CAN-SPAM Plaintiff Slammed With $800K Attorney Fee Award — Asis Internet v. Optin Global

[Post by Venkat]

Asis Internet Servs. v. Optin Global, Inc., et al., Case No. C-05-05124JCS (N.D. Cal. May 19, 2010)

A federal court granted a request for attorney’s fees (in the amount of $806,978.84) against prolific CAN-SPAM plaintiff Asis Internet. I thought things were looking good for Asis – whose lawsuits have generated substantial blog fodder – when it recently obtained a 2.5 million dollar default judgment in a spam case. I don’t know the details of Asis’s financial situation, other than the fact that it’s a small ISP that once argued a bond should not be imposed against it due to its financial situation. At the least, this fee award will take some spring out of its step. More importantly, it stands as a warning to CAN-SPAM plaintiffs everywhere.

The court’s order contains a good summary of the procedural history of the case. In 2008, the court granted summary judgment in favor of Azoogle, finding that Asis lacked standing and there was insufficient evidence for a reasonable jury to conclude that Azoogle “procured” the emails in question. Asis then moved for fees. The court denied the fee request without prejudice, but awarded costs ($34,825.24). Asis appealed both the summary judgment order and the cost order to the Ninth Circuit. The Ninth Circuit summarily affirmed. (Here’s my blog post on that Ninth Circuit ruling.) Although the Ninth Circuit affirmed both the summary judgment order and the cost order, it didn’t comment on the proper standard to be used for awarding costs in CAN-SPAM cases. Asis urged a plaintiff-friendly approach that is used in civil rights cases. Azoogle argued that the more neutral Fogerty standard (which is used in copyright cases) was appropriate.

The court finds the Fogerty standard to be appropriate and grants Azoogle’s request for attorney’s fees and costs. Azoogle also filed a Rule 11 request for sanctions along with its request for fees. The court awards the fees and costs under CAN-SPAM and doesn’t make a finding as to whether Rule 11 sanctions are appropriate:

the Court concludes that while Asis may not have acted out of bad faith in initiating litigation against Azoogle, it at least acted unreasonably. Even assuming Asis might have reasonably believed when it initially named Azoogle as a defendant that it would establish standing – a question that turned on an as-yet unresolved issue of law – there was never any evidence that Azoogle sent or procured the emails on which Asis based its claims. Rather it is apparent that Asis sued Azoogle based on little more than speculation that there might be a connection between those emails and Azoogle. Asis then continued to litigate even as its discovery efforts turned up no evidence in support of its claims against Azoogle. Having initiated over 20 similar actions, and sued over 20 defendants in this action alone, an award of attorneys’ fees here is necessary to deter Asis and other plaintiffs hoping to profit under the CAN-SPAM Act from casting such a wide net. [emphasis mine]

Ouch! The court also cites to Gordon v. Virtumundo, where Judge Coughenour awarded Virtumundo $110K in fees and costs. Finally, the court finds that expert fees are unavailable under CAN-SPAM, and declines to award the $105,435 in expert fees which Azoogle requested.

Asis’s filings in response to Azoogle’s fee request provide a window into the approach frequently taken by Asis and other spam-plaintiffs. Despite being unable to marshal sufficient evidence to withstand summary judgment on the core issues, Asis maintained that it shouldn’t be hit with a fee award because the emails at issue “were ‘clear violations’ of the CAN-SPAM Act.” (??)

As reported by Ken Magill in 2009, Gordon (the plaintiff in Virtumundo) lost more than his spam case – he lost his house (“Anti-Spammer Loses More than His Lawsuit“). I expect Azoogle will be fairly aggressive in its collections efforts here. Only time will tell as to whether Asis will suffer the same fate as Gordon. Regardless, this is definitely a wake-up ruling for CAN-SPAM plaintiffs everywhere.

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