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Silverstein v Keynetics
Silverstein v Keynetics, Inc., and Click Sales., Inc, No. 17-15176 (9th Cir. 2016), United States District Court, Northern California
Pre-emption, spam email, fictitious name, class action, CAN-SPAM Act
The plaintiff Silverstein commenced action against the defendants Keynetics, and its subsidiary Click Sales under Californian civil procedure class action provisions. The class action alleged the Defendants had violated California’s restrictions imposed on unsolicited commercial email. In particular, the Plaintiff claimed that the Defendants (each Internet-based ‘direct’ marketing companies) group, had sent the Plaintiff (and many thousands of others) unsolicited, and unlawful commercial emails (‘spam’ emails) to his LinkedIn social media address.
These Defendant emails had fictitious authors names provided in the ‘From’ name field in each email heading (such as ‘Liana Christian’, and ‘Whitney Spence’). The Plaintiff alleged this ‘From’ information falsely described the actual spam emailer sender. In a four-month period between July and November 2015, the Plaintiff received 86 such emails. Each email provided links to various marketing web sites controlled by the Defendants.
The Plaintiff alleged these emails violated the California Business and Professions Code (Code) section 17529.5 prohibition against unsolicited commercial email, where the email ‘contains or is accompanied by a third party’s domain name (in this case, LinkedIn), without the third party’s permission. Silverstein alleged that the Defendant’s email header information was ‘fictitious and false’ in two ways: (1) the sender names, and (2) by ‘hiding’ their names by using the Linkedin domain, the Defendant’s misappropriated LinkedIn’s goodwill. The Plaintiff sought liquidated damages ($1000 per email), and costs.
The Defendants resisted this claim on the primary basis that the California state law had been pre-empted by Federal law, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), 15 U.S.C. §§ 7701-7713. The CAN-SPAM provisions expressly supersede any State email regulation, except to the extent that such regulation prohibits commercial email message ‘falsity or deception’ in any portion of it. The Defendants accordingly moved to dismiss the Plaintiff’s claim pursuant to Federal Rules of Civil Procedure.
- Whether the fictitious names the Defendant’s emails included in the ‘From’ header contained false or deceptive information within CAN-SPAM meaning, and thus permitted to Plaintiff to proceed against them under the California Code unsolicited email provisions.
- Whether the Defendant’s ‘From names were materially false or misleading, where those names were accompanied by accurate domain names, subject lines and the e-mail was clearly commercial in nature.
- Whether the Plaintiff’s claim should be dismissed on the basis that CAN-SPAM supersedes State law
Under the Federal Civil Procedure Rules, the Defendant’s motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims the Plaintiff alleges. (Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). When reviewing these motions, the Court must accept as true all factual allegations the Plaintiff’s complaint contains, as noted in Erickson v. Pardus, 551 U.S. 89, 94 (2007).
Where a plaintiff claims the California ‘spam’ email prohibitions have been violated, they must demonstrate that the ‘From’ email header information violates California Code provisions by virtue of containing material misrepresentations (the fictitious names). In earlier cases (notably Gordon v. Virtumundo, Inc., 575 F.3d 1040, 1061 (9th Cir. 2009), citing Omega World Travel, Inc. v. Mummagraphics, Inc., 469 F.3d 348, 354 (4th Cir. 2006)), the US District Court Ninth Circuit had concluded that these direct marketing emailer actions do not amount to CAN-SPAM Act ‘falsity or deception’, on the basis that there was ‘nothing inherently deceptive in [defendant’s] use of fanciful domain names’.
Gordon makes the important distinction between fictitious email senders that do not disguise the commercial email origin, and cases such as Balsam v. Trancos, Inc., 203 Cal. App. 4th 1083 (2012), where the email header information was falsified or misrepresented with the California Code prohibition meaning. A similar approach was later adopted by the California Court of Appeal (Rosolowski v. Guthy-Renker LLC, 230 Cal. App. 4th 1403, 1407 (2014)).
In Gordon, the Ninth Circuit had further observed that any domain registrant is readily identified by using a ‘reverse-look-up’ database. On this basis, the header information does not deceive the email recipient into believing that the email was not commercial in nature, or that this recipient cannot identify the true sender. This reality defeated the Gordon plaintiff’s ‘technical allegations regarding the header information’, ones that the Court found had no basis in traditional tort theory.
Further, Gordon confirms that for the California Code provisions to apply, the false or deceptive commercial email information must be material. Congress, through the CAN-SPAM pre-emption provisions, did not intend that States laws could impose liability regarding emails prohibiting ‘mere errors’, or ‘insignificant inaccuracies’.
For these collective reasons, the Court concluded that the Plaintiff’s alleged email header deficiencies, at their highest, related to non-deceptive statements or omissions, and the claim is pre-empted accordingly by the CANSPAM Act. The Court thus resolved all three Issues in the Defendant’s favour.
In its brief reasons (Silverstein v. Keynetics, Inc., 727 Fed. Appx. 244 (9th Cir. 2018), the US Court of Appeals for the Ninth Circuit upheld the District Court reasons.
Not mentioned in the District Court’s reasons is the fact that Silverstein has been a prolific California ‘anti-spam’ campaigner. He has litigated numerous class action claims against direct marketers and other ‘multilevel marketing’ (MLM) enterprises that seek to attract customers though emails containing direct links to their commercial websites. For several years, Silberstein maintained a website that provided the public with details regarding the status of each ongoing class action (such as his 2014 Silverstein v. Alivemax litigation).
The California Code ‘anti-spam’ commercial email prohibitions that Silverstein has relied upon in his many commercial email claims has attracted significant controversy in California. Prior to the District Court’s Keynetics ruling, the California Code had been widely regarded as unfriendly to the interests of the US direct marketing industry. California state Courts had demonstrated a willingness to permit ‘professional plaintiffs’ such as Silverstein to advance class action claims, in the face of the explicit CAN-SPAM Act pre-emption provisions.
The Keynetics outcome seems likely to reduce, if not entirely eliminate class action claims based on the California Code anti-spam provisions. Only where the plaintiff can demonstrate that the marketers’ emails contain false or misleading information regarding the sender’s identity will such actions be insulated from CAN-SPAM pre-emption remedies.
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