CAN-SPAM Defendant Awarded $111k in Fees/Costs–Gordon v. Virtumundo

By Eric Goldman

Gordon v. Virtumundo, 06-0204-JCC (W.D. Wash. Aug. 1, 2007)

I believe this ruling represents the first time that a CAN-SPAM plaintiff has been ordered to pay attorneys’ fees and costs to a defendant. As a result, it’s a leading example that courts can and do grow tired of bogus anti-marketing lawsuits, and perhaps it will serve as an expensive warning to CAN-SPAM plaintiffs to ensure the merits of their lawsuit.

Gordon is an uber anti-spam plaintiff, leading countless CAN-SPAM lawsuits. (Ethan blogged a little on Gordon’s litigation here). As the court describes, Gordon runs a “spam business”–basically, a for-profit plaintiff litigation shop to go after spammers (the court also calls it a “litigation factory”). The court doesn’t seem very impressed with this business model. Having already dismissed the lawsuit’s substance, the court repeatedly rips on Gordon for bringing a junk lawsuit, saying that “The Court finds that Plaintiffs’ instant lawsuit is an excellent example of the ill-motivated, unreasonable, and frivolous type of lawsuit that justifies an award of attorneys’ fees to Defendants” and “the Court finds that the goal of deterrence is particularly relevant here. Plaintiffs should be deterred from further litigating their numerous other CAN-SPAM lawsuits now that they are aware their lack of CAN-SPAM standing.”

Along the way, the court interprets the appropriate standard for awarding fees under the CAN-SPAM fee shifting provision. Informed by Gordon’s litigation abuses, the court decides that the fee-shifting provision should use the more defendant-favorable “even-handed” standard when evaluating a defendant’s fee requests (like it is in the copyright context) instead of the “dual standard” where the plaintiff gets a favorable review on both its fee requests and defendant’s fee requests (the latter standard thus encourages plaintiffs to bring lawsuits without the fear of a loser-pays ruling). The court correctly notes that Congress really wasn’t trying to enable lots of private lawsuits from CAN-SPAM, so the risk of chilled plaintiffs is appropriate in this context. As the court says, “Promotion of prolific private CAN-SPAM litigation is not what Congress intended.” Thus, this ruling paves the way for CAN-SPAM defendants to request and get attorneys’ fees when faced with bogus CAN-SPAM claims.

More generally, I remain frustrated that so much regulatory attention is focused on curbing marketers’ abuse while comparatively little attention is given to curbing marketing plaintiffs’ abuse. But make no mistake–every new anti-marketing law with a private right of action will stir up more action than some chum thrown into shark-infested waters. As I think I’ve mentioned before, I have a Westlaw alert set up on TCPA cases, usually triggering several alerts each week, and the amount of wasted judicial resources is stunning–there is a steady and mind-numbing stream of rulings over whether TCPA lawsuits are covered by advertising injury insurance; whether (in light of the business relationship exception) TCPA plaintiffs have enough in common to form a class; whether the TCPA preempts state law; and lawsuits where plaintiffs try to get standing to sue under TCPA provisions that are clearly specified as enforced only by the FTC or FCC. In other words, most of the rulings relate to largely procedural squabbling before the parties even get to the substance of the marketer’s allegedly impermissible behavior. What a colossal waste of society’s resources.

Fortunately, rulings like this one (and others I’ve blogged about based on anti-SLAPP and Rule 11 sanctions) suggest that plaintiffs can and do go too far and that courts won’t ignore this either. But it remains to be seen how well these sanctions work at curbing litigation abuse. At minimum, I hope this award convinces Gordon that his “spam business” may not be as profitable as he initially thought.

HT: Venkat

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