Precedents May Be Set in WA, NY Rulings
The Washington state Supreme Court upheld the constitutionality of the state's anti-spam law. The June 7 ruling, which reversed a lower court's decision, involved the state attorney general's 1998 lawsuit accusing an Oregon man, Jason Heckel, and his company, Natural Instincts, of violating the state's anti-spam law.
The lawsuit accuses Heckel of sending unsolicited e-mail promoting a booklet on how to profit from the Internet by sending bulk e-mail.
And in New York, a state Supreme Court justice June 4 upheld a temporary restraining order barring PaeTec Communications from kicking MonsterHut off its network. PaeTec, an Internet service provider, has been trying to void its contract with MonsterHut because it claims MonsterHut, which describes itself as a permission-based e-mail marketer, is a spammer.
Neither case has gone to trial yet. One legal observer familiar with the case who did not want to be identified said that the MonsterHut lawsuit is nothing more than a contract dispute. However, since the two cases are among the first to test spamming allegations in court, marketers are keeping a close watch for indications of how legal precedents might develop in the field of e-mail marketing.
The Washington anti-spam law, enacted in June 1998, was one of the first in the United States to regulate spam. The law prohibits sending e-mail with false headers and subject lines.
The lawsuit against Heckel alleged that he used misleading subject lines to entice recipients to open the e-mail and to send him $40 by postal mail. It also alleged that he posted an invalid return address, preventing people from opting out of future correspondence.
Heckel used a commercially available bulk e-mail program to harvest addresses from various online sources and to send e-mail through free accounts he set up with Juno Online Services, routing the messages through a dozen domain names to hide his tracks, according to the court's decision. It noted that he also maintained a personal Juno account, but did not send any spam through that account.
The text of Heckel's message was a lengthy sales pitch that included testimonials from purchasers and an order form that the recipient could download and print, according to the decision.
The court noted that Heckel racked up 30 to 50 sales each month.
The Washington attorney general's office said it met with Heckel in June 1998 and advised him he was violating the state's anti-spam law. The attorney general sued Heckel after receiving 20 complaints alleging that Heckel had not stopped spamming.
In March 1999, King County Superior Court granted Heckel's motion to dismiss the case on the grounds that the state's law was unconstitutional because it violated the commerce clause of the U.S. Constitution. The attorney general appealed the decision directly to the state Supreme Court, which overturned the lower court's ruling.
The commerce clause prohibits states from enacting laws that unduly burden interstate commerce. Heckel argued that Washington's anti-spam law constituted an undue burden by forcing him to filter out e-mail being sent to addresses in Washington.
Now that the anti-spam law has been upheld, the case will go to trial in King County Superior Court to determine whether Heckel violated the law.
In the New York case, the heart of the dispute is whether MonsterHut's contract with PaeTec allowed for a spam threshold. According to MonsterHut, its five-year agreement, signed in December, called for a 2 percent complaint rate on e-mail messages. However, PaeTec maintains that it never set a complaint threshold and that it never agreed to let MonsterHut send spam.
In his ruling last week, state Supreme Court Justice John Lane sided with MonsterHut and held PaeTec to its contract. The ruling upheld a temporary restraining order issued in March.
PaeTec, Fairport, NY, filed more than 100 signed affidavits from Internet users claiming they were spammed by MonsterHut, Niagara Falls, NY. PaeTec said it was disappointed with the judge's ruling and was considering an appeal.
The judge agreed with MonsterHut's contention that unsolicited e-mail is not necessarily spam, according to Todd Pelow, MonsterHut's CEO.
"The judge definitely felt MonsterHut had compelling issues and reasons," he said. "They [PaeTec] wanted to change the definition of what spam is. The judge said it was a binding contract."
Pelow maintains that MonsterHut does not spam and that it is being "strong-armed" by PaeTec. He said that as a marketer, MonsterHut should be allowed to send an unsolicited prospecting e-mail to drum up new business. He agreed, however, that if the recipient subsequently opts out of further e-mail, the company should stop sending the messages.
"It's the same scenario that MAPS [Mail Abuse Prevention System] tries to play: Everything needs to be double opted-in or it's spam," Pelow said, referring to the anti-spam organization. "PaeTec obviously does not know how the industry works."
Pelow said MonsterHut is looking forward to a trial so it can tell its side of the story.
Ray Everett-Church, an attorney and co-founder of the Coalition Against Unsolicited Commercial E-Mail, an anti-spam group, said the judge's decision is not unusual, given the contentious nature of this case.
"From what I understand, the judge upheld the temporary injunction until full trial," he said. "If that's the case, it's not terribly surprising. It's just keeping the parties standing still until the dispute can be ultimately resolved. Courts don't like disputes escalating while they're being tried, so injunctions keep everybody treading water [until] then."