Bringing a Spammer to Justice

New Jersey Law Journal November 8, 2004
Copyright 2004 ALM Properties, Inc. All Rights Reserved.

HEADLINE: Bringing a Spammer to Justice;
Before initiating a suit against a spam user, procedural issues must be considered

BYLINE: By Jonathan Bick; Bick is of counsel to WolfBlock Brach Eichler of Roseland and is an adjunct professor of Internet law at Pace Law School and Rutgers Law School. He is also the author of 101 Things You Need To Know About Internet Law [Random House 2000].

When initiating a private action against a spammer, the first issue the plaintiff must grapple with is jurisdiction. If a recipient of spam is located in the same state as the spam sender, ordinary private action rules apply. However, many would-be defendants reside outside the state where the spam recipient resides, and long-arm jurisdiction must be employed. Recent case law supports the conclusion that states can reach out-of-state offenders.

Internet Doorway, an ISP, brought a tort suit against a nonresident sender of e-mail that advertised pornographic Internet sites. Internet Doorway Inc. v. Parks, 138 F.Supp.2d 773 [S.D. Miss. 2001]. A Texas resident sent e-mail to people all over the world, including Mississippi residents, with a falsified header that made the e-mail appear to have been sent from an Internet Doorway account. Internet Doorway asserted claims for violations of the Lanham Act and trespass to chattels. The defendant moved to dismiss for lack of personal jurisdiction.

The court examined two necessities for personal jurisdiction - the state's long arm statute must be satisfied and the exercise of personal jurisdiction must not affront traditional notions of fair play and substantial justice. Under the Mississippi long arm statute, a court may exercise personal jurisdiction over a defendant who: 1] makes a contract with a state resident to be performed in the state; 2] commits a tort in the state; or 3] does business i.e., performs work or service in the state. The court recognized that the defendant committed a purposeful act that occurred in Mississippi, just as if the Internet user had sent a letter to a Mississippi resident via U.S. Mail advertising a product or service. Consequently, the Internet user was found to be doing business within the contemplation of the Mississippi long arm statute.

A Virginia court also considered the issue of personal jurisdiction in Verizon Online Services, Inc. v. Ralsky, 203 F.Supp.2d 601 [E.D. Va. 2002]. Verizon, an ISP, brought an action against defendants based on their transmission of spam through its network, which operates a handful of servers in Virginia.

Verizon alleged the transmissions overwhelmed its servers. The action resulted in interruptions in processing e-mail and provoked consumer dissatisfaction, as expressed in complaints. The defendants, Michigan residents, transmitted millions of unsolicited bulk e-mails addressed to Verizon subscribers through the Verizon computer network advertising goods and services. The defendants used nonexistent e-mail user names in the "to" line and used false information in the "from" line. In addition, the defendants sent e-mail from third party servers, used false information to obtain Web sites connected to the hypertext in their spam messages, and used false opt-out links.

The defendants sought dismissal based on a lack of personal jurisdiction, but the court found sufficient minimum contacts to satisfy due process. The court examined personal jurisdiction in a two-step inquiry - whether the Virginia long arm statute is satisfied and whether the long arm statute's reach complies with due process requirements.

The court found that it could exercise personal jurisdiction over a defendant that causes a tortious injury in Virginia if: 1] he regularly does or solicits business in the state; 2] he engages in any other persistent course of conduct in the state; or 3] he derives ample revenue from goods used or services rendered in Virginia. The court found that using Verizon's e-mail servers caused damage in Virginia and that the defendants' purposeful, persistent, commercial conduct satisfied the long arm statute.

The court then addressed due process, asking whether bringing the defendants into a Virginia court would offend traditional notions of fair play and substantial justice. The defendants claimed they did not purposefully avail themselves of the laws and privileges of Virginia because they did not knowingly target Virginia residents. However, the court rejected that argument because the defendants sent millions of e-mails to solicit business at no cost to them, while causing a tort where the recipients are located.

Government Actions

Spammers will typically receive a state-incited Consumer Protection Act action and/or a civil investigation demand from the United States Federal Trade Commission. It is not uncommon for a spammer to receive both nearly simultaneously.

The state Consumer Protection Act action will normally be submitted by an assistant attorney general in the consumer protection division. The action will usually contain two or more of four causes of action, including: a violation of the CAN-SPAM Act; a violation of state advertising practices; a violation of state licensing practices; a violation of a state deceptive trade practice or fraud statute and a violation of a state health, safety or welfare regulation. The relief requested is a show cause why a preliminary injunction should not issue, then a preliminary injunction restraining the spammer from all e-mail content and activities, and finally a permanent injunction. Additionally, the action will seek restitution to all consumers and civil penalties, including state attorney fees.

The Federal Trade Commission Civil Investigative Demand is prepared by the commission counsel and authorized by a commissioner. The demand sent to spammers is allegedly an attempt to determine if a spammer used deceptive e-mail practices. It normally consists of six to ten pages of document requests that are normally due within a month of issuance.

Both state-incited Consumer Protection Act action and civil investigation demand from the United States Federal Trade Commission are invitations to negotiate. Negotiations rather than litigations have been the route preferred by both government officials and spammers. Consequently, far more settlements than court decisions concerning spam-related difficulties have resulted.

This outcome is most likely attributed to the relatively small damages available and the difficulty for government agencies to prove actual damages. Additionally, spam cases also may be more difficult to win than initially anticipated because judicial incursion authority might be impaired if there were significant free speech interests at stake.

Even when significant free speech interests are not at stake, many courts presume that an Internet user who connects to the Internet consents to any lawful communication by any person who can access the Internet. As in the case of most presumptions, it is reputable. Internet users can normally rebut this presumption by notifying a spammer that the Internet user does not consent to particular communications, or consents to such communications only to certain conditions.

Notice must be given on a case-by-case basis. One notice cannot be used for all situations. For example, spam users that rely on automated browsing programs are bound only by notices they can read, and individual spam users are bound only by notices they can read. Conditions should be analyzed under general legal rules, such as a contract. Deviations from this regime exist, but this is currently the default presumption of most courts.

In the case of a state action, three major courses of action are available to the spammer. First, answer the summons. Second, make a motion to dismiss without submitting to the jurisdiction of the court. Third, take action outside of the complaining state.

Typically, the cause of action set forth in most state spam cases is based on cookie cutter complaints and thus are normally adequately pleaded. The answer may be made in one of two ways: [a] fight the case in state court, or [b] have the case removed to federal court [and perhaps moved to out of the federal court in the state the action was brought].

Fighting the case in the state court is the first option. Based on the fact that the spammer normally did not send the spam in question, the spammer will most likely prevail on three charges that claim a violation of the state Consumer Protection Act. If a state license issue is raised, it is not likely a spammer will be able to prevail on that charge. The cost of losing will depend upon the amount of money the spammer has received from state consumers; the damage done to state consumers; and penalties and attorney fees to the state [usually $10,000 to $100,000].

A spammer could also respond by seeking to remove the action to federal court, or seeking to transfer the action to a different state. It should be noted that the venue [the place of the trial] will not control governing law, but a spammer could remove the state home court advantage and increase the likelihood of prevailing.

A spammer could make a motion to dismiss without submitting to the jurisdiction of the court. Normally, an out-of-state spammer may challenge personal jurisdiction without submitting itself to jurisdiction. However, although no general jurisdiction over a spammer exists, specific jurisdiction normally exists based on the spammers business connections to residents of the complaining state and the spammer's use of a state facility, such as a post forwarding mail drop.

Should a spammer not respond, the state will move and likely get a default judgment, which is as unfavorable as losing the case. Usually, the judgment would be recognized under full faith and credit, and not subject to any significant challenge. It would then most likely be enforced through registration under the Uniform Enforcement of Foreign Judgments Act, which has been enacted in most states.

Should a spammer choose not to respond, the spammer should take steps to mitigate the result of enforcement. These steps include positioning to take advantage of the protection of bankruptcy laws, securing litigation insurance, and challenging service of summons.