Whether you are an advertiser or a marketer, if you engage in email advertising you have received, or likely will receive, a settlement demand letter or papers commencing a lawsuit from one of many California-based plaintiffs or law firms.

While many advertisers and marketers anticipated an explosion of lawsuits after the passage of the CAN-SPAM Act of 2003, the number of CAN-SPAM cases actually litigated has been fairly modest due in part to limitations on private individuals’ right to file suit.  Conversely, state deceptive marketing laws, particularly California Business and Professional Code §17529 (“§17529”), have become a very fertile ground for litigation, as well as for demands for settlement in advance of litigation.

What is §17529

§17529 is, in effect, the California anti-spam law, which covers multiple aspects of email marketing.  §17529.2 generally prohibits unsolicited commercial email sent to California email addresses, as well as unsolicited commercial email sent from California.  Because it is often impossible to determine where an email recipient is physically located by his/her email address alone, §17529.2 has acquired somewhat of a de facto national application.   Further, §17529.5 prohibits the sending of any commercial email advertisement from California or to a California electronic mail address – - which email contains falsified, misrepresented or forged header information or which contains a subject line that a person knows would be likely to mislead a recipient . . . about a material fact regarding the contents or subject matter of the message.

How To Defend a §17529 Spam Lawsuit

Often a §17529 lawsuit is preceded by a demand letter insisting that you pay $1000.00 per email plus attorney’s fees, or a slightly discounted amount to avoid the filing of the prospective suit.  Alternatively, the filing of the lawsuit may be accompanied by a similar settlement demand letter.  What should you do when you receive such a lawsuit or letter?

First, take a deep breath.  You will get the best possible result if you take the appropriate steps.  While any lawsuit is a serious matter, there are many factual and legal defenses, a few of which are set forth below, which may potentially end the case quickly and relatively painlessly.  The ultimate outcome of the case may depend largely upon your initial response.

Second, do not create or destroy documents.  Whether you receive a demand letter or papers commencing an actual lawsuit, there are strict rules relating to the retention of documents for purposes of litigation.  In our digital age, document destruction, tampering or spoliation will generally be uncovered during the discovery portion of the action.  Such activities can result in significant monetary sanctions and/or lead the applicable court to strike critical defenses that would have been otherwise available to you.

Third, do not overreact.  A call to plaintiff’s counsel in defense of your business practices will almost certainly cause much more harm than good.  Business practices that you believe to be proper, and that many or most of your peers  engage in may, in fact, be precisely the basis of plaintiff’s claim.  Sharing your business practices or other material facts with plaintiff may simply confirm plaintiff’s case and serve as a clear admission of wrongdoing.

Fourth, or perhaps first, speak with experienced counsel.  Immediately upon being served with, or otherwise notified of, a §17529 filing, it is critical that you contact experienced counsel, preferably counsel familiar with §17529, and email marketing laws generally.  Once you have retained appropriate counsel, you should provide them with any and all relevant details – both good and bad, especially regarding your business model and your place in the email marketing chain. It is particularly important for your counsel to know where the potential potholes and landmines are.

As referenced above, there are many factual and legal defenses that may apply to your case.   For example, have you established and implemented practices and procedures to effectively prevent the sending of unlawful commercial email?  If so, the court may limit damages to a maximum of $100.00 per email, rather than affix a cost of $1000.00 per email.  Are you an advertiser?  If so, you may have indemnity rights that you can invoke with your email publisher, or vice versa.  Did you have consent from the recipient to send him/her the email in question?  If so, that is a defense to certain claims under §17529.  Do the emails referenced even relate to you as an advertiser or marketer?  Perhaps the plaintiff named your business erroneously, or served it improperly?  Often plaintiff’s counsel, despite best efforts, does not have all of the material facts or, more particularly, factual defenses, that may apply to your case.

Avoid Being Named in a Spam Lawsuit Altogether

For peace of mind, as well as to save the potential substantial costs of litigation, a penny of prevention is worth a pound of cure.  The best way to succeed in any §17529 action is to never appear on plaintiff’s radar screen in the first place.  Are you currently working on a regular basis with experienced Internet marketing counsel, versed in the intricacies and nuances of §17529, CAN-SPAM and online marketing law?  As referenced above, if you are served with a lawsuit, the ability to demonstrate that you worked with counsel to implement practices and procedures to prevent the sending of unlawful commercial email should go a long way toward significantly reducing your potential damages.

This topic should be of interest to any company or individual engaging in email marketing.