CAN-SPAM Preemption Doesn’t Apply To Fraud…And More

June 2, 2014 · by Venkat Balasubramani · in Marketing, Spam

This a spam case. Plaintiff sued, alleging violations of California’s spam statute with respect to 49 emails. Plaintiff alleged that defendants:

register[ed] its domain names used to send spams to unregistered fictitious business names claiming their addresses to be boxes at commercial mail receiving agencies so as to be untraceable back to the actual SPIRE VISION companies. Other senders register[ed] the domain names to false companies and/or proxy-register their domain names so that a spam recipient cannot readily trace the information provided by a Whois query to the actual sender. The unlawful elements of these spams represent[ed] willful acts of falsity and deception, rather than clerical errors.

shutterstock/popart: pop art background office stamp with the word spam

CAN-SPAM preempts state laws regulating email, except those that prohibit falsity or deception. The key question is whether in order to escape the scope of CAN-SPAM preemption, a plaintiff must satisfy all elements of a common law fraud claim, or whether something less suffices.

The court says that the appeals court decisions to date do not answer this precise question. Both cases (Mummagraphics and Virtumundo) held that only material inaccuracies are covered by CAN-SPAM, while claims based on minor inaccuracies are preempted. However, the majority of district court cases (Reunion; Consumerbargaingiveaways) permit plaintiffs to escape preemption without pleading a traditional fraud claim.

A somewhat recent California case (Trancos) said that use of tools that make the identity of a sender hard to find could be actionable under California’s anti-spam statute. The allegations here track that case.

While Virtumundo and Mummagraphics did not directly speak to this issue (the court in Mummagraphics noted that the recipient could have taken the simple step of using WHOIS to find out the identity of the company behind the domain name), they nevertheless said that only material representations can be actionable. Using a mail-forwarding service or proxy registration shouldn’t be considered a misrepresentation at all, and it certainly shouldn’t be a material misrepresentation. Federal courts in California don’t seem particularly interested in wading into the dispute of whether these types of allegations are preempted.

The ruling was issued in early March, and nothing of real significance has happened in the case. (Wagner filed another similar looking lawsuit that was remanded to state court by Judge Gonzalez Rogers. A request was made to relate this case with that one and that request was denied.) Hopefully we don’t see a settlement in this case. Judge Alsup is well known as a no-nonsense judge, and defendants have a good forum to test plaintiff’s factual allegations, as well as the core issue of whether things like use of proxy registration or PO boxes are considered misrepresentations at all, much less materially misleading ones that should be actionable.

Case citation: Wagner v. Spire Vision, C13-04952 WHA (N.D. Cal. Mar. 3, 2014)

Court Accepts Narrow View of CAN-SPAM Preemption but Ultimately Dismisses Claims – Davison Design v. Riley

Spam Arrest’s Sender Agreement Fails Because Email Marketer’s Employees Lacked Authority–Spam Arrest v. Replacements (Forbes Cross-Post)

Another Spam Litigation Factory Unravels –- Beyond Systems v. Kraft

Independent Contractor Relationship Between Sender and Advertiser Dooms Spam Claims – Kramer v. NCS

CAN-SPAM Violations For Private WHOIS Information and Putting Disclosures in Remotely Served Images – ZooBuh v. Better Broadcasting

Crazy SOPA-Like Attempt to Hold International Banks Liable for Pharmacy Spam Fails on Jurisdiction Grounds–Unspam v. Chernuk

Courts Allows Text Spam Class Action Against Voxer, a Cell Phone Walkie-Talkie App — Hickey v. Voxernet

Court Refuses to Dismiss Claims Against Alleged Twitter-Bot Spammer–Twitter v. Skootle

Is SOPA’s “Follow the Money” Meme Infecting Anti-Spam Litigation? – Project Honey Pot v. Does

Text Spam Class Action Against Jiffy Lube Moves Forward – In re Jiffy Lube Int’l, Inc., Text Spam Litigation

California Appeals Court Says Emails That Don’t Identify Sender Violate State Spam Statute – Balsam v. Trancos