November 22, 2006
Fourth Circuit Rejects Anti-Spam Lawsuit--Omega World Travel v. Mummagraphics
By Eric Goldman
Omega World Travel, Inc. v. Mummagraphics, Inc., No. 05-2080 (4th Cir. Nov. 17, 2006)
Wow, what a huge ruling on spam from Judge Wilkinson in the Fourth Circuit! People--even judges--hate spam so viscerally that it's almost impossible to imagine an email marketer winning a lawsuit. Yet, the Fourth Circuit hands a big win to email marketers with 3 major rulings:
1) CAN-SPAM preempts Oklahoma's anti-spam law, because the "falsity and deception" exclusion to CAN-SPAM's preemption only covers fraud or other types of tortious misrepresentation, not garden-variety falsity or deception. Thus, at minimum, state anti-spam laws can't be used to pursue spammers for immaterial falsity or deception. Dozens of states have reenacted anti-spam laws post-CAN-SPAM relying on the "falsity and deception" standard. This ruling casts significant doubt on the enforceability of most of those reenactments. (See, e.g., this speculation that North Carolina's anti-spam law is now preempted).
2) Errors in the defendant's headers were "immaterial" and thus not actionable under CAN-SPAM. Specifically, "the messages’ header information incorrectly indicated that the e-mails originated from the server "FL-Broadcast.net," and  the messages’ "from" address read email@example.com, although that e-mail address was apparently non-functional" but the court says that these mistakes are immaterial because the "e-mails at issue were chock full of methods to "identify, locate, or respond to" the sender or to "investigate [an] alleged violation" of the CAN-SPAM Act."
3) A common law trespass to chattels claim fails when the plaintiff only alleges nominal damages. Specifically, the court says that "Mummagraphics failed to submit any evidence that the receipt of eleven commercial e-mail messages placed a meaningful burden on the company’s computer systems or even its other resources" (cite to Hamidi). This finding is consistent with the recent trend to reject privacy-related lawsuits for lack of cognizable damages (see, e.g., In re JetBlue, Bell v. Acxiom and Key v. DSW). However, as far as I can recall, this is the first time a court has used Intel v. Hamidi to reject an anti-spam lawsuit for lack of email-attributable damages.
Unquestionably, the defendants benefited from having made a reasonably good faith effort to comply with CAN-SPAM, even if they didn't dot every i and cross every t. But even if they tried to be good actors, they are still allegedly spammers, which makes this result an amazing hat trick for the defendants--no liability under the Oklahoma state anti-spam law, CAN-SPAM or common law trespass to chattels. As Fourth Circuit precedent, surely this opinion will take some wind out of the sails of anti-spam plaintiffs.
Hat tip to Venkat for catching this. Venkat says:
The decision is important for one simple reason: anti-spam lawyers (and plaintiffs) often advance the exact arguments advanced by the plaintiff in this case. Lawyers on the other side know these arguments lack merit, but do not have any court decisions to back them up. As a result, a vicious settlement cycle results. This case probably represents the start of the tide turning in the other direction.
Check out Venkat's post for some other interesting analysis of the case.
UPDATE: Dan Solove weighs in, saying "The 4th Circuit holding makes the very narrow and ineffective CAN SPAM law even more narrow and ineffective."
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Tracked on November 22, 2006 04:24 PM
I've litigated these cases against Venkat. He is right about one, and only one, thing. The case will make plaintiff's lawyers disappear. He is wrong that these theories were without merit. The 4th Circuit simply fucked up. They read the Congressional intent all wrong. But, be that as it may, get ready for an complete onslaught of spam. CAN SPAM was never much of a deterrent, and the 4th just made it even less so. But the real damage is that the 4th Circuit took away the real weapon, the state statutes that had some actual teeth, and which didn't limit plaintiffs to ISPs. Without them, there is no reason to sue.
Posted by: anon at November 29, 2006 10:43 PM