DAVISON DESIGN & DEVELOPMENT INC. v. Riley, Dist. Court, ND California 2013
ISSUE: Is state cause of action for SPAM preempted by the Can Spam Act?
RULE: State SPAM laws are preempted by Can Spam Act, except when they address fraud or misrepresentation.
HELD: State cause of action preempted by Can Spam Act where misrepresentation was not material.
"First, the parties dispute the scope of the exception to CAN-SPAM
preemption. Plaintiffs argue that Riley must allege a claim for fraud in
order to avoid preemption, while Riley argues that the "falsity or
deception" language used in the statute creates a broader exception,
encompassing more than just claims for fraud. As an example, Riley
points to Cal. Civ. Code § 1710, which defines the tort of "deceit," and
which does not require the elements of common-law fraud, including
reliance. While the relevant Ninth Circuit authority on this issue (Gordon v. Virtumundo, 575 F.3d 1040 (9th Cir. 2009))
does use the word "fraud" when discussing the preemption exception, the
court agrees with Riley that Gordon does not necessarily limit the
exception to fraud claims. And while Gordon did not answer the question
of whether a party must plead reliance and damages in order to avoid
CAN-SPAM preemption, the court agrees with and adopts the reasoning set
forth in two post-Gordon district court cases, both of which held that
"reliance and damages need not be demonstrated to save a lawsuit from
preemption." Asis Internet Services v. Member Source Media, LLC, 2010 WL
1610066, at *3 (N.D. Cal. Apr. 20, 2010); see also Asis Internet Services v. Subscriberbase Inc., 2010 WL 1267763 (N.D. Cal. Apr. 2, 2010).
Riley need not establish reliance and damages in order to avoid
preemption; instead, as long as she can establish that plaintiffs "were
responsible for making knowing and material misrepresentations," her
counter-claim "will sound in `falsity or deception' and will not be
preempted by the CAN-SPAM Act." See Subscriberbase, 2010 WL 1267763 at *13.
Specifically, if Riley can establish that the presence of her own name
in the "from" line of the seven emails at issue was materially false or
deceptive, her counter-claims will avoid preemption.
"Applying that standard, the court finds that while the use of Riley's
name in the "from" line was indeed false, the fact that Riley would
have immediately recognized the use of her own name puts her
counter-claims in the same category as the "non-deceptive statements"
that were rejected by the Gordon court. Upon receiving the emails, Riley
would have instantly known that she did not send those emails to
herself, and thus, the emails could not have been deceptive in any
meaningful way. Thus, any falsity or deception was not sufficiently
"material" to avoid preemption. The court recognizes that the factual
circumstances of this case are unique, and that a misrepresentation as
to the identity of the sender of emails will indeed be material in many
cases. For instance, if Riley had received emails from plaintiffs with
the name of one of Riley's personal contacts in the "from" line, those
emails might well give rise to a non-preempted claim. However, as to the
seven emails at issue, the court fails to see how Riley could have been
deceived into believing that she sent herself these emails, and fails
to see how any reasonable person could be deceived by an email bearing
his or her own name in the "from" line. Accordingly, the court finds
that Riley's counter-claims are preempted by CAN-SPAM, and hereby GRANTS
summary judgment in favor of plaintiffs on the preemption issue. As
discussed above, and for the reasons stated in the court's September 13,
2013 order (Dkt. 212), in which the court declined to exercise
jurisdiction over claims relating to 108 of the emails, the court
similarly declines to exercise declaratory judgment jurisdiction over
plaintiffs' claims relating to these seven emails."