In this case, the United States Court of Appeals for the Ninth Circuit affirmed the grant of a summary judgment motion against an anti-spam plaintiff, James S. Gordon, Jr. The court held that Gordon lacked standing to bring claims under the CAN-SPAM Act of 2003, and that Gordon's claims under Washington's Commercial Electronic Mail Act ("CEMA") were preempted by the CAN-SPAM Act of 2003. Gordon also brought claims under Washington's Consumer Protection Act. However, because these claims relied primarily on Gordon's CEMA claims, the Ninth Circuit determined that they were also properly dismissed.
The plaintiff, James S. Gordon, Jr. ("Gordon"), ran a business - Omni Innovations, LLC - that provided software development services, and worked to discourage spamming activity through litigation. In connection with this business, Gordon registered and maintained an internet domain name ("gordonworks.com") through GoDaddy.com. He established email accounts in connection with this domain name, and used these email accounts to attract the attention of spammers.
In 2004, Gordon began suing companies that were sending him spam emails, and in 2006 Gordon sued the defendants - Virtumundo, Inc. and Adknowledge, Inc., together with the sole shareholder of both companies ("Virtumundo") - in the U.S. District Court for the Western District of Washington. In his lawsuit, Gordon argued that Virtumundo's spamming activity violated: (1) the CAN-SPAM Act of 2003; (2) CEMA; (3) Washington's Consumer Protection Act; and (4) Washington's "Prize Statute" (Revised Code of Washington Title 19, Chapter 19.170).
Gordon v. Virtumundo I: The District Court Decision:
Due to pleading deficiencies, the District Court dismissed Gordon's Prize Statute claim. In May 2007, the court also granted Virtumundo's motion for summary judgment, finding that Gordon lacked standing to bring claims under the CAN-SPAM Act, and that his claims under Washington's CEMA and Consumer Protection Act were preempted by the CAN-SPAM Act. Gordon's appeal of this decision brought his case to the Ninth Circuit.
The Ninth Circuit on CAN-SPAM's Standing Requirement:
Finding that the CAN-SPAM Act's standing requirements are "ambiguous," the Ninth Circuit drew on "familiar techniques of statutory construction" to decide what Congress intended in providing for "internet access providers" to bring private lawsuits under the CAN-SPAM Act.
The court first noted the following principles standing behind its interpretation of CAN-SPAM's standing requirements:
- The purpose of the CAN-SPAM Act was not to completely eliminate spam: "there are beneficial aspects to commercial e-mail, even bulk messaging, that Congress wanted to preserve, if not promote." The "fine balance" struck by Congress involves the attempt to alleviate the negative effects of spam by targeting "deceptive and predatory" commercial email practices. 575 F.3d at 1049
- Congress conferred standing to bring CAN-SPAM lawsuits on a "narrow group of possible plaintiffs": the Federal Trade Commission, federal and state agencies, state attorneys general, and "internet access service providers" who are "adversely affected" by violations of the CAN-SPAM Act. Congress' intent in carving out such a narrow group was to confer standing on parties "best suited" to detecting, investigating, and prosecuting violations of the Act - "those well-equipped to efficiently and effectively pursue legal actions against persons engaged in unlawful practices and enforce federal law for the benefit of all consumers." 575 F.3d at 1050
- Congress was concerned about the possibility that substantial damage awards would induce private parties to portray themselves as "internet access service providers," in order to profit from collecting the damages. Congress' intention in drafting the CAN-SPAM Act was to prevent this, and to carefully limit the domain of legitimate "internet access service providers." 575 F.3d at 1050
- Given the rapid pace of technological change involved with the internet, courts must be especially careful to maintain clear and limited boundaries in their interpretations of the law. 575 F.3d at 1050-51
Based on these principles, the Ninth Circuit held that Gordon lacked standing because (1) he was not an "internet access service provider" and (2) he was not "adversely affected," in the sense intended by Congress, by violations of the CAN-SPAM Act. Specifically, the court held that:
- Providing email accounts is not enough to confer status as an "internet access service provider" under the CAN-SPAM Act. Comparing Gordon's case to the case of The University of Texas at Austin, where provision of both email accounts and email access was sufficient to confer status as an "internet access service provider," the Ninth Circuit noted that a "technical or hardware component" may be the distinguishing factor. In any case, Gordon was completely dependent on other service providers (Verizon and GoDaddy) in providing email accounts. And furthermore his provision of email accounts seemed designed to elicit spam. For these reasons, the court held that he could not be viewed as an "internet access service provider" under the CAN-SPAM Act. 575 F.3d at 1051-52
- In order to confer standing, an "adverse effect" suffered from a violation of the CAN-SPAM Act must be something like what an "internet access service provider" would suffer. The harm must exceed "the ordinary inconveniences experienced by consumers and end users." In most cases, the court noted, some combination of operational and technical impairment, which is expensive to rectify, would be sufficient. However, there would need to be a clear causal nexus between (1) the harms and costs incurred, and (2) illegal spamming activity. Gordon failed to meet this standard, and, moreover, seemed to invite spam, rather than attempting to mitigate costs arising from spam. 575 F.3d at 1052-57
The Ninth Circuit on CAN-SPAM's Preemption of Gordon's Claims Brought Under CEMA:
The court held that Gordon's CEMA claims were preempted by the CAN-SPAM Act because they did not fit within the CAN-SPAM Act's limited exception to preemption; under this exception, state laws that prohibit fraud or deception in commercial email messages are not preempted by the CAN-SPAM Act. See 15 U.S.C. § 7701(b)(1); CAN-SPAM Act of 2003: Preemption.
Gordon's claims were brought under:
- Revised Code of Washington § 19.190.020(a), which prohibits "misrepresenting or obscuring" information about the origin or transmission path of an email. (This information was alternately referred to by the court, and by Gordon, as email "headers," "from lines," "from names," and "domain names.") 575 F.3d at 1058, 1063-64; and
- Revised Code of Washington § 19.190.020(b), which prohibits sending an email with false or misleading information in the subject line.
However, because Gordon did not identify or describe any false or misleading subject line information, the court held that summary judgment was properly granted with respect to this claim. 575 F.3d at 1058
Based on analysis of the CAN-SPAM Act's text, structure, and legislative history, the Ninth Circuit determined that:
- Congress intended the CAN-SPAM Act to broadly preempt state regulation of commercial email, and intended to allow only a narrow exception for state laws targeting fraud or deception in commercial email communications. The court agreed with the U.S. Court of Appeals for the Fourth Circuit (in Omega World Travel v. Mummagraphics, 469 F.3d 348, 354 (4th Cir. 2006)), which interpreted the CAN-SPAM Act's limited exception to preemption as extending only to "traditionally tortious or wrongful conduct." Under this interpretation, CAN-SPAM established a "national standard" for the regulation of commercial email, and limited state regulation to extensions of "traditional tort theories," such as fraud or deception. 575 F.3d at 1059-63
- Interpreted in light of these CAN-SPAM Act preemption principles, CEMA claims relating to "header" information (e.g. domain names) must be substantiated with evidence of actual fraud or deception, analogous to what would be required in a traditional tort case. Where the evidence shows merely that header information is incomplete or difficult to identify with a particular sender, claims will not survive preemption analysis. 575 F.3d at 1063-64
Note: Washington's Attorney General, as amicus curiae, had argued that the Ninth Circuit should affirm the district court's grant of summary judgment, without ruling on the preemption issue. The Attorney General argued that Washington's "well-developed deceptiveness standard" would apply to the interpretation of CEMA, and that, according to this standard, Gordon's allegations were legally insufficient under Washington law. The Ninth Circuit, however, was not persuaded that the broad language of CEMA would necessarily be interpreted according to Washington's "deceptiveness" standard, noting that a Washington appellate court had recently applied ordinary dictionary definitions in interpreting the words "misrepresent" and "obscure." The Ninth Circuit expressed concern that application of these ordinary dictionary definitions could extend liability for email header information far beyond actual "deceptiveness." 575 F.3d at 1058-59