Gosbee v. Martinson–Trial Court Motion to Dismiss Reversed on Appeal

July 9, 2005 · by · in Adware/Spyware, Derivative Liability

Gosbee v. Martinson, 2005 ND APP 10 (N.D. Ct. App. July 6, 2005). This is the latest ruling in a RICO action based on the “Spy Wiper” software program. The plaintiff alleges that the defendants hijacked his computer to create demand for the software. David Bank wrote a story on Gosbee’s plight back in April 2004.

The appeals court summarizes the lower court’s determination as follows:

“Martinson moved for dismissal of the complaint under N.D.R.Civ.P. 12(b)(6) for failure to state a claim, or alternatively for summary judgment. Martinson alleged that any “highjacking” of Gosbee’s computers was caused by one of Martinson’s marketing affiliates, and he was not responsible for the actions of the affiliate. The trial court granted Martinson’s motion for dismissal, [FN1] and judgment was entered dismissing the action and awarding costs and disbursements to Martinson.”

Gosbee objected to the award of costs/disbursements and asked for reconsideration of the dismissal and an opportunity to amend the complaint. The trial court rejected both, and Gosbee appealed. In this ruling, the appeals court reversed the trial court, saying that the trial court has to give Gosbee a hearing.

The plaintiff is going to get another day in court, but it’s never a good sign for the plaintiff when a trial court grants a motion to dismiss the complaint, does not give an opportunity to amend, and refuses to reconsider. Some of this may be due to “inartfully drafted” pleadings, and some news reports indicated that the plaintiff wasn’t responding promptly to the trial court. While the appeals court practically instructs the trial court to give the plaintiff an opportunity to amend, it’s going to be tough for the plaintiff to win back this judge.

Spyware Warrior has a small repository of papers related to this action.

Related action: in April, the FTC extended an enforcement action to include the defendants in this case. This, along with Spitzer’s enforcement action against Intermix, raises the recurring and critical question of when a vendor is liable for its affiliate’s actions. Note how the trial court in this case resolved that question. I’m not yet clear, however, if the FTC’s theory is advertiser liability under CAN-SPAM; there is statutory authority for that.