Well, we predicted this would happen. And so it has. Comcast has § 230 immunity from liability on everything. Even if they didn't, e360 failed to file any CREDIBLE claims against Comcast. They've been pretty much laughed out of court.
The first paragraph sets the tone. If you were pulling for e360 on this one then it doesn't get any better from there.
Don't forget, though, that the Countersuit/3rd Party Complaint against Linhardt and his corporate sock puppets remain until or unless Comcast decides to dismiss. This case has suddenly transformed into Comcast v. e360Insight.
[UPDATE: I just noticed that the case is marked as "CLOSED" in PACER. I'll post more as I get more information, but if the whole case is closed then the Countersuit/3rd Party Complaint may not be moving forward either.
UPDATE 2: I found the following minute entry in PACER today (4/18/2008):
MINUTE entry before Judge Honorable James B. Zagel: Judgment entered on 4/10/2008 is hereby vacated. Entered in error. Case reopened as to the counterclaim and third party complaint.
Thus, the Counterclaim/3rd Party Complaint is ON and the matter is re-opened as to this part of the case ONLY.]
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
MEMORANDUM OPINION AND ORDER
Plaintiff e360Insight, LLC is a marketer. It refers to itself as an Internet marketing company. Some, perhaps even a majority of people in this country, would call it a spammer.
e360 sends e-mail solicitations and advertisements, for a fee, to millions of e-mail users. More than a few of those users are subscribers to Comcast, an Internet service provider. Many e-mail users do not want to see (or delete unread) the messages sent by e360. Even if every user wanted these e-mails, Comcast might well have its network overloaded by the mailings. Comcast, like the federal judiciary and other enterprises, uses filters to control the volume of its e-mail and to block e-mails its users don’t want to see.
It can fairly be said that there is a national discussion about blocking unwanted messages of all sorts. In 2004, Congress noted that unsolicited commercial e-mail is currently estimated to account for over half of all e-mail traffic and noted, too, that these e-mails imposed significant costs on those who carry and receive such e-mail. 15 U.S.C. § 7701 (a)(2), (6) (2004). This is the context of this case. There is a “do not call list” designed to stop unsolicited phone calls and faxes. Many, if not most, large companies, block messages to their own employees. On the other hand, there are no laws which facilitate the blocking of direct mail solicitations through the
post office or package carriers, perhaps because the cost of physical delivery of a paper solicitation significantly limits its use. The idea of blocking seems at odds in some way with free speech protection, even though there are limits imposed on the free speech protection of commercial speech, which is, I infer, the principal, if not the only, business of e360. None of the larger policy issues, though, is particularly relevant to the decision of Comcast’s motion for judgment on the pleadings.
The claims here are four: (1) a federal law claim for violation of the Computer Fraud and Abuse Act (CFAA); (2) a claim of infringement of free speech in violation of First Amendment rights; (3) a state law claim for tortious interference with prospective economic advantage; and (4) a claim for deceptive or unfair practices barred by the Illinois Consumer Fraud Act (ICFA). The motion for judgment on the pleadings argues that the Communications Decency Act of 1996 (CDA) protects Comcast from these claims even if they would otherwise be valid.
It is clear that Congress understood that it would not be enough to pass a law against mass electronic mailings. It knew that servicers like Comcast would create software to identify, filter, and block e-mail messages that were unwanted. It knew, too, that the details of such software could not be publicly disclosed, so as to prevent them from being easily evaded. The policy was to make it easier for e-mail recipients to control the information they receive, particularly the material received by minors at home and in schools.
Congress, and, I think, everyone else who studied the issue understood that blocking software would probably block too much. To insure that you or your child will not receive unwanted or inappropriate e-mails, your Internet service may wind up preventing you from receiving some e-mails that are neither unwanted nor inappropriate. Such Internet service
providers feared they might be held liable for blocking too much, or even too little, and this was, as Congress recognized, “[a] disincentive[ ] for the . . . utilization of blocking and filtering technologies.” 47 U.S.C. § 230(b)(4) (1998). So, Congress passed the so-called Good Samaritan provision of the CDA to protect providers who take actions to prevent access to objectionable content:
No provider or user of an interactive computer service shall be held liable on account of –
(A) any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be . . . objectionable, whether or not such material is constitutionally protected; or
(B) any action taken to enable . . . the technical means to restrict access.
§ 230(c)(2). The Act of Congress expressly pre-empted state or local laws inconsistent with its grant of immunity. § 230(e).1
[1 In this case, Congressional policy does not differ, much, if at all, from Illinois law. See 815 ILCS 511/10 (Electronic Mail Act) which permits providers to block receipt or transmission of unsolicited advertisements on their own initiative and states that providers shall not be held liable for such actions taken in good faith.]
The claim that a suit is barred by federal statute may be properly raised in a motion for judgment on the pleadings. See McCready v. eBay, Inc., 453 F.3d 882 (7th Cir. 2006); Chicago Lawyers Comm. for Civil Rights v. Craigslist, Inc., 461 F.Supp.2d 681 (N.D. Ill. 2006), aff’d, 2008 WL 681168 (7th Cir. 2008) (claim for failure to block).
The initial question is whether the kind of unsolicited and bulk e-mails (whether you call them spam or mass marketing mailings) are the sort of communications an entity like Comcast could deem to be objectionable. A few courts have addressed the issue and answered “yes.” See Optinrealbig.com, LLC v. Ironport Systems, Inc., 323 F.Supp.2d 1037 (N.D. Cal. 2004) (company that forwarded spam complaints to ISPs entitled to immunity). Indeed, section 230
imposes a subjective element into the determination of whether a provider or user is immune from liability. Zango, Inc. v Kaspersky Lab, Inc., No. 07-0807, slip. op. at 6-7 (W.D. Wash. Aug. 28, 2007) (noting that section 203(c)(2) only requires that the provider subjectively deems the blocked material objectionable); Pallorium v. Jared, 2007 WL 80955, at *7 (Cal. Ct. App. Jan. 1, 2007) (same). This standard furthers one of section 230's goals “to encourage the development of technologies which maximize user control over what information is received by individuals, families, and schools who use the Internet and other interactive computer services.” § 230(b)(3). Here, there is no question that Comcast, through the use of its numerous programs, software, and technologies, considers the material sent by e360 via e-mail objectionable.
e360 argues that § 230(c) has a narrower ambit than the one claimed by Comcast. e360 insists that a broad immunity was enacted, but not so broad as to protect Comcast. It relies on Chicago Lawyers’ Committee, but it is difficult to determine what language in Chicago Lawyers’ Committee favors e360. 461 F.Supp.2d 681. The problem the Court of Appeals confronted in that case and in Doe v. GTE, 347 F.3d 655 (7th Cir. 2003), was the problem of the service provider who did not block anything, or anything much. The question before the Courts there was how to read a statute which seemed to offer protection to providers who did block, a protection which was intended to be an incentive to block. Should the statute be extended to protect those who choose to do nothing? Implicit in both decisions is the conclusion that the statute does provide fairly absolute protection to those who choose to block. This was the choice Comcast made.
The validity of that choice is attacked by the claim, presumed true, that e360 is in compliance with another federal act, 15 U.S.C. §§ 7701-7713 (2004) (Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003) (CAN-SPAM).
e360 rejects the spammer characterization, saying that it sends e-mails only to persons who opt-in with e360 (or its partners) to receive e-mails. It has a common practice of sending emails to request a second confirmation of willingness to receive e-mails. Beginning in 2005, Comcast began a program of indiscriminate blocking of e360 e-mails, which is a significant problem for e360 because, for the majority of its addressees, it has no other way to deliver its goods. e360 protested and, sometimes, Comcast would release a block after hearing from e360 that it was mailing to people who were willing recipients. By 2007, Comcast refused any further releases and showed little interest in discussing the matter with e360.2
[2 e360 says, in its brief, that Comcast has also engaged in “denial of service” attacks on
their system which acts overwhelm e360's system and prevent it from sending or receiving emails. e360 also claims that Comcast sends incorrect bounce information to their system with respect to e-mail addresses of those on e360's opt-in list. I do not understand what is being alleged. If e360 means that Comcast is refusing to transmit the e-mails and communicates this fact to e360 by bouncing them back, then it is e360's choice to submit very large numbers of emails for transmission which, after the first Comcast block, it should have known of this possibility and been prepared for it (perhaps by altering its protocols to allow for a connection to be disconnected). It is hard to see that sending e-mails back, in this context, is a denial of service “attack” when it is designed to prevent legitimate users of a service from using the service. It is not an “attack” to prevent users not believed to be legitimate from using a service. It is also impossible to see the allegations here as stating that Comcast intentionally accesses a computer without authorization. Unless these computers operate in non-standard ways, the initiation of access is laid at e360's door, not at Comcast's.]
But compliance with CAN-SPAM, Congress decreed, does not evict the right of the provider to make its own good faith judgment to block mailings. Section 7707 of the Act says that nothing in the Act shall “have any effect on the lawfulness . . . under any other provision of
law, of the adoption, implementation, or enforcement by a provider of Internet access service of a policy of declining to transmit, route, relay, handle or store certain types of electronic mail messages.” See White Buffalo Ventures, LLC v. University of Texas, 420 F.3d 366, 371 (5th Cir. 2005); § 7707(c).
Under the law, a mistaken choice to block, if made in good faith, cannot be the basis for liability under federal or state law. To force a provider like Comcast to litigate the question of whether what it blocked was or was not spam would render § 230(c)(2) nearly meaningless.
What is left for e360 is to claim that Comcast has not acted in good faith. It argues that claim in this way: “Comcast has not acted in good faith. Comcast allows numerous other companies to send bulk emails in greater volume and with greater frequency . . . singling out Plaintiff when others behaving in a like manner are not treated in a like fashion.” Pl.’s Resp. to
Def.’s Mot. for J. on the Pleadings.3
[3 Comcast argues that, absent its statutory protection, e360 has failed to state claims on all of its Counts.
(A) I agree that the Tortious Interference with Prospective Economic Advantage Count is difficult to understand. I have found no cases in which refusal to allow a plaintiff to run an advertisement in a medium with wide circulation (and thus reducing sales) of plaintiff’s products or those from whom he is selling constitutes such tortious interference. Usually the prospective economic advantage is far more concrete than selling to public which consists of people on a very, very long opt-in list. It is illegal to interfere with a fair number of prospects, but usually they are a class of easily identified individuals and usually the interference is that of the defendant interacting directly with the prospective buyers.
(B) The claim under CFAA under the “denial of service” theory fails for the reasons stated above.
(C) Comcast is a private enterprise and has no obligation to honor the free speech rights of e360. C.B.S. v. Democratic Nat’l Comm., 412 U.S. 94 (1973). Comcast provides services traditionally performed by private enterprises, not the government. The government does not, with very few exceptions, connect people with one another through the Internet. Jackson v. Metropolitan Edison, 419 U.S. 345 (1974) (publicly regulated utility). The fact that an enterprise is regulated, licensed, or funded by the government does not make the enterprise part of the state. Wilcher v. City of Akron, 498 F.3d 516 (6th Cir. 2007).
(D) The state law claim for unfair competition is weightless. Comcast did not deceive e360 since Comcast told e360 that Comcast reserved the right to refuse service, besides which e360 is not a consumer under Illinois law.]
The issue is whether e360 has pled an absence of good faith. Under the standards of Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007), e360 has not done so. The affidavit of the President of e360 does not attest to Comcast’s alleged policy of allowing others to do what it denies e360. And Comcast does not claim that the reason it refuses to transmit e360's electronic mails is their volume and their frequency. The absence of good faith is not adequately pled.
I grant judgment on the pleadings with respect to the complaint as a whole on the grounds that § 230(c) precludes proceeding on any of the claims. Alternatively, I dismiss the remainder of the claims for the reasons stated above.
James B. Zagel
United States District Judge
DATE: April 10, 2008
|MotJudgmentPleadingsOrder.pdf||04/11/08 9:31 am||69.85 KB|
When a federal district court judge says that a bunch of people might call you a spammer, then your honor must be defended!
And so e360Insight, LLC, is asking the judge to pretty please take that back and let them have a case and discovery.
In answer to the question that I know most of you are asking, I've never actually seen a judge say "Oops! You're right! My bad!" in response to one of these. Now, that's not to say that it doesn't happen, but instead that it's really, really, really rare. This is really just a prelude to an appeal.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
MAVERICK DIRECT MARKETING
BARGAIN DEPOT ENTERPRISES, LLC,
d/b/a bargaindepot.net and
NORTHSHORE HOSTING COMPANY, LLC d/b/a ROCKY MOUNTAIN INTERNET
SERVICES, LLC and BAY CITY HOSTING, LLC,
RAVINIA HOSTING COMPANY, LLC,
NORTHGATE INTERNET SERVICES, LLC,
JOHN DOES 1-50,
MOTION TO RECONSIDER PURSUANT TO F. R. C. P. 59(E)
NOW COMES, Plaintiff, e360Insight, LLC (“e360”) and by and through its attorneys, Carla E. Buterman of the Law Office of Carla E. Buterman and Bartly J. Loethen of Synergy
Law Group, LLC, and for its Motion to Reconsider pursuant to Fed.R.Civ. P. 59(e), states as follows:
Plaintiffs move to reconsider the ruling for Defendant of Judgment on the Pleadings for the simple reason that it appears Plaintiff’s assertions in its complaint, including the assertion that it was not and is not a “spammer” were wholly disregarded in rendering the opinion. The second line of the Opinion and Order states “Some, perhaps even a majority of people in this country would call it a spammer” is indicative of this bias and erroneous assumption made in this case. In the complaint, e360 states that it is not a spammer and states that all email messages are requested by its customers. These statements must be taken as true by the court in this motion, and clearly it has not been, as the statement above indicates. This is merely one statement that was not taken as true and is indicative of the erroneous ruling based on improper factual assumptions in this case.
A. Legal Standard.
A motion for reconsideration filed within ten1 days following the entry of an order is governed by Fed. R.Civ.P. 59(e). The grounds for a Rule 59(e) motion include “newly discovered evidence, an intervening change in the controlling law, and manifest error of law [or fact]." Cosgrove v. Bartolotta, 150 F.3d 729, 732 (7th Cir. 1998). It is the duty of the moving party to “clearly establish” the aforementioned grounds. Harrington v. City of Chicago, 433
F.3d 542, 546 (7th Cir. 2006). A party is not entitled to “to undo its own procedural failures or present new evidence or arguments that could and should have been presented to the district court prior to judgment.” Woolner v. Flair Comm'cns Agency, Inc., 2005 U.S. Dist. LEXIS 42489, at *1 (N.D. Ill. Jan. 31, 2005). The Rule is designed to enable “a district court to correct its own errors, sparing the parties and the appellate courts the burden of unnecessary appellate proceedings." Russell v. Delco Remy Div. of Gen. Motors Corp., 51 F.3d 746, 749 (7th Cir. 1995).
[1 Rule 59(e) requires that motions to alter or amend a judgment must be filed within 10 days. Pursuant to Rule 6(a), when computing time, the day of the entry of the judgment is not included and when the amount of time proscribed is less than 11 days, intermediate Saturdays and Sundays shall be excluded. The Judgment on the Pleadings was granted on April 10, 2008 (Docket No. 44) and thus, ten days later not including intermediate Saturdays and Sundays is April 24, 2008.]
B. Comcast is not immune under the Communications Decency Act.
E360 has pled the absence of good faith in Comcast’s action toward it and thus Comcast is not entitled to the exemption offered under the Communications Decency Act in any reading of the statute. see 47 USCS § 230(c)(2)(A). In its Complaint, e360 states: (i) it has complied with Comcast’s Acceptable Use Policy (paragraph 13 of Complaint), (ii) Comcast refuses to provide e360 with any information as to how e360 could modify its email messages to avoid triggering the block of its rightfully sent email messages (Complaint p. 16); (iii) Comcast blocks based on content such as the use of the word “free” (see generally p. 19 Plaintiff’s Complaint) (iv) Comcast has regularly blocked double-confirmed emails (Complaint p. 19); (v) Comcast arbitrarily censors e360’s email (Complaint p. 19); (vi) Comcast has transmitted fraudulent “bounce data” making it impossible for Plaintiff to reasonably ascertain how or why the emails are being blocked (p. 24 of Complaint); and (vii) that Comcast is blocking e360’s email messages that are compliant with Comcast’s policies and allowing other email marketers with substantially similar business practices as those employed by e360 to send messages to Comcast’s customers (Complaint p. 58). These paragraphs detail Plaintiff’s allegations that Comcast is acting arbitrarily in blocking email sent by e360 to its customers who wish to receive the email. Assuming Plaintiff’s Complaint to be true, this is a sufficient allegation of bad faith
on the part of Comcast, and should be sufficient to allow the case to move forward and additional discovery to be undertaken to determine the full extent of Defendant’s bad faith. see Gillman v. Burlington N. R. Co., 878 F.2d 1020, 1022 (7th Cir. 1989) (when ruling on a motion for judgment on the pleadings, district court is required to accept as true all facts alleged in the complaint and to draw all reasonable inferences from the pleadings in favor of the non-moving party).
C. e360 Has Plead Each Count of Its Complaint Properly.
1. Plaintiff has properly pled its claim for tortious interference with prospective economic advantage.
The ruling of the court dismisses this count with a footnote stating the count is difficult to understand and the Court seems to characterize Plaintiff’s business as mere advertisement, with the inability to send the advertisement being the sole source of the potential damage. This statement is clearly in error as it seems to focus on potential damages which could be proven in the course of a trial rather than proper pleading.
In addition, the Court made a fundamental error of fact when it falsely assumed that every message e360 sends is perceived to be spam by “perhaps even a majority of people in this country.” As stated in its complaint, Plaintiff states “e360...sends emails to consumers who...purchase goods and services from its proprietary company owned website.” (Complaint p. 27). E360 sends different types of email messages to its customers, including signup confirmation messages, order confirmation messages, back-order notification messages and order shipping notices. These messages are sent in e360’s normal course of business as an e-commerce service provider. The vast majority, if not nearly all e-commerce websites send these types of transactional messages and consumers have come to expect to receive them. E360 is unaware of any organization or individual, including Comcast who believes an order confirmation message is spam. Nevertheless, Comcast blocks all of these messages, advertising
messages and transactional messages, and does so without explanation or justification and with intent to cause e360 harm.
Plaintiff has alleged each and every element of the tort. Plaintiff had a expectancy of a valid business relationship with those who had signed up to receive email offers from Plaintiff; defendant clearly knew of this relationship, as it was aware of the offers and blocked the delivery of the offers, thus such interference was intentional, and the failure of such delivery has damaged Plaintiff, as is alleged in the complaint and must be taken as true. Cook v. Winfrey, 141 F.3d 322 (7th Cir. 1998) (identifying elements necessary to state a cause of action for tortious interference). Plaintiff will be able to prove those damages at trial. Plaintiff has a vast amount of empirical evidence that directly links its ability to deliver email messages to a direct and substantial affect on Plaintiff’s revenue and Plaintiff should be allowed to prove its adequately pled case.
2. e360 has properly pled its claims for violations of the Computer Fraud and Abuse Act (“CFAA”).
Although difficult to understand, and also in a footnote, Plaintiff’s claim for violation of the CFAA is dismissed for (evidently) the reason that any initiation of computer to computer contact is at the door of e360 and not Comcast. The Court clearly misconstrues the action alleged in this claim. Plaintiff alleges in its Complaint that Comcast has engaged in “denial-of-service” attacks, which must be accepted as true at this stage of the case. 18 U.S.C. § 1030(a)(5)(A)(i) and (iii). It is incorrect to assume that because e360 is sending email to a client who has an expectation of receiving such email that the intended recipient’s email service provider should be entitled to tie up the sender’s computer for hours for a message that should take seconds to deliver merely due to the fact that there are several more emails to others originating from the same computer. This type of attack is initiated by Comcast, draws the e360 5
computers into a slow dialogue, and denies e360 computers the ability to continue at proper speed. This is the equivalent of bombarding a computer with information causing the computer to be unable to function properly (akin to many of the computer worms and viruses that gave rise to this law). Plaintiff has alleged such attacks have occurred and should be allowed to prove its case.
The Court misconstrues Plaintiff’s claim that “Comcast frequently transmits false bounce information to e360’s mail servers.” (Complaint p. 42). As stated in its complaint, Plaintiff defines false bounce information as “false information on the status of an email account.” e360’s customers have signed up using email addresses managed by Comcast, including those addresses containing a “@comcast.net” address. In these instances Comcast is the sole authority as to the status of these email addresses and whether the email addresses are in an active status and able to receive email messages. Plaintiff has pled that Comcast intentionally sends false information to e360 about the status of Comcast email addresses provided to e360 by e360 customers. For example, if e360 sends an email message to JohnSmith@comcast.net, Comcast sends a message back to e360 stating: JohnSmith@comcast.net is “not our customer” or “account is no longer active” or “mailbox is currently unavailable.” Plaintiff has properly pled that these statements made by Comcast are false statements and thus in bad faith. In addition, since Comcast is the sole authority on the status of a comcast.net email account and e360 has no other way to confirm or verify the status of its customers’ email addresses, and Plaintiff has pled that “....Comcast’s actions have directly resulted in the destruction of e360’s proprietary data and asset, its database.” (Complaint p. 43). The Court improperly dismisses Plaintiff’s claim, again in a footnote and states, “I do not understand what is being alleged.” Clearly, the Court simply
dismissed Plaintiff’s claim based on a lack of understanding even though Plaintiff clearly stated and defined the terms used in its claim.
3. e360 has properly pled unfair competition and business practices.
Again in a footnote, the Court dismisses Plaintiff’s claim for unfair business practices. The Court is clearly in error to determine factually, without presentment of any evidence, that Comcast did not deceive e360. E360 has pled Comcast did deceive it and that fact must be accepted as true at this stage of the pleadings. Further, the Court has stated e360 is not a consumer, but this is a clear error of law, as Roche v. Country Mut. Ins. Co. sets forth that a party need not be a consumer itself to bring a claim under this act so long as there is a “consumer nexus”. Roche v. Country Mut. Ins. Co., 2007 U.S. Dist. LEXIS 48921 *25 (S.D. Ill 2007). When, as is the case here, both entities are commercial entities, “the test for standing is whether the alleged conduct invokes trade practices addressed to the market generally or otherwise implicates consumer protection concerns.” Stepan Co. v. Winter Panel Corp., 948 F.Supp. 802, 805-06 (N.D. Ill. 1996). Here, consumer protection is clearly implicated as Comcast’s actions are directly impacting consumers (Comcast customers) that have requested to receive e-mail from e360 and are being denied access to e360’s e-mail through the arbitrary actions of Comcast. Moreover, e360 has adequately pled its cause of action and should be allowed to discover the facts necessary to prove its case, not be cut off by a premature determination that no deception has taken place.
In summary, this Court must overturn its ruling in favor of Defendants on this matter, as there is a manifest error in law and fact. The Court has improperly assumed certain facts that must be taken as true as alleged by Plaintiff. It is improper to make assumptions of facts such as whether Plaintiff is a spammer and whether Comcast has deceived Plaintiff. It is improper to
base a ruling at this stage of the case on what the Court deems of its own accord to be an absence of damages. It is improper to dismiss a claim based on an exemption that is not available when the Defendant shows bad faith and when Defendant’s bad faith is pled in Plaintiff’s Complaint. Plaintiff respectfully requests the Court reconsider its prior ruling and deny Defendant’s Motion for Judgment on the Pleadings for the reasons set forth herein.
By: /s/ Bartly J. Loethen
One of their Attorneys
Bartly J. Loethen (6225484)
Synergy Law Group, L.L.C.
730 West Randolph, 6th Floor
Chicago, Illinois 60661
Telephone: (312) 454-0015
Facsimile: (312) 454-0261
Carla E. Buterman (6281101)
Law Office of Carla E. Buterman
555 Skokie Blvd., Ste 500
Northbrook, IL 60062
Telephone: (847) 480-1020
Facsimile: (847) 480-5879
|MotReconsiderJotP.pdf||04/25/08 9:02 am||54.15 KB|
Raise your hand if you're shocked by this one, but the Judge has denied e360Insight's Motion to Reconsider.
MINUTE entry before Judge Honorable James B. Zagel: Motion to reconsider is denied.