U.S. v. Jones No. 10–1259 (U.S. Supreme Court; Jan 23, 2012)

In 2005 federal agents convinced a judge to issue a warrant so they could affix a cellular-based GPS tracker to the underside of Antoine Jones’ wife’s car, which the agents then tracked constantly for almost a month. Unfortunately for the federal agents’ subsequent criminal prosecution of Jones on cocaine distribution and conspiracy charges, the agents did so after the warrant had expired, and in a different state than the warrant permitted. After an unsuccessful trial, Jones appealed his conviction to the D.C Circuit, which suppressed the warrantless surveillance, finding it was obtained through a Fourth Amendment violation.

In so holding, the D.C. Circuit split with the Seventh, Eighth and Ninth Circuits on the matter. Importantly for the Supreme Court, each of these Circuits found no search occurred (or in the case of the D.C. Circuit, a search had occurred) when analyzing the ‘search’ under the ‘reasonableness’ test of Fourth Amendment law developed from Katz v. United States.

Yesterday, the Supreme Court held that the government’s search was a Fourth Amendment violation. Importantly, the five-member majority opinion by Justice Scalia reaches that result by effectively resurrecting the ‘trespass’ element of Fourth Amendment law that has been dormant for almost 50 years–and wasn’t a part of any of the underlying Circuits’ opinions. I don’t want to denigrate the significance of that holding, and I suspect it will dominate much of the scholarly commentary about the ruling. Already, the universally-cited Orin Kerr, blogging at the Volokh Conspiracy, has several posts up already about the trespass and mosaic theories aspects of Jones.]

However, my biggest surprises from the opinions were the unanimity of support for the idea that this was a constitutionally-suspect search, and the numerical majority that also found this search unreasonable for non-tresspassory “reasonableness” reasons. It’s kind of a big deal that all nine Justices found this case to be a Constitutionally-infirm search, disagreeing with a significant portion (probably a majority) of the Circuit Courts’ benches. Even more so, it’s truly a big deal that five (a numerical majority) found this search “unreasonable” under a reasonableness test that looked to the intent of the searching officers and so casually dismissed the atomistic arguments of the government that at each moment the searching was being done in a public place. Both of these arguments have been mainstays in earlier Fourth Amendment decisions.

Additionally, much of the earlier commentary on the D.C. Circuit’s unreasonableness rationale, somewhat pejoratively nicknamed a “mosaic theory,” had focused on its novelty and un-testedness. However, five justices appear ready to apply it in this case. In particular, Justice Sotomayor ‘s concurrence makes clear that she agrees with Justice Alito’s four-member opinion adopting the D.C. Circuit’s reasonableness rationale. In that concurrence, she amplifies the majority opinion’s holding relying on trespass principles, but indicates this is an “irreducible constitutional minimum,” above which Katz’s reasonableness rationale (which Justice Scalia’s majority opinion doesn’t denigrate, even if it declines to evaluate the applicability of) still controls. Tom Goldstein shares my conclusion that there are effectively two majority opinions in this case. His excellent observations are here and also illuminate just how much was not resolved in the decision.

Eric’s Comments

I really only learned two things in my Criminal Procedure class from law school: (1) every fact matters, and (2) the Supreme Court makes up the rules from case-to-case. At the time, I didn’t feel I got very much from my class, but in retrospect, perhaps I actually learned everything that really mattered in Fourth Amendment jurisprudence. As Ethan recaps and as Paul Ohm indicated (United States v. Jones is a Near-Optimal Result), this opinion is a mix of good news (get a warrant before GPSing my car) and unresolved issues (basically everything else–ranging from practical questions like the legitimacy of warrantless tracking of cellphone movements to theory battles over whether the Fourth Amendment protects against trespass, violations of reasonable expectations of privacy or both).

Putting aside those important questions, the opinions articulated some deep distrust of government motives. I am always perplexed when the privacy community loses sight that the government is the real privacy threat, not the private sector. It also seemed that the judges did, in fact, internalize the personal threat that police could monitor their own cars without a warrant. It reminded me a little of the RIM case where the judges tried to envision their personal situation without their Crackberries.

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The Supreme Court has agreed to hear a long-running copyright dispute over a 1994 law that retroactively restored copyright in some expired foreign works.

In what ScotusBlog is calling “a major test of copyright power,” the Supreme Court agreed to hear an appeal of the 10th Circuit decision in Golan v. Holder upholding the Uruguay Round Agreements Act, a law that brought the US into compliance with several international treaties. Part of the Act restored copyright protection retroactively to a set of foreign works that had passed into the public domain. Tyler Ochoa has blogged in detail about an earlier ruling on this blog, covering the copyright and First Amendment challenges the Act faced. Tyler Hart also provides a similar writeup of the history of the case and the cert granting. The Center for Internet and Society, at Stanford Law School, has represented plaintiff Golan in the case, and provided their history, supplemented with the relevant filings as well, here.

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In coming to a 4-4 procedural tie that defaults to upholding the ruling below, the Supreme Court let stand a 9th Circuit opinion territorially limiting the first sale defense’s applicability to domestically made goods. While still not an actual, controlling opinion from the Supreme Court, this default outcome lets the 9th Circuit opinion remain as controlling precedent there and exhausts any appeals for Costco and Omega in this case. It also leaves the 2nd Circuit with no real guidance in deciding the same issue itself in the pending textbook importation appeal.

The issue of “grey market” importation and reimportation is heavily controlled by the degree to which such importations are prohibited or permitted by the various types of IP protection. Trademarks, copyrights, and patents all have slightly different statutes, court cases, and even federal regulations controlling the contours of when they can be used to block unauthorized reimportation. Generally, each doctrine’s laws prohibit unauthorized importation, but also have controlling “first sale” exceptions in those laws. Important and intelligent people think about the scope of those exceptions a lot, and do excellent scholarship on those doctrines as well. Unhelpfully, those boundary lines don’t even match up from one area of protection to the others, resulting in a reimportation that may be illegal or legal depending on whether the work bears a trademark, or whether it is covered by a patent, or both.

Copyright law, over the whining and screaming of a protectionist Congress and the U.S. government, was kicked towards greater market openness by the 1998 Supreme Court decision in Quality King v. L’Anza, where the Supreme Court (re)imposed the first sale doctrine of Section 109 on Section 602’s near-prohibition on grey market re-imports.

Faced now with the slightly different factual circumstances of a grey market import (rather than re-import) the 9th Circuit in Omega v. Costco slunk back to its pre-Quality King precedents and held that the limitation in Section 109 applying the section only to “works lawfully made under this title” meant ‘works lawfully made in the United States.’ To hold otherwise, the 9th Circuit implied, would be to impermissibly extend the reach of U.S. copyright law extraterritorially. Embarrassingly for the 9th Circuit, Costco and the U.S. Solicitor General both (politely) mocked such ideas in their briefs before the Supreme Court, with the Solicitor demurely stating that “the court of appeals appears to have overstated the matter.” This author would demurely state that analyzing overseas conduct to determine compliance with the conditions of section 109 is no more an “extraterritorial application of the Copyright Act” than analyzing overseas conduct to determine compliance with the conditions of section 104 is.

With the looming prospect of control-seeking (and rationally price maximizing) manufacturers rushing to manufacture goods abroad to achieve an important control they would lose if they manufactured domestically, U.S. retailers and foreign manufacturers rushed to the Court with a considerable number of opposing and supporting amicus briefs. IP public interest groups like the EFF and Public Knowledge also weighed in, highlighting the statutory and precedential inconsistency in the 9th Circuit decision and emphasizing the absurd outcomes that would follow if the decision were upheld.

In response to Costco’s petition to the Supreme Court, then-Solicitor General and now Supreme Court Justice Elena Kagan made an argument for the government in 2009 that ultimately precluded her participation in this case and resulted in the 4-4 procedural default. What was the government’s argument this time anyway? In Quality King, the government had argued that Section 602 trumped 109, which it asserted was not applicable in any cases of imported works. As Solicitor General Kagan’s brief delicately acknowledged, “The Court rejected that contention” in Quality King. This time around, the government again argued in favor of the continued applicability of 602 over 109, on the (somewhat narrower) theory that 109 isn’t applicable to this case of imported works. When the Supreme Court held in Quality King that the location of first sale didn’t matter, the Solicitor now responds in Costco that maybe the location of first manufacture does. [author’s note – This is actually a great example of one of the canons of Supreme Court argument construction in action – if the Court rejects your broad theory, adopt a narrower one that still applies in your case.]

To see how much is riding on Justice (not Solicitor) Kagan’s opinion in the future, and just what not having it here means for the law in this area going forward, Public Knowledge’s Anjali Bhat does an excellent backgrounder on the case and its impacts.

[Eric’s note: Venkat and I soon will blog the MDY v. Blizzard case, which further compounds some of our confusion on these topics.]

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By Ethan Ackerman (with comments from Eric below)

On Thursday, the U.S. Supreme Court released its opinion in City of Ontario v. Quon, a Fourth Amendment case over the privacy government employees, and those who communicate with them, have in their workplace communications.

I noted with some surprise in December 2009 when the Court granted certiorari, and wondered whether this was a good or bad thing for online privacy. The glass half-full or half-empty quandary remains after the court’s narrow opinion. The result for officer Quon and his text message recipients is a loss, but only because the Court found the city’s search sufficiently narrow to pass muster even assuming he was entitled to all the possible Fourth Amendment protections, even while the Court declined to conclude whether or not he did actually have those protections. Everyone else will have to await the further development of Fourth Amendment case law, as Justice Kennedy’s opinion for the unanimous Court said that “Prudence counsels caution before the facts in the instant case are used to establish far-reaching premises that define the existence, and extent, of privacy expectations enjoyed by employees when using employer-provided communications devices.”

There is more insightful commentary than this brief note at Scotusblog.

_____________

Eric’s comments: after seeing the opinions, it remains baffling why the court granted cert in this case. The only obvious reason is that the Supreme Court felt like it had to fix the 9th Circuit’s mistakes, as it yet again reversed the 9th Circuit (like that wasn’t entirely predictable). Otherwise, the opinions are so limited to the facts of the case that they provide almost no value to anyone other than the litigants. That seems like a real lost opportunity for an appellate court with discretionary appeals. Even so, it’s better than dealing with a Supreme Court screwup that could have easily occurred given the messy facts in this case.

I had a chance to moot the case earlier in Spring, so I read the litigants’ SCOTUS briefs. By far the most compelling fact in that massive stack of paper was that Quon was a SWAT team member who was texting on the job using a government-issued device. The on-the-job conduct of SWAT team officers is especially likely to be subject to investigation/discovery requests if/when something goes wrong, so it makes total sense to narrowly circumscribe the privacy afforded to SWAT team members’ text messages. I would feel differently about the privacy rights of other government employees whose minute-by-minute choices don’t have the same instantaneous life-and-death consequences. I don’t see how this case’s outcome has any implications for private-sector employees or employers.

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By Ethan Ackerman

This blog recently covered the US Supreme Court’s decision to hear a 4th Amendment case dealing with texting privacy. While technology privacy cases are fairly rare at the US Supreme Court level, many of the 50 states’ highest courts have dealt with similar issues recently. The waning months of 2009 saw three fairly important state-level 4th Amendment cases that could potentially have a big impact on electronic and online privacy.

Searching Suspects’ Cellphones

In December, the Ohio Supreme Court addressed the searches of an arrestee’s cell phone. In a 4-3 split, the court held that police searches of a suspect’s cell phone, even though incident to the suspect’s arrest, required a warrant. The court’s decision grappled with the scope of ‘a search incident to arrest,’ which is one of the few exceptions to the warrant requirement the 4th Amendment usually imposes. Susan Brenner helpfully lays out the details surrounding the exception and its scope here. The court noted that federal courts were split on the issue; the Supreme Court hadn’t addressed cell phones or anything similar. So the court proceeded to look at the underlying justification for the exception (officer safety, evidence protection). The court held that the exception wasn’t necessary and ruled that a warrant was necessary to protect the private and extensively detailed personal information cell phones often hold.

It’s perhaps an understatement to say that this area of the law isn’t settled, and the Ohio court’s focus on two federal cases is just a small chunk of the universe of cases on this issue. In-house counsel at the Federal Law Enforcement Training Center has helpfully catalogued the cases on this issue. So is the outcome sensible? Orin Kerr is a bit skeptical, but as of yet undeclared.

In a necessary reminder that the 4th Amendment matters even in non-criminal cases, the Mississippi ACLU has taken a civil case over a student’s expulsion stemming from a cell phone search.

Fourth Amendment Protection for Records Held by Third Parties

The second state Supreme Court case, Colorado v. Gutierrez, doesn’t occur online or even address online activities. It’s about the impropriety of a (paper) search warrant for the (paper) tax records kept in the (physical) office of a tax preparer. Politicizing it just a smidge, the prosecutor in the case is running for the US Senate, and the taxpayer in the case was a Mexican immigrant. But the case’s principal issue, whether information stored with a 3rd party retains 4th Amendment protections, is one of the core issues of online privacy. Facebook, Google Docs, every other “cloud” service, Skype, Hotmail, Google chat, Verizon wireless voicemail, and even Quicken all are 3rd parties holding private communications and information generated by their users. While privacy policies and state and federal statutes grant (or deny) some protections to this information, the 4th Amendment remains the cornerstone of much of the protection this information has. Several past US Supreme Court cases on the 4th Amendment have latched onto the “3rd party” present in these types of relationships to sometimes find that there was no reasonable expectation of privacy in information given to the 3rd party and thus no 4th Amendment protection. This phenomenon was common enough to get its own name as a legal doctrine – the ‘3rd party’ doctrine. 4th Amendment scholar Orin Kerr recently published a law review article mostly praising the doctrine, and skillfully addressing its applications and shortcomings in the online world.

One of the major exceptions to the 3rd party doctrine is when a statute or protected type of relationship may still preserve a reasonable expectation of privacy despite transmission to a 3rd party. Evidentiary privileges like the attorney-client or marital privilege are examples of this. Less clear is the degree to which statutes protecting privacy may preserve the expectation. The Supreme Court has occasionally found statutes insufficient to protect the expectation (e.g. US v. Paynter, the Bank Secrecy Act was an insufficiently privacy-protecting law) but hasn’t to my knowledge yet found a statute sufficient.

In Colorado v. Gutierrez, the Colorado Supreme Court found the federal and state laws protecting the privacy of tax records were sufficient to create a reasonable expectation of privacy in those records, even though they were held by the 3rd party tax preparer. Will a court hold that ECPA’s protections for email, or the SCA’s protections for chat logs or a Google doc, are sufficiently similar and strong to create a reasonable expectation of privacy in those records?

GPS Tracking of Vehicles

The third recent case is really a trilogy of recent state cases on GPS tracking of vehicles. Long ago in the 1990’s, GPS tracking was a world of cops and scorned spouses sticking bulky devices under cars. In the past decade with the (government-mandated) addition of GPS tracking to cellphones, and their increasing ubiquity, the prospect of after-the-fact and real-time tracking of a person’s every move is closer now than its ever been. How state courts handle these three car cases might give us some clues to how they’ll handle the phone cases in the next few years.

New York, Wisconsin and Massachusetts went three different ways on the issue; finding, denying, and punting on 4th Amendment protections. Jeff Bone does an excellent summary of all three cases on his employers blog, so I’ll just point you there. To give you a flavor of how the issue splits across the country and between different federal Circuits, read an earlier email of mine helpfully archived on the internets. Once again go-to scholar Orin Kerr also has thoughts on the general issue. Continuing its record as the best place on the internet for intelligent comment debates, Concurring Opinions is host to a 2008 comments debate between Kerr and fellow scholar Renee Hutchins on the issue.

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By Ethan Ackerman

The Supreme Court has agreed to hear an appeal by a California city from an earlier 9th Circuit ruling finding the city had violated the Constitutional and statutory rights of one of its police officers by recovering and reading the officer’s pager text messages. While some appellate commentators expected the Supreme Court to take the case, many 4th Amendment scholars (and this author) were surprised by the Court’s action in granting certiorari in the case of USA Mobility Wireless, Inc. v. Quon.

The Quon case is notable because it contains two major issues: the 4th Amendment privacy issue and the somewhat unique issue surrounding employer monitoring when the employer is also the government.

The latter aspect had previously driven much of the attention focused on the Quon ruling. In fact, 4th Amendment scholar Orin Kerr even suspects it is the public employee legal standard dispute that may be driving the cert. grant, especially in light of the arguments and authors of the dissent.

Prior to the Supreme Court’s action, most of the legal commentaries and even a majority of the web search results for the case were from employer-side law firms telling their clients that private sector employee monitoring was still OK. For example:

* NelsonMullins attorneys, in an article oxymoronically titled “Employer Monitoring Best Practices,” informed their clients that that there was no need to change “the surveillance approach used by U.S. employers.”

* Greenberg Traurig reminded all employers that “electronic communications policies must be drafted and implemented to effectively eliminate any reasonable expectation of privacy,” and that it was advisable to preemptively obtain employee consent to the disclosure of employee communications, even on 3rd-party services. However, Greenberg Traurig also pointed out the “limited direct applicability to private employers” of the case.

* Proskauer Rose explained that the “decision appears to change very little for private employers who wish to review employee communications stored on, or sent through, their own servers and computers” but also (regretfully?) concluded that federal law does “limit employers’ ability to request from third-party providers the contents of employees’ electronic communications.”

* Foley & Lardner attorneys undercut the certainty of their recommendations, including that “text messages should be included in monitoring policies,” by confusing cellphones and old-fashioned alphanumeric pagers in their discussion of the case.

Even much of the media coverage of the Supreme Court’s decision to review the case focuses on the government employer-employee aspect, with both the LA Times and CNN devoting significant discussion to the fact that it was Quon’s boss doing the reading and Quon was a police officer (salaciously) using department property.

Warning, a brief blogger-criticizes-some-mainstream-journalism rant: You’d think that a major news organization like CNN, able to employ someone with the presumably competent title of “CNN Supreme Court Producer,” wouldn’t get fundamental elements of this story wrong. The Court pointedly did not “accept[] a pair of appeals on this free-speech and privacy dispute” – it denied one and granted one. And “free speech dispute?” There’s nothing remotely free speech about this case.

Employment law issues aside, this case is, at its core, a classic 4th Amendment case addressing when someone has a reasonable expectation of privacy in a communication. Quon’s holding is notable for two things: (1) it finds a fairly expansive protection of 4th Amendment rights in electronic communications, and (2) it’s one of a very small number of Circuit Court cases to do so. Rare cases like this can be privacy gold – they effectively stand until the Supreme Court reverses them. Further, because there are so few cases on the issue, a circuit split or other conflict is unlikely to occur, lessening the chance of Supreme Court reversal. This fact alone is reason for fans of an expansive 4th Amendment to be wary of any Supreme Court review.

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On Sept. 19th, a California state appellate court held that CAN-SPAM doesn’t categorically trump state laws that may address email. Defendant retail store Pottery Barn was hoping it would agree with the initial ruling of the California trial court and hold that the federal CAN-SPAM law preempted the state law at issue, the Song-Beverly Credit Card Act.

The Song-Beverly Credit Card Act (apparently the enemy of corporate defense attorneys everywhere judging from google search results) generally prohibits the collection of certain personal information as a condition of processing a credit card transaction. Powers sued Pottery Barn under this law over its practice of collecting email addresses at the time of payment. Faced with these fairly uncontested facts, Pottery Barn argued at the trial court that the federal CAN-SPAM Act, regulating the sending and content of email, should preempt the state law.

Putting aside the obvious difference between a law that governs the collecting of personal information and a law that governs the sending and content of commercial email, the California Court of Appeals took the arguably easier route in addressing the issue – it read the preemption exceptions contained in the federal statute.

Readers interested in the details and holding logic can read the actual opinion. My short summary:

The California court read the preemption exceptions in CAN-SPAM and rightfully held that since the federal statute itself said it didn’t preempt general state laws not specific to email, Song-Beverly wasn’t preempted by CAN-SPAM.

“By its terms CAN-SPAM does not pre-empt state statutes which are not specific to e-mail and have only such incidental impact on e-mail use. (Tit.15, U.S.C. § 7707(b)(2).)”

In thinking of just how weak the preemption argument is, it’s not hard to come up with other instances of state law addressing the collection or use of email addresses that aren’t specific to “the use of electronic mail to send commercial messages.” Indeed, the court rules of all state courts in California address the redaction of certain types of personal information (although not ultimately email addresses in the rules’ present version.) I suspect the state’s freedom of information laws have similar provisions addressing personal identifiers. I don’t imagine that defendant’s counsel would have relished acknowledging that the logical extension of defendant’s argument was that the courts own filing rules were preempted.

Tom O’Toole at BNA has more.

[Eric’s comment: while I agree with Ethan that the court correctly concluded that the Song-Beverly law isn’t preempted by CAN-SPAM, I remain a little confused and troubled by the implications of the plaintiffs’ arguments. It seems to me like the logical extension of their arguments is that it is illegal to collect email addresses when accepting credit card payments online. If this is the direction the case heads, then this case could have disconcerting implications for virtually the entire e-commerce industry. UPDATE: Ethan has pointed out that Saulic v. Symantec and some other cases have constrained the application of the Song-Beverly law to online commerce, a point I had forgotten. I hope that precedent will help put this lawsuit to rest, but it does make me wonder why the defendant accelerated CAN-SPAM preemption argument, a weaker one, to the front of the line,]

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By Ethan Ackerman

The Associated Press generates a very large number of copyrighted works. This means it is often involved in legal tussles surrounding copyright law. Last year my post on this blog covered an incident where the AP took a very debatable stance over whether news headlines were copyrightable, and many other blogs have covered a more recent case where the AP has asserted copyright infringement over a news photo it may not even own the copyright to. So when the AP filed suit against competitor All Headline News, it was refreshing to see the AP asserting plausible copyright infringement claims.

Unfortunately, the AP levered the facts of this case to breath some life into the moribund ‘hot news misappropriation’ doctrine, and even secured an unfortunate opinion on one of the rarer provisions of the DMCA – section 1202’s copyright management information provision. In February of this year, in the Southern District of New York, Federal District Court Judge Castel denied AHN’s motions to dismiss on these two claims, and granted dismissal on some related trademark-stripping claims. Eric Goldman’s earlier post on the opinion covered all these legal issues in thorough detail. Denying AHN’s motion to dismiss doesn’t carry the same weight as a final opinion endorsing the AP’s legal theories, but it was a court ruling nonetheless, and a clear win for the AP.

Now, AHN has sensibly settled. (For a bit of journalistic humor, read AHN’s own, slimmer coverage of the settlement here.)

The settlement is notable for two things: money changed hands and AHN is subject to an injunction. As far as the settlement’s impacts on the validity of AP’s legal theories, well… settlements don’t validate legal theories, court opinions do. That said, part of the settlement required AHN to pseudo-admit the viability of the hot news misappropriation doctrine.

The excellent bloggers at the Citizen Media Law Project have gone over the narrowness of the ‘hot news misappropriation’ doctrine before, and the Copyright Litigation Blog also takes some time focusing on choice of law issues, important since the doctrine’s viability is strongest in the 2nd Circuit. In this post however, I wanted to highlight an under-discussed issue – 17 USC 1202. 1202 is the provision of the DMCA prohibiting removal or modification of Copyright Management Information, or CMI.

At issue is the scope of section 1202’s prohibition on removing CMI. Does 1202 apply only to digital or metadata-like CMI, or does it extend to analog information on tangible goods like newspaper bylines, book flyleaves and painting signatures as well? When section 1202 was enacted, as part of the Digital Millenium Copyright Act, clearly the former were contemplated, but the plain words of the statute could include the latter as well. David Johnson artfully details the split in cases that have developed over the scope, so I’ll just point to his post. Interestingly enough, David’s post suggests that the AP earlier found itself on the other end of byline-stripping accusations, and was presumably arguing for a narrower reading of section 1202. Eric Goldman’s earlier comments on the 1202 issue pointed out a potential copyright/TM catch-22 as well.

Finally, Fred von Lohmann at the EFF has an excellent post on a strategic reason why 1202 claims are often made – potentially big statutory damages, much larger than infringement damages, may incent settlement. Fred also spends some time on the weaknesses in expanding 1202 beyond digital CMI to tangible examples.

The post AP Gets It Right and Then Overreaches–AP v. AHN appeared first on Technology & Marketing Law Blog.

By Ethan Ackerman

It is a truth universally recognized that a legal blogger whose legal positions cause them to eat crow or be left crying out in the wilderness usually will be entitled to the occasional I-told-you-so post as well. Two (of three) recent court opinions from California suggest that courts are (sometimes) beginning to reject the broad CAN-SPAM preemption holdings that have followed the reasoning of the 4th Circuit’s Mummagraphics case.

Hypertouch v. ValueClick

First, the status quo. A slight majority of the cases addressing CAN-SPAM preemption of state laws have found preemption. Starting with some adverse rulings in response to repetitious pro-se litigants in Washington state, and building on the sweeping Mummagraphics opinion from the 4th Circuit Court of Appeals, many judges have been tempted to dismiss state anti-spam law claims as somehow preempted by the federal CAN-SPAM Act.

Hypertouch v. ValueClick falls squarely into this category. The opinion was handed down by Los Angeles Superior Court judge Richard Adler, but it basically relies on the N.D.Cal. District Court Opinion by Judge Chesney in Hoang v. Reunion.com, which in turn relies on Mummagraphics for its preemption analysis. Judge Adler’s holding, “that any claim [desiring to survive preemption] must be based on fraud” represents just the most recent of what is becoming a majority position on CAN-SPAM preemption cases. This case was likely particularly problematic for plaintiff Hypertouch, representing a state court loss following on the heels of its federal court loss earlier.

Fortunately, the tide may be turning away from impossible fraud standards and back in favor of the actual language of the CAN-SPAM preemption clause, as two recent opinions show.

Asis Internet Servs. v. Consumerbargaingiveaways

The defendants in this N.D.Cal. district court case seemed to put in a rather rote defense recycling the holdings of Hoang v. Reunion.com, a previously blogged N.D.Cal. district court that found CAN-SPAM preemption and even a blurry holding that plaintiff might lack Constitutional standing. I imagine they were a tad surprised when another N.D. Cal. district judge in the same division, Judge William Alsup, held that their Constitutional standing argument was “without merit” and their California anti-spam law standing argument was “mistaken.” Over and above this significant difference from the Reunion.com line of thinking, Judge Alsup’s biggest departure occurs later in the opinion where he parses the preemption language of the CAN-SPAM Act. Because a second N.D. Cal. case in another division also follows and amplifies Judge Alsup’s reasoning, I thought I’d summarize them together below.

AsIs v. Vistaprint

Judge Saundra Brown Armstrong wastes no time in getting to the meat of the preemption issue in her Vistaprint holding, declaring after one brief paragraph listing the differing cases on the issue that “[t]his court agrees with the preemption analysis in the recently published order in Asis [v. Consumerbargaingiveaways], and similarly rejects Defendants’ preemption challenge.”

Judge Armstrong’s similarly brief elaboration on this holding is equally informative in its brevity – the core of her holding taking up a few brief paragraphs:

“The very terms of the savings clause exempt laws that proscribe “falsity or deception” in email advertisements, and although the terms are not defined in the Act, this Court finds they should be applied more broadly than just to common-law fraud claims. After all, Congress explicitly used the term “fraud” in the next provision of the preemption clause, yet did not in the savings clause… In the provision immediately preceding the preemption provision, Congress specifies that “[n]othing in this chapter shall be construed to affect in any way the Commission’s authority to bring enforcement actions under FTC Act for materially false or deceptive representations or unfair practices in commercial electronic mail messages.” The Court is persuaded that here too, Congress intended the phrase “falsity or deception” to be apply more broadly than just to common-law fraud claims.”

I told you so?

If this ‘when Congress meant one thing, it said it, when it meant something else, it said something else’ argument doesn’t sound familiar, I’ll step in with my own I-told-you-so pointer to my prior post on Congress’ careful word choice in the CAN-SPAM drafting negotiations:

When ‘falsity’ was intended, as in 15 USC 7707(b)1, ‘falsity’ was used. When ‘fraud’ was intended, as in a mere paragraph later in 15 USC 7707(b)2, ‘fraud’ was used. When ‘falsity’ wasn’t enough, but ‘fraud’ was too much, as in 15 USC 7701(a)1, ‘materially false’ was used. When Congress wanted to require actual knowledge, or a specific intent, as in 7704(a)2 and 7702(12), it used the terms “actual knowledge” and “intentionally.”

The brief icing on this I-told-you-so cupcake comes from Judge Alsup’s astute observation that the Mummagraphics opinion doesn’t even expressly hold all that subsequent courts have attributed to it, a point I identically brought up in criticizing the scope of the Mummagraphics holding. Judge Alsup has this to say:

“Most or all of the district court decisions that have equated “falsity or deception” with fraud have relied on [Mummagraphics. Mummagraphics,] however, merely held that state laws were preempted insofar as they permitted claims for immaterial errors. It did not hold, at least not expressly, that all elements of common-law fraud were required or that any particular element other than materiality was required to survive preemption.”

I’d say that’s a more eloquent version of my earlier observations that district courts were extending Mummagraphics even further than its mismatched holding suggested:

“[T]he Mummagraphics holding, for all its strong dicta about fraud and broad preemption, only held that CAN-SPAM would preempt a strict liability statute… Mummagraphics‘ stated holding (strict liability is preempted) is inconsistent with the Mummagraphics result (a ‘more-than-strict-liability’ statute was preempted).”

Also worth a read is the observant coverage at spamnotes.com.

The post Expansive Preemption of State Anti-Spam Laws Is Curtailed appeared first on Technology & Marketing Law Blog.

While it seems most CAN-SPAM watchers (and even traditional media, apparently) await the results of key 9th Circuit and California Supreme Court cases, CAN-SPAM rulings in lower courts and in other Circuits continue to trickle in. Two of these new cases raise issues this blog has covered in the past, but they’re still worth a quick note.

Ferron v. Subscriberbase Holdings, Inc

(excellent coverage, and a link to the decision, at spamnotes.com)

This case manages to come out just right in its results, even though the opinion relies rather extensively on the 4th Circuit’s rather poorly-reasoned Mummagraphics precedent.

If ever there were a cut-and-dried ‘actual statutory conflict’ preemption case that largely didn’t have to resort to parsing the CAN-SPAM Act’s preemption language, it is this case. The 6th Circuit Court should have just done a straight forward preemption analysis and said: “The OH statute imposes labeling and physical address requirements in a manner inconsistent with CAN-SPAM’s labeling and physical address requirements. Actual conflict preemption – the end. We need not dally in the hypothetical of whether CAN-SPAM’s preemption savings clause for ‘falsity or deception’ applies…” While the Court came to the correct conclusions about CAN-SPAM’s preemption clause not applying to this particular statute, because this statute wasn’t a “falsity and deception” law, the court muddied the waters by using Mummagraphics to get there.

On the other hand, the court correctly pointed out that the general OH consumer protection act claims were not preempted, because the state act is one of general applicability and has “false or deceptive” elements, just like CAN SPAM’s exception requires. [Author’s comment: Wow, you’d think CAN SPAM had been specifically drafted to pointedly protect state consumer protection acts from preemption or something…]

Hypertouch v. Azoogle.com, 2009 WL 734674 (N.D.Cal.)

While this order granting motions to dismiss and granting leave to amend the complaint is a new and separate case, you could be excused in confusing it with another of federal District Judge Chesney’s spam cases – the previously-blogged Hoang v. Reunion.com.

Like in Reunion.com, the opinion confuses the tort of fraud, with its special elements and pleading requirements, with the statutory provisions of the CAN-SPAM Act. To be fair, Judge Chesney does a precise and accurate job with the preemption analysis under CAN-SPAM. Everything in the opinion is an appropriate statement of the law regarding preemption, including the review of plaintiff’s less-common trespass to chattels claim.

It’s at the erroneous rulings over fraud pleading standards where this opinion looses its steam. As I bemoaned in a post over the same error in Reunion.com, falsity is still not the same thing as fraud, especially when Congress distinguishes between them in a statute. Unfortunately, this opinion also repeats this earlier mistake, and explicitly imposes the heightened pleading standards of FRCP Rule 9 because the pleadings “sound in fraud.” It’s dismaying to see this mistake again, especially after the judge even concedes that the plaintiffs in their complaint explicitly noted that they were not asserting a general claim for the tort of fraud.

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