Federal Court Rejects Particularity Challenge to Spam Claims
A federal court in Washington denied a Motion to Dismiss for lack
of particularity and for failure to state a claim in a CAN-SPAM/state spam case (the case is Gordon
v. Virtumundo, Inc., et al., Case No 06-0204-JCC) (pdf version of the
order here). Plaintiffs brought claims under Washington’s email
statute, CAN-SPAM, the Washington prize statute, and the Washington
Consumer Protection Act. Defendants moved to dismiss for failure to
state a claim and for lack of particularity.
Plaintiffs' CAN-SPAM claims were premised on misleading subject lines, lack of an unsubscribe option, no disclaimer, and no postal address. The court denied the Motion with respect to the CAN-SPAM claims, finding that the claims did not contain elements of fraud (knowledge of falsity, intent to deceive, or reliance on the deceptive statements). The court rejected the Northern District of California’s reasoning in Asis Internet Services, which held that certain CAN-SPAM claims could sound in fraud for purposes of the particularity requirement.
Plaintiffs’ Washington state spam claims were premised on misleading subject lines, misrepresented points of origin, and finally, that Defendants took action to induce Plaintiffs to provide personally identifying information. The court declined to apply the particularity requirement with respect to the first two claims. According to the court Defendants' alleged inducement to Plaintiffs to disclose personally identifying information should have been pled with particularity.
The court dismissed the prize statute claims (with leave to amend) and the CPA claims to the extent these piggybacked on the prize state claims. The court refused to dismiss the CPA claims based on the Washington spam statute claims. Washington courts have interpreted Washington's CPA statute to require damage to business or property – in my recollection, specifically rejecting “time away from work” and other similar intangible costs. Nevertheless the court held that the CPA claim could be premised on the Washington spam statute violation (based on an explicit legislative declaration that a state spam statute violation is a per se CPA violation).
On one level, the court’s refusal to grapple with the issues around preemption and particularity is disappointing. CAN-SPAM preempts state email statutes except to the extent they deal with falsity or deception. Mummagraphics reads CAN-SPAM to cover only material misstatements. There is a powerful case to be made that both state spam and CAN-SPAM claims (at least the ones dealing with misleading subject lines – the thrust of which clearly is reliance by the reader) should be pled with particularity. I can see how labelling, postal address information, and unsubscribe-related claims need not be pled with particularity. But for emails that are alleged to be misleading, 9th Circuit law certainly seems to require particularity, even if the cause of action does not track the elements of fraud.
In the end, this incident probably illustrates the marginal utility of Motions to Dismiss. Sometimes courts engage, and give you a roadmap as to the contours of the claims. Other times not. This falls in the latter category. I guess this also illustrates that Mummagraphics' wake is not being felt in the 9th Circuit.
Plaintiffs' CAN-SPAM claims were premised on misleading subject lines, lack of an unsubscribe option, no disclaimer, and no postal address. The court denied the Motion with respect to the CAN-SPAM claims, finding that the claims did not contain elements of fraud (knowledge of falsity, intent to deceive, or reliance on the deceptive statements). The court rejected the Northern District of California’s reasoning in Asis Internet Services, which held that certain CAN-SPAM claims could sound in fraud for purposes of the particularity requirement.
Plaintiffs’ Washington state spam claims were premised on misleading subject lines, misrepresented points of origin, and finally, that Defendants took action to induce Plaintiffs to provide personally identifying information. The court declined to apply the particularity requirement with respect to the first two claims. According to the court Defendants' alleged inducement to Plaintiffs to disclose personally identifying information should have been pled with particularity.
The court dismissed the prize statute claims (with leave to amend) and the CPA claims to the extent these piggybacked on the prize state claims. The court refused to dismiss the CPA claims based on the Washington spam statute claims. Washington courts have interpreted Washington's CPA statute to require damage to business or property – in my recollection, specifically rejecting “time away from work” and other similar intangible costs. Nevertheless the court held that the CPA claim could be premised on the Washington spam statute violation (based on an explicit legislative declaration that a state spam statute violation is a per se CPA violation).
On one level, the court’s refusal to grapple with the issues around preemption and particularity is disappointing. CAN-SPAM preempts state email statutes except to the extent they deal with falsity or deception. Mummagraphics reads CAN-SPAM to cover only material misstatements. There is a powerful case to be made that both state spam and CAN-SPAM claims (at least the ones dealing with misleading subject lines – the thrust of which clearly is reliance by the reader) should be pled with particularity. I can see how labelling, postal address information, and unsubscribe-related claims need not be pled with particularity. But for emails that are alleged to be misleading, 9th Circuit law certainly seems to require particularity, even if the cause of action does not track the elements of fraud.
In the end, this incident probably illustrates the marginal utility of Motions to Dismiss. Sometimes courts engage, and give you a roadmap as to the contours of the claims. Other times not. This falls in the latter category. I guess this also illustrates that Mummagraphics' wake is not being felt in the 9th Circuit.
Comments