Anti-SPAM Plaintiffs Find Little Success in the Courthouse, But They Can Cause Mountains of Attorneys’ Fees

December 7, 2009

As businesses across the country increase their efforts to market their products through e-mail, a motley crew of plaintiffs have created a cottage industry of lawsuits seeking damages for e-mails that they claim violate the federal CAN-SPAM Act and deceptive advertising laws.

Fortunately, federal courts have done a good job filtering through the cases and rejecting those plaintiffs who seem to bring claims for no reason other than to generate income.  Last week, in a case titled ASIS Internet Services v., the Ninth Circuit rejected CAN-SPAM claims brought by a small ISP plaintiff. The Ninth Circuit relied upon its previous ruling in Gordon v. Virtumundo, finding that lacked standing to bring a CAN-SPAM claim because it was not “adversely affected by” any statutory violation.  Specifically, the Ninth Circuit stated:

the mere costs of carrying SPAM emails over Plaintiff's facilities does not constitute a harm as required by the statute. While Plaintiff argues that employee time was spent on spam-related issues, Plaintiff concedes that it has no records detailing employee time. Plaintiff also spent money on email filtering, though the cost of email filtering did not increase due to the emails at issue. Such ordinary filtering costs do not constitute a harm. Thus, Plaintiff has not suffered a harm within the meaning of the statute and lacks standing.

The ruling is significant because is an actual ISP, albeit a small one, with real users who have real e-mail accounts.  This case did not involve the same kind of facts encountered in Gordon v. Virtumundo, where the plaintiff set up an ISP for the sole purpose of collecting e-mails and filing lawsuits based upon technical violations.  The Ninth Circuit’s clear message is that it will not entertain CAN-SPAM lawsuits that consume judicial resources and cause excessive attorneys’ fees, when there is little to no actual damage to the plaintiff.  Under this standard, we may be headed toward a legal framework in which CAN-SPAM claims can only be brought by larger ISPs, social networking websites and state actors.

However, even under this framework, the onslaught of e-mail advertising lawsuits does not appear to be going away any time soon.  Numerous private plaintiffs not only continue to bring e-mail advertising claims under the CAN-SPAM Act, but they are also bringing claims under the general federal and state deceptive advertising laws. 

For example, the Ohio Administrative Code has specific rules about the use of asterisks in advertisements and the font size of any qualifiers used in connection with the use of the word, “FREE.” As a result, plaintiffs in Ohio have filed numerous e-mail advertising lawsuits seeking to capitalize on these kinds of provisions and claiming nothing but statutory damages and attorneys’ fees.

While these kinds of claims have been repeatedly rejected by the courts, the cost of defending such cases can be pricey.  The best practice is to obtain legal counsel before publishing your e-mail advertisements to make sure all laws have been followed and there are no technical problems for plaintiffs to prey upon.