In OnNet USA Inc. v. Play9D.com, N.D. Cal., No. 3:12-cv-06282-LB, 1/8/13, the U.S. District Court for the Northern District of California ruled that an internet gaming company could pursue a claim against a domain name pursuant to the “in rem” provisions of the Anti-Cybersquatting Protection Act by serving process by publication in an Australian newspaper where the unknown domain registrant was likely to be found.
In Ryabyshchuck v. Citibank N.A., S. D. Cal., No. 11-1236, 10/30/12, the Federal District Court ruled that Citibank’s sending of a text message to a customer confirming that it received the customer’s message requesting to opt out of additional text messages did not violate the Federal Telephone Consumer Protection Act (the “TCPA”).
The TCPA makes it unlawful to send unsolicited, auto-dialed calls to cellular telephones. See 47 U.S.C. §227(b)(1)(A)(ii). Text messages are considered “calls” covered by the statute under Satterfield v. Simon & Schuster, Inc., 569 F. 3d 946 (9th Cir. 2009). Courts disagree about whether text messages sent to consumers confirming that the sender will send the consumer no further text messages violate the statute. This issue is currently under review by the Federal Communications Commission.
In Ryabyshchuck, Judge Irma E. Gonzalez held that “common sense renders the second text inactionable under the TCPA,” deferring to the statement in Henrique v. U.S. Marshal, 653 F. 2d 1317 (9th Cir. 1981), that courts must recognize common sense practicalities of situations presented. The statute was intended to shield consumers from the proliferation of intrusive nuisance calls, the court held. A “simple, confirmatory response to plaintiff-initiated contact can hardly be termed an invasion of privacy under the TCPA.”
The court relied upon its above analysis to grant summary judgment to Citibank following a prior denial by the court of Citibank’s motion to dismiss.
The California Attorney General’s office announced on October 30, 2012 that the state will begin notifying dozens of mobile application developers and companies of their failure to comply with the California Online Privacy Protection Act, Cal. Bus. & Prof. Code §§ 22575-22579.
In a public statement , Attorney General Kamala Harris said, “[p]rotecting the privacy of online consumers is a serious law enforcement matter.” The Attorney General’s office plans on pursuing as many as 100 non-compliant application developers for violations of the Act.
On September 13, 2012, in the case of Davison Design & Development v. Riley, Case No. C 11-2970 PJH, Judge Phyllis J. Hamilton granted a motion to dismiss claims filed by Daniel Balsam on behalf of his wife (and professional plaintiff) Cathy Riley for alleged violations of California Business & Professions Code section 17529.5(a)(2). Judge Hamilton, United States District Judge, Northern District of California (Oakland Division), ruled that all of Riley’s claims were preempted by the federal CAN- SPAM Act of 2003. A transcript of the hearing may be downloaded here.
The motion follows a widespread shakedown by attorney Daniel Balsam of email marketers and advertisers in the wake of the controversial decision in Balsam v. Trancos, 203 Cal. App. 4th 1083 (2012), in which a California Court of Appeals judge ruled that a commercial e-mailer’s deliberate use of untraceable, privately registered domain names to conceal its identity as a falsification or misrepresentation for purposes of the statute.
While there remains a split in the federal courts as to whether the CAN-SPAM Act preempts the California spam statute, prior to the September 13 ruling the trend of decisions had been in the plaintiffs’ favor. The decision in the Riley matter may signify a judicial recognition that the Balsam v. Trancos decision expands the scope of private plaintiff email marketing claims, thus subjecting the already overburdened, underfunded court system with a material increase in the number of such lawsuits. As discussed in Gordon v. Virtumundo, 575 F. 3d 1040, 1057 (9th Cir. 2009):
“We, like Congress, are sympathetic to legitimate operations hampered by a deluge of unwanted e-mail marketing. Our record, however, conclusively demonstrates that this is not the case before us. Gordon has created a cottage industry where he and his ‘clients’ set themselves up to profit from litigation. The CAN-SPAM Act was enacted to protect individuals and legitimate businesses—not to support a litigation mill for entrepreneurs like Gordon.”
Similarly, the Balsam v. Trancos decision has taken the “cottage industry” of being a private spam plaintiff and turned it into a litigation mill for entrepeneurs like Balsam and his “clients”. In deciding that lack of traceability is the functional equivalent of deception or falsity, Trancos employs a fiction in order to avoid federal preemption. Viewed in this light, it is not surprising to see a court apply federal preemption against a “Trancos suit,” particularly where, as here, the claims go beyond the facts in the Trancos decision. Balsam is not only targeting emailers (and, by extension, advertisers) whose domain names are registered by proxy. He is also targeting those with non-private registrations whose identities he contends are not readily traceable by way of a WHO-IS search.
It is also notable that the Trancos decision relied in part upon a finding of an intent by the emailer to conceal its identity from consumers. There are a multitude of other reasons why an emailer may wish to register its domain by proxy (including, for example, to increase deliverability, or to maintain anonymity in an affiliate marketing relationship). There is no known precedent for a finding of liability under the California spam statute for untraceability of header information in a case in which an intent to conceal an emailer or advertiser’s identity from the consumer is not established.
On June 27, 2012 the Federal Trade Commission announced based upon an FTC-commissioned study indicating that when marketers use the phrase “up to” in claims about their products, that many consumers are likely to believe that they will achieve the maximum “up to” results.
In its public announcement the same day, the FTC has taken the position that advertisers using these claims should be able to substantiate that consumers are likely to achieve the maximum results promised under normal circumstances.
Is the FTC overreaching in requiring substantiation that consumers are likely to achieve maximum results where the advertisement does not in fact state or even imply that the maximum results are likely to be achieved?
It is yet to be seen as to whether the FTC will act upon its position regarding “up to” claims, and if it does, how the all-but-inevitable challenges that will ensue will fare.