., 05-05124, to pay over $800,000 in attorneys’ fees to an Internet marketing company in order to deter what the magistrate said was abuse for profit of the CAN-SPAM Act’s private right of action.
Magistrate Judge Joseph C. Spero of the Northern District of California—in what is one of the largest attorney’s fee awards to date under the CAN-SPAM Act—agreed with attorneys from San Francisco firm Kronenberger Burgoyne that Asis 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 received during a three-week period in 2005.
Kleffman was represented by Hagens Berman Sobol Shapiro, while Vonage was represented by Perkins Coie. Attorneys from Gibson, Dunn & Crutcher represented amici curiae in support of Vonage.
The case is Kleffman v. Vonage Holdings Corp., S169195.
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