Davison Design & Development Inc. et al v. Riley

Filing 217

ORDER by Judge Hamilton granting 206 Motion for Summary Judgment (pjhlc2, COURT STAFF) (Filed on 11/8/2013)

1
2

UNITED STATES DISTRICT COURT

3

NORTHERN DISTRICT OF CALIFORNIA

4
5

DAVISON DESIGN & DEVELOPMENT
INC., et al.,

6
Plaintiffs,

No. C 11-2970 PJH

7
v.
8

ORDER RE MOTION FOR
SUMMARY JUDGMENT

CATHY RILEY,
9
Defendant.
_______________________________/

11
For the Northern District of California

United States District Court

10

12

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

13

October 23, 2013. Plaintiffs and counter-defendants Davison Design and Development,

14

Inc., et al. (“plaintiffs”) appeared through their counsel, Leeor Neta. Defendant and

15

counter-plaintiff Cathy Riley (“defendant” or “Riley”) appeared through her counsel, Daniel

16

Balsam. Having read the papers filed in conjunction with the motion and carefully

17

considered the arguments and the relevant legal authority, and good cause appearing, the

18

court hereby rules as follows.

19

This is a declaratory judgment suit brought by plaintiffs. Plaintiffs originally sought

20

an order stating that some 115 emails sent from plaintiffs to defendant do not violate

21

California’s anti-spam law, Cal. Bus. & Prof. Code § 17529.5. Riley responded by asserting

22

counter-claims against plaintiffs, alleging that the 115 emails did violate section 17529.5.

23

The court then found that Riley’s counter-claims, to the extent based on 108 of the emails,

24

were preempted by the federal CAN-SPAM Act, which expressly preempts all state laws

25

related to spam e-mail, except to the extent that a state law “prohibits falsity or deception in

26

any portion of a commercial electronic mail message or information attached thereto.” 15

27

U.S.C. § 7707(b)(1); see also Dkt. 149 (dismissing counter-claims as preempted). The

28

court later declined to exercise declaratory judgment jurisdiction over plaintiffs’ claims

1

related to those same 108 emails. See Dkt. 212. With those claims and counter-claims out

2

of the case, the only emails that remain at issue are seven emails which list Riley’s own

3

name in the “from” line. The court previously found that those seven emails could give rise

4

to a non-preempted claim under California’s anti-spam law, and allowed Riley’s counter-

5

claims (and plaintiffs’ related declaratory judgment claims) to go forward. See Dkt. 188.

6

Plaintiffs now move for summary judgment that those seven emails do not violate section

7

17529.5, and that Riley’s counter-claims as to those emails are preempted.

the scope of issues that remain in the case. In declining to exercise declaratory judgment

10

jurisdiction over plaintiffs’ claims relating to the 108 emails that are no longer at issue, the

11
For the Northern District of California

As a threshold matter, the court notes that plaintiffs seek a ruling that goes beyond

9

United States District Court

8

court also held that “[a]s to the other seven emails, the court declines to exercise

12

declaratory judgment jurisdiction to the extent that plaintiffs seek a ruling that goes beyond

13

Riley’s counterclaims.” Dkt. 212 at 5. Thus, the only issue before the court is whether

14

plaintiffs are entitled to summary judgment that the seven emails with Riley’s own name in

15

the “from” line are preempted by CAN-SPAM (in other words, that they do not fall into the

16

“falsity or deception” preemption exception set forth in the statute).

17

First, the parties dispute the scope of the exception to CAN-SPAM preemption.

18

Plaintiffs argue that Riley must allege a claim for fraud in order to avoid preemption, while

19

Riley argues that the “falsity or deception” language used in the statute creates a broader

20

exception, encompassing more than just claims for fraud. As an example, Riley points to

21

Cal. Civ. Code § 1710, which defines the tort of “deceit,” and which does not require the

22

elements of common-law fraud, including reliance. While the relevant Ninth Circuit

23

authority on this issue (Gordon v. Virtumundo, 575 F.3d 1040 (9th Cir. 2009)) does use the

24

word “fraud” when discussing the preemption exception, the court agrees with Riley that

25

Gordon does not necessarily limit the exception to fraud claims. And while Gordon did not

26

answer the question of whether a party must plead reliance and damages in order to avoid

27

CAN-SPAM preemption, the court agrees with and adopts the reasoning set forth in two

28

post-Gordon district court cases, both of which held that “reliance and damages need not
2

1

be demonstrated to save a lawsuit from preemption.” Asis Internet Services v. Member

2

Source Media, LLC, 2010 WL 1610066, at *3 (N.D. Cal. Apr. 20, 2010); see also Asis

3

Internet Services v. Subscriberbase Inc., 2010 WL 1267763 (N.D. Cal. Apr. 2, 2010). Riley

4

need not establish reliance and damages in order to avoid preemption; instead, as long as

5

she can establish that plaintiffs “were responsible for making knowing and material

6

misrepresentations,” her counter-claim “will sound in ‘falsity or deception’ and will not be

7

preempted by the CAN-SPAM Act.” See Subscriberbase, 2010 WL 1267763 at *13.

8

Specifically, if Riley can establish that the presence of her own name in the “from” line of

9

the seven emails at issue was materially false or deceptive, her counter-claims will avoid
preemption.

11
For the Northern District of California

United States District Court

10

Applying that standard, the court finds that while the use of Riley’s name in the

12

“from” line was indeed false, the fact that Riley would have immediately recognized the use

13

of her own name puts her counter-claims in the same category as the “non-deceptive

14

statements” that were rejected by the Gordon court. Upon receiving the emails, Riley

15

would have instantly known that she did not send those emails to herself, and thus, the

16

emails could not have been deceptive in any meaningful way. Thus, any falsity or

17

deception was not sufficiently “material” to avoid preemption. The court recognizes that the

18

factual circumstances of this case are unique, and that a misrepresentation as to the

19

identity of the sender of emails will indeed be material in many cases. For instance, if Riley

20

had received emails from plaintiffs with the name of one of Riley’s personal contacts in the

21

“from” line, those emails might well give rise to a non-preempted claim. However, as to the

22

seven emails at issue, the court fails to see how Riley could have been deceived into

23

believing that she sent herself these emails, and fails to see how any reasonable person

24

could be deceived by an email bearing his or her own name in the “from” line. Accordingly,

25

the court finds that Riley’s counter-claims are preempted by CAN-SPAM, and hereby

26

GRANTS summary judgment in favor of plaintiffs on the preemption issue. As discussed

27

above, and for the reasons stated in the court’s September 13, 2013 order (Dkt. 212), in

28

which the court declined to exercise jurisdiction over claims relating to 108 of the emails,
3

1

the court similarly declines to exercise declaratory judgment jurisdiction over plaintiffs’

2

claims relating to these seven emails.

3
4

IT IS SO ORDERED.
Dated: November 8, 2013
______________________________
PHYLLIS J. HAMILTON
United States District Judge

5
6
7
8
9

11
For the Northern District of California

United States District Court

10

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
4