ValueClick Wins One for Marketers

A Los Angeles court has thrown out a $45 million lawsuit against ad firm ValueClick and its subsidiaries, agreeing that the action filed under California state law was preempted by the Can Spam Act.

This was a nuisance lawsuit that hopefully has come to its rightful end.

Internet service provider Hypertouch—and the term “Internet service provider” is used loosely here—sued ValueClick, its subsidiaries and co-defendant PrimaryAds last year, alleging they sent Hypertouch’s customers 45,000 e-mails containing false claims.

Hypertouch claimed the e-mails contained false header information, misleading subject lines and third-party domains without the third parties’ consent. However, Hypertouch didn’t claim the messages were unsolicited.

Under California’s anti-spam statute, plaintiffs can recover $1,000 per offending e-mail.

ValueClick’s lawyers argued that Hypertouch’s California-state-law claims were preempted by the federal Can-Spam Act because Hypertouch had not demonstrated fraud or deception.

Superior Court judge Richard Adler agreed.

“Because plaintiffs cannot establish any of the traditional fraud elements for even a single asserted email, Can-Spam’s preemption clause mandates dismissal of [the] claims,” he wrote in his opinion. “Plaintiff has neither adduced evidence nor even attempted to show that any elements of fraud exist in this case.”

Federal courts have ruled that the U.S. Can Spam Act preempts all state laws regarding spam with the exception fraud, deception and computer crime.

At the outset of his decision, Judge Adler noted that Hypertouch could identify no more than 24 of the 45,000 allegedly deceptive e-mails had come from ValueClick, immediately dropping the ad company’s potential exposure to $24,000. The rest of the messages were apparently sent by ValueClick affiliates.

Moreover, according to the decision, 43,600 of the allegedly deceptive e-mails were sent to “dummy,” or “test” accounts not used by Hypertouch customers.

According to Ashlie Beringer, ValueClick’s attorney, “a very significant percentage of the messages in question weren’t connected to ValueClick at all. Our client did not have any of the plaintiff’s addresses in its database.”

She said Hypertouch’s president Joe Wagner “would submit nonsensical e-mail addresses on promotional Web sites to test them.”

A call to Wagner’s attorney, Lawrence Riff, asking if Wagner fed addresses to ValueClick’s affiliates’ promotional Web sites was not returned.

In testimony included in Adler’s decision, Wagner couldn’t identify a single instance where anyone was deceived by anything in the messages he alleged were deceptive.

Beringer said she even questions Hypertouch’s claim it’s an Internet service provider. “Its users are the president, his wife and his brother’s company,” she said.

Adler wrote in his decision: “I understand the plaintiff uses ‘wild card’ e-mail addresses to collect commercial electronic mail sent to nonexistent e-mail addresses.”

Wagner is clearly a crusader. He has sued Kraft and Gevalia, BobVila.com, Kennedy-Western University, Discover Financial Services and Stamps.com.

In an article in Wired in 2005, Adam Penenberg wrote: “Although Hypertouch provides consulting services like remote monitoring, maintenance, backups and computer systems for people and businesses new to the Internet, a cynic might say his company, with its low-rent Web site and ‘think small’ mentality, is little more than a front for anti-spam litigation.

“Of course, even if that were true—not that it is—so what? I’m all for combating spam by any means necessary.”

What smarm.

So what? Guys like Wagner do zero to combat real, criminal spam. They tie up our legal system with petty nonsense and leech the resources of companies that could be otherwise using them to do other things such as employ more people, that’s what.

Guys like Wired’s Penenberg were behind the Soviet gulag system. Hey, what are a few off-target punishments when we’re striving for a utopian, collective good?

Usually companies settle anti-spam litigation because it’s cheaper than fighting it. However, all these settlements do is embolden would-be litigants and give them war chests to go after bigger targets.

I cannot vouch for ValueClick’s or any of its subsidiaries’ or affiliates’ e-mail practices. However, I have no sympathy for so-called consumer protectionists who troll the Internet looking for companies to sue.

ValueClick should be commended for standing up to Wagner. Here’s to hoping more companies do likewise.