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Pre-emption Card Played Successfully in $45 Million Anti-Spam Case
The American Lawyer
May 06, 2009
We've seen the federal pre-emption doctrine play out to a big finale in drug labeling cases. Now it's time to see how it fares in anti-spam litigation. For those keeping score, chalk up a big early win for defendants. On Monday, Los Angeles Superior Court Judge Richard Adler granted a summary judgment motion by the Internet advertising company ValueClick and its subsidiaries, which were sued by Internet service provider Hypertouch for allegedly sending users 45,000 e-mails containing false claims. The winning argument, made by ValueClick's lawyers at Gibson, Dunn & Crutcher, was that Hypertouch's California state law claims were pre-empted by the federal CAN-SPAM Act because Hypertouch had not demonstrated fraud or deception.
Adler's ruling is worth some $45 million to ValueClick. That's because under California's anti-spam statute, one of the toughest in the land, plaintiffs can recover damages of $1,000 per violating e-mail. As Gibson Dunn's Ashlie Beringer (who represented ValueClick along with Kevin Rosen) explained to us on Tuesday, California's laws have encouraged "opportunistic plaintiffs" to look for technical violations of the state law. She predicted that Adler's ruling will have a "chilling effect" on plaintiffs who can't prove that defendants acted fraudulently. (Here, by the way, is a fun Law Blog piece on Beringer, who practices entertainment law out of Gibson Dunn's Denver office.)
Beringer also told us that while Adler's decision is the first by a California state court judge to address CAN-SPAM's impact on California's anti-spam statute, some federal district courts have opined on the issue -- and they've come out differently. That discrepancy seems likely to result in an appeal by Hypertouch, though its counsel, Lawrence Riff of Steptoe & Johnson, told Reuters that the company hasn't made a decision yet. "It is important to the people of California that the law be clarified," Riff said. "Judge Adler's carefully considered decision provides an excellent record for appellate review."
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
