This week, the U.S. Court of Appeals for the Fourth Circuit affirmed a judgment from the United States District Court for the District of Maryland dismissing a $600 million spam lawsuit brought under California’s and Maryland’s anti-spam statutes by Internet Service Provider, Beyond Systems, Inc. (“Beyond Systems”) against Kraft Foods, Inc. (“Kraft”) and Connexus Corp, respectively. The Circuit Court held that Beyond Systems was precluded from recovery because it had consented to the receipt of the email marketing of which it complained. The facts, as detailed below, indicate that Beyond Systems not only consented to the receipt of the subject email messages, but affirmatively invited them. Accordingly, the courts proved unwilling to reward such behavior with a multi-million dollar award.
- Beyond Systems has an extensive history of litigating spam-trap claims and generates nearly 90% of its income from collecting damages from spam-trap litigation.
- Beyond Systems did not have meaningful anti-spam filters in place and its software settings to block or reject unsolicited commercial email had been turned off.
- Beyond Systems encouraged receipt of unsolicited commercial email by developing webpages with hidden fake-email addresses embedded in the coding – the email addresses were only discoverable to computer programs known as “spam crawlers,” which are used by unscrupulous marketers to locate email addresses and subscribe them to email lists.
- Beyond Systems increased its email storage capacity to retain huge volumes of email, hoping to increase its eventual recovery under anti-spam statutes, and intentionally participated in the routing of email from California to Maryland for purposes of further increasing its exposure to spam in order to allow it to sue under both California and Maryland Law.
A Limit to Courts’ Tolerance for Spam Lawsuits?
This case is instructive for more than just the particular set of facts unique to this matter. The Circuit Court engaged in a lengthy legal analysis into the role of the common law doctrine, “volenti non fit injuria” (to a willing person it is not a wrong), in precluding a plaintiff’s recovery under both the California and Maryland anti-spam statutes. The Circuit Court ultimately adhered to the general principle that under tort law, there is no wrong done to one who consents. As such, a prominent federal court has now set an upper boundary to what is acceptable behavior from a spam-trapping plaintiff seeking to recover damages against an email marketer. While a plaintiff, such as Beyond Systems, may ultimately prove to be an extreme example of a litigant gratuitously creating the circumstances to support its legal claims, the case nevertheless proves that there is a point at which the courts will not recognize a spam claim because of the plaintiff’s own behavior. Despite the prevalence of lawsuits brought under California’s Business and Professions Code § 17529.5, this ruling, along with a ruling on which we recently reported, represent positive developments for email marketers concerned with the ever-expanding regulatory minefield governing their business practices.
It must be noted, however, that the Circuit Court did not preclude the future possibility that a legitimate Internet Service Provider can bring suit and recover damages when its business has been impacted by deceptive spam, even in those scenarios where it has gathered and retained deceptive email, and even set “spam traps” to help identify those responsible. Therefore, it is imperative for email marketers to work with experienced counsel to implement practices and procedures to prevent the sending of unlawful commercial email. In situations where an email marketer nonetheless finds itself on the receiving end of a spam lawsuit, it should contact counsel well-versed in the intricacies of email marketing law at the earliest stages of the proceedings.