Wagner v. Digital Publishing Corporation et al

Filing 88

ORDER DENYING 57 SECOND MOTION FOR PARTIAL SUMMARY JUDGMENT; AND VACATING HEARING. (whalc2, COURT STAFF) (Filed on 10/10/2014).

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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CHRISTOPHER WAGNER,

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For the Northern District of California

United States District Court

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Plaintiff,

No. C 13-04952 WHA

v.
DIGITAL PUBLISHING CORPORATION
et al.,
Defendants.

ORDER DENYING SECOND
MOTION FOR PARTIAL
SUMMARY JUDGMENT;
AND VACATING HEARING

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INTRODUCTION
In this action alleging spam e-mails in violation of California state law, plaintiff has filed

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a second motion for partial summary judgment. Defendants oppose with evidentiary objections

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and a request for monetary sanctions. For the reasons discussed below, the motion for partial

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summary judgment is DENIED. All evidentiary objections, as well as the request for monetary

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sanctions, are DENIED AS MOOT. The hearing on October 16, 2014, is VACATED.

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STATEMENT
The background of this action is set forth in a prior order (see Dkt. No. 53). In brief,

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plaintiff Christopher Wagner claims that defendants sent him 49 spam messages to his e-mail

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address, which he accesses in California. Wagner further alleges that those spam e-mails all

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contained “materially falsified, misrepresented, and/or forged information,” in violation of

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Sections 17529.5 and 17538.5 of the California Business and Professions Code.

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This action began in Sonoma County Superior Court on October 25, 2012. Following

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removal to this court based on diversity jurisdiction and two months of jurisdictional discovery

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thereafter, Wagner moved for partial summary judgment on one legal question: whether state

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law claims that do not allege every element of common law fraud — specifically, the elements of

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reliance or damages — are preempted by the federal CAN-SPAM Act. On that question, an

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order dated March 3, 2014, granted summary judgment in favor of Wagner, holding that he need

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not plead reliance or damages to avoid preemption of his California state law claims under the

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CAN-SPAM Act (Dkt. No. 53).

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Now, Wagner has filed a second motion for partial summary judgment on only four spam
e-mails sent by defendant Spire Vision Holdings Inc. and its “other parent/sister/subsidiary

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For the Northern District of California

United States District Court

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companies and ‘brands’” (Br. 1). Defendants oppose, arguing that they need more time to

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discover whether Wagner consented to receiving the four spam e-mails. In particular, defendants

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argue that further discovery would reveal Wagner’s consent to the four spam e-mails from an IP

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address — 159.150.101.117 — which is assigned to the University of Arkansas.

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An order dated August 11, 2014, thus continued the hearing on Wagner’s present motion,

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and permitted defendants three more weeks to complete discovery as follows (Dkt. No. 75)

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(emphasis added):

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[T]he issue of consent (direct or otherwise) and any other
issues necessary to oppose plaintiff’s second motion for partial
summary judgment. No extensions will be given. If plaintiff
does not fully cooperate with discovery, however, the motion
[for partial summary judgment] will be denied on that ground
alone.

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Having considered full briefing and supplemental responses from both sides, this order decides
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below.
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ANALYSIS
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1.

MOTION FOR PARTIAL SUMMARY JUDGMENT.

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In his present motion, Wagner makes three arguments. First, he contends that the
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headers of all four spam e-mails contain false and misleading information in their “from” names
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because those names do not identify who sent the spams. Second, he asserts that those headers
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contain similarly inaccurate domain names that fail to identify or readily trace back to Spire
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Vision. Third, Wagner claims that three of the four spam e-mails contain false and misleading

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information in their subject lines. All four e-mails, as well as their “from” names, domain

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names, and subject lines, are provided below:

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E-Mail
Sent
Date

Subject Line

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May 5,
2012

“Receive a $20
giftcard Christopher
Wagner. Complete
our survey”

May
Giftcard
Survey

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May 7,
2012

“AntiBullying
Survey: Claim your
$20 Dunkin Donut
Giftcard”

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May 8,
2012

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#

May 8,
2012

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For the Northern District of California

United States District Court

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Domain Name
Registrant

LLC
Creation
Date

adtargets.
net

Paths Direct

June 10,
2012

May
Giftcard
Survey

deliveredi
ntranets.
net

Paths Direct

June 10,
2012

“Claim a $25
Giftcard for
completing our
Fling Survey”

GiftCard
Survey

changeem
power.
com

Paths Direct

June 10,
2012

“Take Courses to be
an App Developer,
Christopher
Wagner”

Apps
Developers
Courses

alertlinks.
com

Achieve
Opportunities

June 11,
2012

“From”
Name

Domain
Name

On this record, partial summary judgment is denied. As a preliminary matter, Wagner

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delayed his responses to defendants’ discovery requests during the three additional weeks

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permitted by the August 11 order. Indeed, that order had warned Wagner that failure to

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cooperate fully with discovery on “the issue of consent (direct or otherwise) and any other issues

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necessary to oppose plaintiff’s second motion for partial summary judgment” would lead to

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denial of his motion “on that ground alone” (Dkt. No. 75) (emphasis added).

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Indeed, the following is uncontested by the parties. Three days afer the August 11 order,

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defense counsel served Wagner with requests for documents, request for admission, and

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interrogatories. At least some of those requests had asked whether Wagner ever provided direct

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consent to receive e-mail advertisements, either from defendants or others, and what IP

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addresses he has ever used. A week then passed before Wagner’s attorney e-mailed the defense

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about “some time issues affecting this case” and his plans to file a discovery motion. No such

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motion was ever filed. Nonetheless, Wagner’s attorney agreed to meet-and-confer with the

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defense the next day and to send some materials in preparation thereof, but he did neither. Two

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more weeks passed before the defense heard from Wagner’s attorney on September 10, 2014, but

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by that point, the three-week period for additional discovery had expired on September 1, 2014.

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Only on September 12, 2014, did Wagner provide responses to defendant’s written discovery

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requests (Neta Decl. ¶¶ 2–10; Twu Exhs. A–C).

triable issue of fact as to whether there are material misstatements in the “from” names, domain

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names, or subject lines of the spam e-mails now at issue. To that end, Section 17529.5(a)(2)

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prohibits “falsified, misrepresented, or forged header information in e-mail advertisements. But

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in the background is the CAN-SPAM Act, which preempts any state statute that regulates the use

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For the Northern District of California

Moreover, this order denies partial summary judgment for another reason: there exists a

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United States District Court

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of e-mail for commercial messages, unless the state statute is limited to “falsity or deception” in

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commercial e-mails. See 15 U.S.C. 7707(b). The issue thus presented is whether “falsity or

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deception,” as used in the CAN-SPAM Act, requires a showing of certain elements of common

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law fraud (i.e., material misrepresentation) to avoid preemption of Wagner’s Section 17529.5

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claims here.

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Previously, the March 3 order addressed preemption by the CAN-SPAM Act, but not the

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precise legal question of whether the federal law preempts Section 17529.5 claims that do not

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allege material misrepresentation. Rather, the March 3 order only determined as a matter of law

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that Wagner need not plead reliance and damages to avoid preemption of his state law claims

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under the CAN-SPAM Act (see Dkt. No. 53 at 3–6).

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Two circuits have interpreted the CAN-SPAM Act’s preemption clause in the context of

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materiality. In Omega World Travel, Inc. v. Mummagraphics, Inc., the Fourth Circuit affirmed

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the district court’s holding that the CAN-SPAM Act preempted a defendant’s Oklahoma

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statutory counterclaims “insofar as they applied to immaterial misrepresentations.” 469 F.3d

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348, 353–57 (4th Cir. 2006) (emphasis added). In reviewing the scope of preemption under the

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CAN-SPAM Act and its use of “falsity or deception” in saving certain state laws from

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preemption, Omega reasoned that a materiality component supported the purpose underlying the

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CAN-SPAM Act, and that a contrary reading “would upend this balance and turn an exception to
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a preemption provision into a loophole so broad that it would virtually swallow the preemption

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clause itself.”

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Our court of appeals later “reach[ed] the same conclusion” as did Omega with respect to

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the CAN-SPAM Act’s scope of preemption. See Gordon v. Virtumundo, Inc., 575 F.3d 1040,

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1061–64 (9th Cir. 2009). In Gordon, the plaintiff alleged false e-mails under Washington state

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law, claiming that those e-mails’ headers “fail[ed] to clearly identify Virtumundo as the e-mails’

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sender and therefore misrepresent or obscure the identity of the sender.” Examples of reportedly

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inaccurate “from lines” in those e-mails included “[e-mail],”

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“[e-mail],” and “[e-mail].” Even so, Gordon held
that such claims were “for, at best, ‘incomplete’ or less than comprehensive information”

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For the Northern District of California

United States District Court

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regarding the sender (Virtumundo), as the plaintiff had conceded that the domain names were

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properly registered to the sender and that a publicly available online database search on WHOIS

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accurately identified the sender as the domain names’ registrant and provided other identifying

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information. Gordon thus concluded that the plaintiff’s “technical allegations regarding the

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header information find no basis in traditional tort theories and therefore fall beyond the ambit of

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the exception language in the CAN–SPAM Act’s express preemption clause.”

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Here, Wagner’s best argument is that the four spam e-mails’ “from” names — i.e., May

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Giftcard Survey, GiftCard Survey, and Apps Developers Courses — and those e-mails’ domain

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names — i.e., adtargets.net, deliveredintranets.net, changeempower.com, and alertlinks.com —

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violate Section 17529.5(a)(2) because those “from” names and domain names fail to identify

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Spire Vision as the spam sender or provide information that readily traces back to Spire Vision.

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He further contends that there is no way to trace the domain names back to Spire Vision on a

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publicly accessible database such as WHOIS, because Paths Direct and Achieve Opportunities

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are listed as the reported registrants for those domain names, and because Paths Direct and

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Achieve Opportunities allegedly did not even exist as legal entities when the four spam e-mails

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were sent in May 2012.

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This order is unpersuaded. There is a genuine issue of material fact as to whether Paths

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Direct and Achieve Opportunities were legal entities at the time the spam e-mails were sent in

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May 2012. Wagner has provided two “separate series agreements” that appear to have created

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Paths Direct and Achieve Opportunities as limited liability companies in Delaware in June 2012

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— i.e., after the spam e-mails were sent — but the record also contains other mentions of Paths

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Direct and Achieve Opportunities at other points in time, some even preceding the date on which

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the spam e-mails were sent (see Balsam Exhs. G1–F2). Spire Vision’s general counsel have also

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declared that Paths Direct and Achieve Opportunities were “brands,” but that declaration makes

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no mention of Paths Direct and Achieve Opportunities being fake entities back in May 2012, as
Wagner now suggests (Berger Decl. ¶ 2). In short, it is unclear whether Paths Direct and

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For the Northern District of California

United States District Court

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Achieve Opportunities existed as legal entities when the spam e-mails were sent.

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Nor does Balsam v. Trancos, Inc., 203 Cal. App. 4th 1083, 1096, 1102–03 (2012), aid

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Wagner’s position. While recognizing Omega and Gordon’s holdings that “state law claims

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based on no more than immaterial or nondeceptive inaccuracies or omissions in commercial

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e-mails are preempted” by the CAN-SPAM Act, Balsam nonetheless found no preemption

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applicable because the defendant’s “deliberate use of randomly chosen, untraceable domain

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names on the ‘From’ line of the subject e-mails for the stated purpose of concealing its role in

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sending them does involve deception as to a material matter — the sender’s identity — as well

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as an element of wrongful conduct.” (emphasis added). Specifically, it was undisputed that the

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defendant there had intentionally used only privately registered domain names “to prevent e-

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mail recipients from being able to identify it as the sender . . . .” In contrast, there is no evidence

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here that defendants used privately registered domain names to hide their identities in connection

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with the four spam e-mails. Wagner even concedes this point in his brief (Br. 14).

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Putting aside the four spam e-mails’ “from” names and domain names, Wagner further

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asserts that the subject lines of those spam e-mails merit summary judgment in his favor. On this

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issue, Section 17529.5(a)(3) prohibits e-mail subject lines “that a person knows would be likely

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to mislead a recipient, acting reasonably under the circumstances, about a material fact regarding

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the contents or subject matter of the message.” (emphasis added). Wagner therefore argues that
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the subject lines of the spam e-mails here — e.g., “Receive a $20 giftcard Christopher Wagner.

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Complete our survey” — violate Section 17529.5(a)(3) because they mislead a recipient into

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thinking that he can simply take a survey to get the giftcard, when he reportedly “must also

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purchase and/or sign up for various goods and services” (Br. 17). For support, he cites

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Hypertouch, Inc. v. ValueClick, Inc., 192 Cal. App. 4th 805, 837 (2011), in which the California

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Court of Appeal held that Section 17529.5(a)(3) can apply even where “the subject line creates

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the false impression that the recipient may receive a free gift when, in fact, the contents of the

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e-mail reveal that is untrue.”

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This order disagrees. While the subject lines at issue suggest that a recipient will get the
giftcard if he takes the survey, a reasonable juror could also find that the subject lines are too

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For the Northern District of California

United States District Court

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good to be true, and that they are thus not “likely to mislead” a recipient into thinking that all he

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needs to do is to take the survey to get the giftcard. Indeed, this is a reasonable inference that

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must be drawn in favor of defendants, at least at the summary-judgment stage, and therefore

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should be left to the jury. Porter v. California Dep’t of Corr., 419 F.3d 885, 891 (9th Cir. 2005).

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Partial summary judgment is therefore DENIED.

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2.

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In opposing the present motion, defendants have filed evidentiary objections to Wagner’s

EVIDENTIARY OBJECTIONS AND REQUEST FOR MONETARY SANCTIONS.

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declarations, and have further requested monetary sanctions against Wagner for his delay in

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responding to the discovery permitted by the August 11 order. Because this order need not reach

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those contested declarations, the evidentiary objections are DENIED AS MOOT. This order

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further finds that monetary sanctions are unwarranted at this time.
CONCLUSION

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For the reasons discussed above, partial summary judgment is DENIED. All evidentiary

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objections, as well as the request for monetary sanctions, are DENIED AS MOOT. The hearing on

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October 16, 2014, is VACATED.

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IT IS SO ORDERED.
Dated: October 10, 2014.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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