Court Tags CAN-SPAM Plaintiff With $111,000 Fee Award


I previously mentioned James Gordon's devastating loss in the Western District of Washington a while back.  Recently, I picked up on happenings in several other Gordon lawsuits in Washington, and wondered when the Gordon train would come to a grinding halt.  That moment is probably here.  Yesterday, the Court in Virtumundo granted Defendants' Motion for Attorney's Fees, and awarded Virtumundo (and its counsel) fees and costs in the amount of $111,440.00. 

In many respects this is just as much of a blockbuster as Mummagraphics and the first Gordon (SJ) ruling.  A few points worthy of note: 

First, this is the first instance I'm aware of where prevailing defendants were awarded fees under CAN-SPAM.  (See here for a case where CAN-SPAM Defendants who prevailed on jurisdictional grounds were denied fees.) Say what you will about the deterrent effect of the other rulings.  But nothing will make you think twice about bringing a lawsuit more than the prospect of a six figure attorney's fees award against you.

Second, the Court articulates the applicable standard.  The Court notes a choice between the more plaintiff-friendly standard applicable in civil rights cases and the more defendant-friendly standard applicable in areas such as copyright.  The Court opts for the latter, finding that the important policies present in civil rights cases of achieving the statutory objectives through private attorneys general are not present in CAN-SPAM cases.  The Court also notes that the enforcement scheme outlined by CAN-SPAM does not emphasize private actions.  Accordingly, the overall principles underlying CAN-SPAM will not suffer if plaintiffs are more likely to have to pay defendants' fees upon losing suit.  Finally, the Court notes that businesses under CAN-SPAM have an equally vested interest in showing that their practices are legitimate.  Based on all of this, the Court decides to apply the Fogerty-Leib test (applicable in copyright cases) consisting of several nonexclusive factors including "frivolousness, motivation, objective unreasonableness . . . and the need . . . to advance considerations of compensation and deterrence." 

Applying this standard, the Court finds that fees are appropriately awarded to Defendants.  First, the fact that Defendants won based on lack of standing is relevant.  Second, the Court found it:

obvious that Plaintiffs are testing their luck at making their "spam business" extraordinarily lucrative by seeking statutory damages through a strategy of spam collection and serial litigation. . . . Plaintiffs are assembling a litigation factory, which if successful, could net millions of dollars in profit, at least theoretically.

(the Court lists the "ten additional cases" brought by Gordon).  Third, the Court found it significant that Gordon did not seek any actual damages.  When added up, the Court concludes that:

Plaintiffs' instant lawsuit is an excellent example of the ill-motivated, unreasonable, and frivolous type of lawsuit that justifies an award of attorneys' fees to Defendants under Fogerty.

Ouch. 

I'm torn a bit on the ruling.  I think it's ultimately the right result, and as the Court points out, Gordon is a serial plaintiff.  As such, he should pay the price when he loses.  However, it's not as if he's been repeatedly rebuffed by the courts.  He pushed the envelope using (in retrospect) what seem like bad arguments.  But a six figure award may not be warranted.  That's a pretty steep penalty. 

At any rate, CAN-SPAM plaintiffs beware!

[Minor edits after-the-fact.]
 
 
Trackbacks
  • 8/6/2007 12:53 PM Technology & Marketing Law Blog wrote:
    By Eric Goldman Gordon v. Virtumundo, 06-0204-JCC (W.D. Wash. Aug. 1, 2007) I believe this ruling represents the first time...
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