Davison Design & Development Inc. et al v. Riley

Filing 188

ORDER by Judge Hamilton denying 175 Motion for Summary Judgment; vacating in part order granting motion to dismiss (pjhlc2, COURT STAFF) (Filed on 3/25/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DAVISON DESIGN & DEVELOPMENT
INC., et al.,

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Plaintiff(s),

No. C 11-2970 PJH

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v.
CATHY RILEY,
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For the Northern District of California

United States District Court

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ORDER DENYING MOTION FOR
SUMMARY JUDGMENT AND VACATING
IN PART ORDER GRANTING MOTION
TO DISMISS

Defendant(s).
_______________________________/

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Plaintiffs’ motion for summary judgment came on for hearing before this court on

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January 16, 2013. Plaintiffs Davison Design and Development, et al. (“plaintiffs”) appeared

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through their counsel, Leeor Neta. Defendant Cathy Riley (“defendant” or “Riley”)

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appeared through her counsel, Timothy Walton. Having read the papers filed in

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conjunction with the motion and carefully considered the arguments and the relevant legal

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authority, and good cause appearing, the court hereby DENIES plaintiffs’ motion, for the

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reasons stated at the hearing and as follows.

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This is a declaratory judgment suit brought by plaintiffs, who are alleged to have sent

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unsolicited commercial email (or “spam” email) to Riley, in violation of California’s anti-

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spam law. After receiving these spam emails, Riley contacted plaintiffs and demanded

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payment to settle any claims arising under the anti-spam law (specifically, Cal. Bus. & Prof.

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Code § 17529.5). Instead, plaintiffs filed this action, seeking a declaratory judgment that

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some 115 emails sent from plaintiffs to Riley did not actually violate section 17529.5. Riley

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then filed counter-claims, alleging that plaintiffs did indeed violate the statute, and seeking

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statutory damages of $1,000 for each allegedly offending email. Plaintiffs then moved to

the federal CAN-SPAM Act, which expressly preempts all state laws related to spam email,

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except to the extent that a state law “prohibits falsity or deception in any portion of a

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commercial electronic mail message or information attached thereto.” 15 U.S.C.

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§ 7707(b)(1). The Ninth Circuit further explained the scope of this preemption in Gordon v.

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Virtumundo, in which it held that “the express language of § 7707 demonstrated Congress’s

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intent that the CAN-SPAM Act broadly preempt state regulation of commercial email with

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limited, narrow exception,” and further held that “the exception language, read as Congress

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intended, refers to ‘traditionally tortious or wrongful conduct.’” 575 F.3d 1040, 1061-62 (9th

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Cir. 2009). The court found that Riley’s counter-claims did not sound in tort, and thus were

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For the Northern District of California

dismiss Riley’s counter-claims, arguing that California’s anti-spam law was preempted by

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United States District Court

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preempted by the federal CAN-SPAM Act. See Dkt. 149 (order granting motion to dismiss).

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However, during its review of the briefs filed in connection with plaintiffs’ motion for

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summary judgment, the court became aware that certain emails sent by plaintiffs contain

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more than the type of technical, non-tortious falsities that are preempted by federal law.

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Seven of the spam emails at issue actually contain Riley’s name in the “from” line, which is

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a material falsity that could possibly give rise to a claim of fraud. And if Riley can

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adequately allege a claim for fraud, her counter-claims as to those seven emails would fall

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under the preemption exception articulated in Gordon. In order to state a claim for fraud,

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Riley still bears the burden of alleging facts showing reliance and damages as to those

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seven emails. But if she is able to do so, her counter-claims as to those emails will not be

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preempted. Thus, to the extent that this court’s dismissal order found Riley’s counter-

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claims as to those seven emails to be preempted, the order is VACATED. As to the

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remaining 108 disputed emails, the court’s dismissal order remains in place, as Riley has

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not identified any possible tort theory that would apply to any of those emails, and instead

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relies on allegations of technical violations of California’s anti-spam law. At the hearing, the

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parties indicated that they might need to take discovery relating to the seven emails with

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Riley’s name in the “from” line. Thus, the parties will have 90 days from the date of this

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order to conduct that discovery. After that discovery is completed, each side will be
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permitted to file one motion for summary judgment, and shall submit a proposed briefing

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and hearing schedule should they wish to do so.

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As to plaintiffs’ motion for summary judgment currently before the court, the court

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first notes that plaintiffs are moving for summary judgment on their own declaratory relief

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claims. Thus, plaintiffs bear the burden of proving that each of the 115 disputed emails

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does not violate California’s anti-spam law. But rather than addressing each email

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individually and explaining why they do not violate the specific provisions of section

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17529.5, plaintiffs have instead decided to rest on the lack of evidence presented by Riley.

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In other words, plaintiffs argue that, because Riley has not presented evidence that the
emails do in fact violate section 17529.5, plaintiffs are thus entitled to summary judgment

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For the Northern District of California

United States District Court

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that the emails do not violate section 17529.5.

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Plaintiffs appear to be confused about which party has the burden of proof on this

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motion. As declaratory judgment plaintiffs, plaintiffs must do more than simply point to a

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paucity of evidence presented by Riley. They must affirmatively show that each of the

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emails at issue does not violate any provision of the California anti-spam law. If plaintiffs

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fail to make that showing, they are not entitled to a declaratory judgment so stating. In the

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alternative, plaintiffs may decide that Riley’s lack of evidence as to any section 17529.5

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violations simply obviates the need for a declaratory judgment. Given Riley’s apparent

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failure to present evidence of a violation, it may be preferable to avoid the academic

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exercise of examining 115 individual emails and determining whether each one warrants a

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declaratory judgment that it does not violate section 17529.5. However, if plaintiffs insist on

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pursuing their declaratory judgment claims, they must meet their burden as the moving

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parties on summary judgment. Because their motion for summary judgment fails to do so,

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the motion is DENIED. However, consistent with the above instructions, plaintiffs will be

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permitted to file the one additional motion for summary judgment, referred to above, after

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the completion of any additional discovery.

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Finally, the court notes that, after briefing on plaintiffs’ motion for summary judgment
had completed, Riley filed a “supplemental declaration,” seeking to introduce a number of
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new emails (beyond the 115 already at issue) into the case. Riley did not have leave of

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court to file this supplemental material, and plaintiffs moved to strike the brief. Because

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Riley filed this brief without leave of court, seeking to introduce new evidence into a record

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that was already closed, the court GRANTS plaintiffs’ motion and STRIKES Riley’s

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supplemental declaration (Dkts. 182-83) as improperly filed. However, plaintiffs’ motion for

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sanctions is DENIED, and plaintiffs’ motion to shorten time is DENIED as moot.

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IT IS SO ORDERED.
Dated: March 25, 2013
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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For the Northern District of California

United States District Court

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