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An Oklahoma-based anti-spam crusader who sued over repeated cruise vacation e-mail ads has put wind in the sails of spammers with the first federal appellate court ruling limiting the reach of state laws that restrict unwanted e-mail. The 4th U.S. Circuit Court of Appeals held that a 2003 federal law, known as the CAN-SPAM Act, pre-empts state laws that allow suits for false information in junk e-mails if the misrepresentation is “immaterial.” Spam is a “serious and pervasive problem” but the federal law “does not impose liability at the mere drop of a hat,” wrote Judge J. Harvie Wilkenson. “Congress did not intend ‘falsity’ to encompass bare error because such a reading would upset the Act’s careful balance between preserving a potentially useful commercial tool and preventing its abuse,” he wrote. The decision is significant for companies that use mass e-mail to get their products in front of likely customers but face potentially costly legal judgments if they conceal the source of transmission or contain false information. An appellate first Most states have laws restricting mass junk e-mail, known as spam, and allow suits for damages for violations. The 4th Circuit held that the federal act partially pre-empts Oklahoma’s laws allowing damages if e-mail misrepresents who transmits it, omits the point of origin or contains false information “insofar as [state laws] applied to immaterial misrepresentations.” The court has sent “an important signal to commercial e-mailers: If they comply with the federal act then they have nothing to worry about from crusaders who pursue these lawsuits,” said James Hodges, a Reston, Va., solo practitioner who represented Omega World Travel Inc., which sent the cruise line ads. Hodges said that the decision “is the first from an appellate court that has construed the scope of pre-emption language in the CAN-SPAM Act.” CAN-SPAM Act stands for Controlling the Assault on Non-Solicited Pornography and Marketing Act of 2003. Kelly O. Wallace, attorney for Mark Mumma of Mummagraphics Inc., agreed that this is a significant ruling, but added that the appeals court “dropped the ball.” “I do think they expanded what is permissible for mass e-mail, especially routing information,” said Wallace of Wellborn & Wallace in Atlanta. Mumma provides online services from Oklahoma City, registering domain names, hosting Web pages and designing Web sites and logos. He also operates Web sites devoted to fighting spam messages, such as www.sueaspammer.com and outoutbydomain.com. Mumma sued Virginia-based Omega World Travel and owners Gloria and Daniel Bohan after receiving 11 e-mails for cruise vacations. He threatened to sue for $150,000 in damages unless the Bohans settled for $6,250, according to the opinion Omega World Travel v. Mummagraphics Inc., No. 05-2080. The potential penalty under Oklahoma law is $25,000 per violation. When the Bohans failed to pay, Mumma accused them of being spammers on his Web site and posted their photos, the opinion states. The couple sued for defamation, copyright and trademark infringement. Mumma raised counterclaims alleging violations of the Oklahoma spam law. Wallace said that the ruling runs counter to a district court decision last year denying a motion to dismiss in Washington state, Gordon v. Impulse Marketing Group, Inc., No. C04-5125FVS. That ruling states that the CAN-SPAM Act does not pre-empt state spam laws to the extent that they “prohibit falsity or deception.” That case is awaiting a decision on a summary judgment motion. Hodges said the 4th Circuit ruling “impliedly rejects that case.” Litigation and threats of suits have made the issue hot around the country. In October, Verizon Wireless Inc. said that it would continue to press legal efforts to block spam to its wireless customers. It has filed several lawsuits over unwanted text messages selling prescription drugs, vacations and stock information. [NLJ, Oct. 30]. Cingular Wireless Inc. has filed several suits under Georgia and Florida state law to protect customers from unsolicited text-messaging operators. It alleged that operators of webuyresorts.com and resortsellers.com sent deceptive and unsolicited commercial text messages to its wireless phone customers. “I think this decision can be used by lawyers representing responsible businesses that use the e-mail advertising tool, but nonetheless get sued by people who don’t like getting e-mail and see the chance for a windfall in some state statutes,” Hodges said. All but 10 states have some anti-spam legislation, according to Mumma.

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