This is the Notice of Appeal to the 7th Circuit Court of Appeals in e360insight, LLC. v. The Spamhaus Project, Ltd..
General Docket
US Court of Appeals for the Seventh Circuit
Court of Appeals Docket #: 06-3779 Filed: 10/16/06
Nsuit: 3380 Oth Per Property Damage-FedQue
e360 Insight, et al v. The Spamhaus Project
Appeal from: United States District Court
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Lower court information:
District: 0752-1 : 06 C 3958
Ordering Judge: Charles P. Kocoras, Judge
Court Reporter: Joene Hanhardt, Court Reporter
Date Filed: 7/21/06
Date order/judgment: 9/13/06
Date NOA filed: 10/13/06
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Fee status: paid
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Prior cases:
None
Current cases:
Lead Member Start End
Consolidated:
06- 3779 06- 4169 11/30/06
Docket as of May 17, 2007 11:01 pm Page 1
06-3779 e360 Insight, et al v. The Spamhaus Project
E360 INSIGHT, an Illinois Bartly J. Loethen
Limited Liability Company 314/454-0015
Plaintiff - Appellee Sixth Floor
[COR LD NTC ret]
SYNERGY LAW GROUP
730 W. Randolph Street
Chicago, IL 60661
DAVID LINHARDT Bartly J. Loethen
Plaintiff - Appellee (See above)
[COR LD NTC ret]
v.
THE SPAMHAUS PROJECT, a Matthew M. Neumeier
Company Limited by Guarantee FAX 312/264-0361
and Organized Under the Laws 312/846-5640
of England also known as THE Suite 3400
SPAMHAUS PROJECT, LIMITED [COR LD NTC ret]
Defendant - Appellant HOWREY, SIMON, ARNOLD & WHITE
321 N. Clark Street
Chicago, IL 60611-4714
USA
Docket as of May 17, 2007 11:01 pm Page 2
06-3779 e360 Insight, et al v. The Spamhaus Project
e360 INSIGHT, an Illinois Limited
Liability Company and DAVID LINHARDT,
Plaintiffs - Appellees
v.
THE SPAMHAUS PROJECT, a Company Limited by Guarantee and
Organized Under the Laws of England also known as THE
SPAMHAUS PROJECT, LIMITED,
Defendant - Appellant
Docket as of May 17, 2007 11:01 pm Page 3
06-3779 e360 Insight, et al v. The Spamhaus Project
10/16/06 Private civil case docketed. [06-3779] [2036150-1]
Transcript information sheet due 10/26/06. Appellant's
brief due 11/27/06 for The Spamhaus Project. Docketing
Statement due 10/20/06. (amyd) [06-3779]
10/16/06 [06-3779] ROA from No. Dist. of Il., E. Div. due 11/3/06.
(amyd) [06-3779]
10/17/06 Filed Seventh Circuit Transcript Information Sheet by
Matthew M. Neumeier for Appellant The Spamhaus Project.
[06-3779] [2036150-1] (kell) [06-3779]
10/20/06 Filed Appellant The Spamhaus Project docketing statement.
[06-3779] [2037931-1] (josh) [06-3779]
10/23/06 Filed Seventh Circuit Transcript Information Sheet by
Carrie A. Fino for Appellant The Spamhaus Project.
[06-3779] [2036150-1] (juli) [06-3779]
10/23/06 ORDER: IT IS ORDERED that defendant-appellant file a
supplemental statement of jurisdiction listing the
citizenship of all members of plaintiff e360 Insight, LLC.
The statement is due on or before October 30, 2006.
[2036150-1] DW [06-3779] (See order for further details)
Statement due 10/30/06 for The Spamhaus Project. (juli)
[06-3779]
10/31/06 Disclosure Statements filed by Matthew M. Neumeier (lead
counsel), Carrie A. Fino, Stephen M. Geissler and Craig C.
Martin for Appellant The Spamhaus Project. [06-3779]
[2036150-1] (juli) [06-3779]
11/2/06 ORDER: The court, on its own motion, orders attorney
Matthew M. Neumeier to show cause for his failure to
respond to the court s order of October 23, 2006. Attorney
Neumeier shall file his response on or before November 9,
2006. Counsel is advised that failure to respond may result
in monetary or disciplinary sanctions. [2036150-1] DW
[06-3779] Response to showcause due 11/9/06 for Matthew M.
Neumeier. (juli) [06-3779]
11/3/06 ORDER: Pursuant to Circuit Rule 33, briefing will proceed
as follows: [2036150-1] SCO [06-3779] Appellant's brief due
12/22/06 for The Spamhaus Project. Appellee's brief due
1/22/07 for David Linhardt, for e360 Insight. Appellant's
reply brief due 2/5/07 for The Spamhaus Project. (juli)
[06-3779]
11/6/06 Filed response to order to showcause by Matthew M. Neumeier
for Appellant The Spamhaus Project. [06-3779] [2043342-1]
(hudk) [06-3779]
11/6/06 Filed Appellant The Spamhaus Project supplemental statement
of jurisdiction. [06-3779] [2036150-1] (amyd)
Docket as of May 17, 2007 11:01 pm Page 4
06-3779 e360 Insight, et al v. The Spamhaus Project
[06-3779]
11/9/06 ORDER re: RESPONSE TO SHOW CAUSE ORDER DATED NOVEMBER 2,
2006 filed by defendant-appellant on November 6, 2006, IT
IS ORDERED that the Rule to Show Cause is DISCHARGED.
[2043342-1] DW [06-3779] (juli) [06-3779]
11/15/06 Original record on appeal filed. Contents of record: 1 vol.
pleadings. [06-3779] [2045920-1] (bria) [06-3779]
11/28/06 Supplemental record on appeal filed. Contents of record: 4
vol. transcripts. [06-3779] [2049139-1] (dave)
[06-3779]
12/4/06 Filed motion by Appellant The Spamhaus Project in 06-3779,
Appellant The Spamhaus Project in 06-4169 to consolidate
cases. [2051670-1] [06-3779, 06-4169] (juli)
[06-3779 06-4169]
12/5/06 ORDER: The court orders these appeals CONSOLIDATED for
purposes of briefing and disposition. The briefing schedule
is as follows: [2051160-1] DW [06-3779, 06-4169]
Appellant's brief due 1/9/07 for The Spamhaus Project in
06-3779, for The Spamhaus Project in 06-4169. Appellee's
brief due 2/8/07 for David Linhardt in 06-3779, for e360
Insight in 06-3779, for David Linhardt in 06-4169, for e360
Insight in 06-4169. Appellant's reply brief due 2/22/07 for
The Spamhaus Project in 06-3779, for The Spamhaus Project
in 06-4169. (juli) [06-3779 06-4169]
12/5/06 ORDER: IT IS ORDERED that appellant file a supplemental
statement of jurisdiction indicating the state in which
Maverick Direct Marketing Solutions, Inc. has its principal
place of business. The statement is due on or before
December 12, 2006. (See order for further detail.) DW
[06-4169] [2036150-1] Appellant's statement or declaration
shall be filed on or before 12/12/06 for The Spamhaus
Project. (juli) [06-4169]
12/6/06 ORDER issued DENYING motion to consolidate cases as moot.
These appeals were consolidated on December 5, 2006.
[2051670-1] DW [06-3779, 06-4169] (juli) [06-3779 06-4169]
12/12/06 ORDER: Pursuant to Circuit Rule 33, the briefing schedule
is modified as follows: [2051160-1] SCO [06-3779, 06-4169]
Appellant's brief due 1/23/07 for The Spamhaus Project in
06-3779, for The Spamhaus Project in 06-4169. Appellee's
brief due 2/22/07 for David Linhardt in 06-3779, for e360
Insight in 06-3779, for David Linhardt in 06-4169, for e360
Insight in 06-4169. Appellant's reply brief due 3/8/07 for
The Spamhaus Project in 06-3779, for The Spamhaus Project
in 06-4169. (juli) [06-3779 06-4169]
Docket as of May 17, 2007 11:01 pm Page 5
06-3779 e360 Insight, et al v. The Spamhaus Project
12/12/06 Filed Seventh Circuit Transcript Information Sheet by
Matthew M. Neumeier for Appellant The Spamhaus Project in
06-4169. [06-4169] [2036150-1] (juli) [06-4169]
12/12/06 Supplemental Statement of Jurisdiction filed by Appellant
The Spamhaus Project in 06-4169. [06-4169] [2055197-1]
(juli) [06-4169]
12/13/06 Disclosure Statement filed by Bartly J. Loethen (as lead
counsel) and Joseph L. Kish for Appellee David Linhardt,
Appellee e360 Insight in 06-3779. [06-3779] [2051160-1]
(juli) [06-3779]
12/13/06 Disclosure Statement filed by Stephen M. Geissler for
Appellant The Spamhaus Project in 06-4169. [06-4169]
[2036150-1] (juli) [06-4169]
1/8/07 ORDER: Pursuant to Circuit Rule 33, briefing will proceed
as follows: [2051160-1] SCO [06-3779, 06-4169] Appellant's
brief due 2/21/07 for The Spamhaus Project in 06-3779, for
The Spamhaus Project in 06-4169. Appellee's brief due
3/23/07 for David Linhardt in 06-3779, for e360 Insight in
06-3779, for David Linhardt in 06-4169, for e360 Insight in
06-4169. Appellant's reply brief due 4/6/07 for The
Spamhaus Project in 06-3779, for The Spamhaus Project in
06-4169. (fern) [06-3779 06-4169]
2/21/07 Filed 15c appellant's brief by The Spamhaus Project in
06-3779, The Spamhaus Project in 06-4169. Disk filed.
[06-3779, 06-4169] [0-0] (josh) [06-3779 06-4169]
2/21/07 Filed 10c appendix by Appellant The Spamhaus Project in
06-3779, Appellant The Spamhaus Project in 06-4169.
[06-3779, 06-4169] [2077110-1] (josh) [06-3779 06-4169]
2/28/07 Filed motion by Apexix AG; Beyond Security, Inc.'
Brandenburg Internet Working; Bright Wings, Inc.;
Changeip.com; Coalition against Unsolicited Commerical
Email (CAUCE) - US; Datran Media Corp.; EMAILLABS; Michael
Geist; Habeas, Inc.; Internet Law Group. PLLC; INNOVYX,
Inc.; Internet Tools, Inc.; Institute for SPAM and Internet
Public Policy (ISIPP); Chris Lewis; John Levine; Mailshell
Inc.; MV Communications, Inc.; Return Path, Inc.; Secure
Computing Corp.; Snertsoft; Spin S.R.L.; SURBL; Talbix,
Inc.; Unspam Technologies, Inc.; Paul Vixie; Webmail.us,
Inc.; Whizardries, Inc.; and Derek Wyatt; for leave to file
their amicus brief in support of defendant-appellant
Reverseal. [2079754-1] 15c amicus curiae tendered. [0-0]
[06-3779, 06-4169] (kell) [06-3779 06-4169]
Docket as of May 17, 2007 11:01 pm Page 6
06-3779 e360 Insight, et al v. The Spamhaus Project
3/5/07 ORDER re: Motion to file amicus curiae brief in support of
appellant and reversal. GMM [06-3779, 06-4169] Matthew B.
Prince, counsel for the potential amici curiae, file a
supplemental statement on or before March 8, 2007 hat
explains whether the John Marshall Law School has
authorized him to use its name in connection with this
litigation. (hard) [06-3779 06-4169]
3/8/07 Filed Notice-Only in 06-3779, Notice-Only in 06-4169
statement of counsel for the amici curiae in support of
defendant-appellant in response to March 5th order.
[06-3779, 06-4169] [2051160-1] (kell) [06-3779 06-4169]
3/9/07 Filed motion by Appellee e360 Insight in 06-3779, Appellee
David Linhardt in 06-3779, Appellee e360 Insight in
06-4169, Appellee David Linhardt in 06-4169 to strike
amicus curiae brief. [2082846-1] [06-3779, 06-4169] (hard)
[06-3779 06-4169]
3/12/07 ORDER issued GRANTING motion to file amicus brief.
[2079754-1] The clerk of this court shall file INSTANTER the
tendered copies of the amicus curiae brief and distribute a
copy of this order and the brief to the members of the
assigned merits panel. The motion to strike the brief of the
amicus curiae is DENIED. [2082846-1] The clerk of this court
is directed to file instanter the tendered copies of the
amicus curiae brief. [2051160-1] GMM [06-3779, 06-4169]
(hard) [06-3779 06-4169]
3/12/07 THIS CAUSE CONSISTS OF MORE THAN 5 PARTIES FOR EITHER SIDE.
The following are those parties to this cause as reflected
on the District Court docket, yet are not reflected on the
Appellate docket/caption for administrative purposes:
AMICUS CURIAE: BRANDENBURG INTERNET WORKING; BRIGHT WINGS,
INC.; CHANGEIP.CO; COALITION AGAINST UNSOLICITED COMMERCIAL
EMAIL (CAUCE)- US; DATRAN MEDIA CORP.; EMAILLABS; MICHAEL
GEIST; HABEAS, INC.; INTERNET LAW GROUP, PLLC INNOVYX, INC.;
INTERNET TOOLS, INC.; THE INSTITUTE FOR SPAM AND INTERNET
PUBLIC POLICY (ISIPP); CHRIS LEWIS; JOHN LEVINE; MAILSHELL
INC.; MV COMMUNICATIONS, INC.; RETURN PATH, INC.; SECURE
COMPUTING CORP.; SNERTSOFT; SPIN, S.R.L.; SURBL; TALKBIZ,
INC.; UNSPAM TECHNOLOGIES, INC.; PAUL VIXIE; WEBMAIL. US,
INC.; WHIZARDRIES, INC.; AND DEREK WYATT, MP. [06-3779,
06-4169] [2051160-1] (hard) [06-3779 06-4169]
3/12/07 Filed 15c amicus brief by Amicus Curiae Apexis AG in
06-3779, Amicus Curiae Beyond Security Inc in 06-3779, per
order. Disk filed. [06-3779, 06-4169] [0-0] (odea)
[06-3779 06-4169]
3/23/07 Filed 15c appellee's brief by e360 Insight in 06-3779,
David Linhardt in 06-3779, e360 Insight in 06-4169, David
Linhardt in 06-4169. Disk filed. [06-3779, 06-4169] [0-0]
(andb) [06-3779 06-4169]
Docket as of May 17, 2007 11:01 pm Page 7
06-3779 e360 Insight, et al v. The Spamhaus Project
3/23/07 Filed 10c appendix vols. I & II by Appellee e360 Insight in
06-3779, Appellee David Linhardt in 06-3779, Appellee e360
Insight 06-4169, Appellee David Linhardt in 06-4169.
[06-3779, 06-4169] [2087161-1] (andb) [06-3779 06-4169]
4/6/07 Filed 15c appellant's reply brief by The Spamhaus Project
in 06-3779, The Spamhaus Project in 06-4169. Disk filed.
[06-3779, 06-4169] [0-0] (odea) [06-3779 06-4169]
4/25/07 ORDER: Argument set for Wednesday, June 6, 2007 at 9:30
a.m. Each side limited to 20 minutes. [06-3779, 06-4169]
[2097101-1] (josh) [06-3779 06-4169]
5/7/07 Filed motion by Appellant The Spamhaus Project in 06-3779,
Appellant The Spamhaus Project in 06-4169 to reschedule
oral argument. [2101154-1] [06-3779, 06-4169] (josh)
[06-3779 06-4169]
5/7/07 Disclosure Statement filed by Matthew M. Neumeier for
Appellant The Spamhaus Project in 06-3779, Matthew M.
Neumeier for Appellant The Spamhaus Project in 06-4169.
[06-3779, 06-4169] [2051160-1] (hard) [06-3779 06-4169]
5/9/07 ORDER issued DENYING motion to reschedule oral argument.
[2101154-1] CF [06-3779, 06-4169] (andb) [06-3779 06-4169]
5/16/07 Disclosure Statement filed by Matthew B. Prince for Amicus
Curiae Beyond Security Inc, Amicus Curiae Apexis AG in
06-3779, Matthew B. Prince for Notice-Only in 06-4169.
[06-3779, 06-4169] [2051160-1] (kell) [06-3779 06-4169]
Docket as of May 17, 2007 11:01 pm Page 8
This is Spamhaus' Docketing Statement.
This is the Transcript Information Sheet associated with the appeal.
This is the transmittal of the long record to the 7th Circuit.
Nos. 06-3779 and 06-4169
_______________________________________________
IN THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
_______________________________________________
THE SPAMHAUS PROJECT, a company limited by guarantee and organized under the laws of England, a/k/a THE SPAMHAUS PROJECT, LTD.,
Defendant-Appellant,
vs.
e360 INSIGHT, LLC, an Illinois Limited Liability Company, and DAVID LINHARDT, an individual,
Plaintiff-Appellees.
_______________________________________________
Appeal from the United States District Court
for the Northern District of Illinois,
District Court No. 06 C 3958
The Honorable Charles P. Kocoras, District Judge
________________________________________________
BRIEF OF DEFENDANT-APPELLANT
THE SPAMHAUS PROJECT
________________________________________________
Matthew M. Neumeier
Craig C. Martin
Carrie A. Fino
JENNER & BLOCK LLP
330 North Wabash Ave.
Chicago, IL 60611
(312) 222-9350
February 21, 2007
CIRCUIT RULE 26.1 DISCLOSURE STATEMENT
Appellate Court No: 06-3779
Short Caption: e360 Insight, LLC et al. v. The Spamhaus Project
To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party or amicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing the following information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.
The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement must be filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occurs first. Attorneys are required to file an amended statement to reflect any material changes in the required information. The text of the statement must also be included in front of the table of contents of the party’s main brief. Counsel is required to complete the entire statement and to use N/A for any information that is not applicable if this form is used.
(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide the corporate disclosure information required by Fed. R. App. P. 26.1 by completing item #3):
The Spamhaus Project
(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedings in the district court or before an administrative agency) or are expected to appear for the party in this court:
Jenner & Block LLP - Chicago, IL (expected to appear); Wellborn & Wallaco, LLC - Atlanta, GA (appeared in the past); Hinshaw & Culbertson, LLP - Chicago, IL (appeared in the past).
(3) If the party or amicus is a corporation:
i) Identify all its parent corporations, if any; and
None
ii) List any publicly held company that owns 10% or more of the party’s or amicus’ stock:
None
Attorney’s Signature: s/Matthew M. Neumeier Date: 10-26-06
Attorney’s Printed Name: Matthew M. Neumeier
Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes X No _____
Address: Jenner & Block LLP
330 N. Wabash Ave., Chicago, IL 60611
Phone Number: (312) 923-2749 Fax Number: (312) 840-7749
E-Mail Address: mneumeier@jenner.com
CIRCUIT RULE 26.1 DISCLOSURE STATEMENT
Appellate Court No: 06-3779
Short Caption: e360 Insight, LLC et al. v. The Spamhaus Project
To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party or amicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing the following information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.
The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement must be filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occurs first. Attorneys are required to file an amended statement to reflect any material changes in the required information. The text of the statement must also be included in front of the table of contents of the party’s main brief. Counsel is required to complete the entire statement and to use N/A for any information that is not applicable if this form is used.
(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide the corporate disclosure information required by Fed. R. App. P. 26.1 by completing item #3):
The Spamhaus Project
(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedings in the district court or before an administrative agency) or are expected to appear for the party in this court:
Jenner & Block LLP - Chicago, IL (expected to appear); Wellborn & Wallaco, LLC - Atlanta, GA (appeared in the past); Hinshaw & Culbertson, LLP - Chicago, IL (appeared in the past).
(3) If the party or amicus is a corporation:
i) Identify all its parent corporations, if any; and
None
ii) List any publicly held company that owns 10% or more of the party’s or amicus’ stock:
None
Attorney’s Signature: s/Craig C. Martin Date: 10-26-06
Attorney’s Printed Name: Craig C. Martin
Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes _____ No X
Address: Jenner & Block LLP
330 N. Wabash Ave., Chicago, IL 60611
Phone Number: (312) 923-2776 Fax Number: (312) 840-7776
E-Mail Address: cmartin@jenner.com
CIRCUIT RULE 26.1 DISCLOSURE STATEMENT
Appellate Court No: 06-3779
Short Caption: e360 Insight, LLC et al. v. The Spamhaus Project
To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party or amicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing the following information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.
The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement must be filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occurs first. Attorneys are required to file an amended statement to reflect any material changes in the required information. The text of the statement must also be included in front of the table of contents of the party’s main brief. Counsel is required to complete the entire statement and to use N/A for any information that is not applicable if this form is used.
(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide the corporate disclosure information required by Fed. R. App. P. 26.1 by completing item #3):
The Spamhaus Project
(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedings in the district court or before an administrative agency) or are expected to appear for the party in this court:
Jenner & Block LLP - Chicago, IL (expected to appear); Wellborn & Wallaco, LLC - Atlanta, GA (appeared in the past); Hinshaw & Culbertson, LLP - Chicago, IL (appeared in the past).
(3) If the party or amicus is a corporation:
i) Identify all its parent corporations, if any; and
None
ii) List any publicly held company that owns 10% or more of the party’s or amicus’ stock:
None
Attorney’s Signature: s/Carrie A. Fino Date: 10-24-06
Attorney’s Printed Name: Carrie A. Fino
Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes No X
Address: Jenner & Block LLP
330 N. Wabash Ave., Chicago, IL 60611
Phone Number: (312) 840-7290 Fax Number: (312) 840-7390
E-Mail Address: cfino@jenner.com
CIRCUIT RULE 26.1 DISCLOSURE STATEMENT
Appellate Court No: 06-3779
Short Caption: e360 Insight, LLC et al. v. The Spamhaus Project
To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party or amicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing the following information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.
The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement must be filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occurs first. Attorneys are required to file an amended statement to reflect any material changes in the required information. The text of the statement must also be included in front of the table of contents of the party’s main brief. Counsel is required to complete the entire statement and to use N/A for any information that is not applicable if this form is used.
(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide the corporate disclosure information required by Fed. R. App. P. 26.1 by completing item #3):
The Spamhaus Project
(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedings in the district court or before an administrative agency) or are expected to appear for the party in this court:
Jenner & Block LLP - Chicago, IL (expected to appear); Wellborn & Wallaco, LLC - Atlanta, GA (appeared in the past); Hinshaw & Culbertson, LLP - Chicago, IL (appeared in the past).
(3) If the party or amicus is a corporation:
i) Identify all its parent corporations, if any; and
None
ii) List any publicly held company that owns 10% or more of the party’s or amicus’ stock:
None
Attorney’s Signature: s/Stephen M. Geissler Date: 10-24-06
Attorney’s Printed Name: Stephen M. Geissler
Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes No X
Address: Jenner & Block LLP
330 N. Wabash Ave., Chicago, IL 60611
Phone Number: (312) 923-2620 Fax Number: (312) 923-2720
E-Mail Address: sgeissler@jenner.com
i
TABLE OF CONTENTS
CIRCUIT RULE 26.1 DISCLOSURE STATEMENTS
TABLE OF CONTENTS.....................................................................................i
TABLE OF AUTHORITIES...............................................................................iv
JURISDICTIONAL STATEMENT.......................................................................1
ISSUES PRESENTED......................................................................................2
STATEMENT OF THE CASE............................................................................3
STATEMENT OF FACTS..................................................................................5
SUMMARY OF ARGUMENT.............................................................................9
STANDARD OF REVIEW...............................................................................10
ARGUMENT..................................................................................................10
I. The Entry of Default Judgment Must Be Reversed Because the District Court Failed to Find that Service of Process was Properly Effected on Spamhaus and that Failure Violates International and United States Law...........................................................................................................11
A. Prior to entering the default judgment, the district court violated international and United States law by failing to consider whether service of process was properly effected on Spamhaus.....................11
1. The District Court Failed to Consider Spamhaus’ Threshold Argument That Service Was Not Proper......................................11
2. Under International and United States Law, the District Court’s Entry of Default, Prior to Making Findings on Service of Process, Was Improper.................................................................14
i. Under the Hague Convention, the Entry of Default Judgment Was Improper.......................................................14
ii. The District Court Improperly Entered Default Judgment without First Determining Whether the Motion for Default Judgment was Properly Served............................15
B. The Default Judgment is Void and Must Be Vacated Because the District Court Lacks Personal Jurisdiction Over Spamhaus...........17
ii
1. The Entry of Default Judgment is Void and Must be Vacated Because the District Court Entered Default Judgment Without Inquiring into or Determining Whether it had Personal Jurisdiction over Spamhaus.........................................17
2. The Jurisdictional Statements in e360’s Complaint are Insufficient to Confer Personal Jurisdiction over Spamhaus and the Default Judgment is Therefore Void and Should be Vacated...................................................................................................20
C. The District Court’s Entry of Default Judgment Must Be Vacated Because the Claims are Insufficient to State a Claim for which Relief can be Granted, a Hearing on Damages was not Held, and the Damages were Awarded Without Sufficient Evidentiary Support..............................................................................................................................26
1. e360’s Allegations Are Insufficient To State A Claim For Relief........................................................................................................27
2. The District Court Abused Its Discretion When It Entered Default Judgment Against Spamhaus Without Holding A Hearing On the Damages Amount................................................28
3. The District Court Abused Its Discretion By Entering a Damages Judgment Against Spamhaus Without Sufficient Evidentiary Support...........................................................................31
4. The District Court Abused Its Discretion By Failing To Enter Findings Of Fact In Support Of The Damages Amount Awarded In The Default Judgment...............................................32
D. Reversing the District Court’s Default Judgment Conforms With the Seventh Circuit’s Preference for Cases to be Tried on the Merits, and Would Allow Spamhaus the Opportunity to Present Its Meritorious Defenses.....................................................................................33
II. The District Court’s Injunction Must be Vacated Because the District Court Failed to Apply the Traditional Test Required for Injunctive Relief, Neglected its Duties under Federal Rule of Civil Procedure 65, and Issued an Injunction that Violates the First Amendment.................................35
A. The District Court erred in not applying the traditional four-part test prior to granting injunctive relief......................................................37
iii
B. The District Court erred because the injunctive relief issued does not comport with the requirements under Federal Rule of Civil Procedure 65.....................................................................................................39
C. The Permanent Injunction Issued by the District Court Violates the First Amendment and Must be Reversed................................................42
1. The Injunction Constitutes an Impermissible Prior Restraint and is Facially Invalid........................................................................43
2. The Injunction Amounts to Impermissible Compelled Speech...................................................................................................................44
3. The Injunction is Impermissibly Broad.......................................46
III. The District Court Erred in Denying Spamhaus’ Motion to Vacate Default Judgment under Federal Rule of Civil Procedure 60(b).........................48
A. The District Court Abused its Discretion by Refusing to Vacate the Default Judgment and Ruling Without Allowing Spamhaus an Opportunity to Present Evidence to Support its Rule 60(b)(4) Motion that the Default Judgment was Void for Lack of Personal Jurisdiction.......................................................................................................48
CONCLUSION...............................................................................................52
CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS AND TYPE-STYLE REQUIREMENTS.......54
CIRCUIT RULE 30(d) CERTIFICATION...........................................................55
CERTIFICATE OF COMPLIANCE WITH CIRCUIT RULE 31(e).........................56
CERTIFICATE OF SERVICE..........................................................................57
iv
TABLE OF AUTHORITIES
CASES
Adam v. Saenger, 303 U.S. 59 (1938)...................................................49
Albiero v. City of Kankakee, 246 F.3d 927 (7th Cir. 2001).....................30
Alexander v. United States, 509 U.S. 544 (1993)...................................43
Anilina Fabrique de Colorants v. Aakash Chemicals & Dyestuffs, Inc., 856 F.2d 873 (7th Cir. 1988)...................................................17
Atiyeh v. Capps, 449 U.S. 1312 (1981).................................................40
Audio Enterprise, Inc. v. B & W Loudspeakers, 957 F.2d 406 (7th Cir.1992).................................................................................16
Bally Exp. Corp. v. Balicar, Ltd., 804 F.2d 398 (7th Cir. 1986)..............17
Board of Trustees v. Elite Erectors, Inc., 64 F.Supp.2d 839 (S.D. Ind. 1999)........................................................................48, 49
Berthold Types Ltd. v. European Mikrograf Corp., 102 F.Supp.2d 928 (N.D. Ill. 2000)..........................................................................21
Black v. Lane, 22 F.3d 1395 (7th Cir. 1994)...................................23, 27
Bombliss v. Cornelson, 355 Ill.App.3d 1107, 824 N.E.2d 1175 [291 Ill. Dec. 925] (2005).........................................................................21
Burda Media, Inc. v. Viertel, 417 F.3d 292 (2d Cir. 2005)......................14
Burger King v. Rudzewicz, 471 U.S. 462 (1985)....................................25
Carroll v. President and Com'rs of Princess Anne, 393 U.S. 175 (1968).............................................................................................46
Chicago Board of Ed. v. Substance, Inc., 354 F.3d 624 (7th Cir. 2003)................................................................................40
Chicago & North Western Trans. Co. v. Railway Labor Exec. Associate, 908 F.2d 144 (7th Cir. 1990)..........................................40
Chung v. Tarom, S.A., 990 F.Supp. 581 (N.D. Ill. 1998).........................14
v
Club Assistance Program, Inc. v. Zukerman, 594 F.Supp. 341 (N.D. Ill. 1984)................................................................................23
Cripps v. Life Insurance Co. of N. America, 980 F.2d 1261 (9th Cir. 1992)................................................................................27
Dearborn National Casualty Co. v. Consumers Petroleum Co., 164 F.2d 332 (7th Cir. 1947)..................................................................32
Dennis Garberg & Associates, Inc. v. Pack-Tech International Corp., 115 F.3d 767 (10th Cir. 1997).........................................................19
Doe v. Xudong, No. 04-C-4097, 2005 U.S.Dist. LEXIS 33377 , (N.D. Ill. Dec. 15, 2005).............................................................18, 19
Dormeyer Co. v. M.J.Sales & Distributing Co., 461 F.2d 40 (7th Cir. 1972)................................................................................33
Dresser Industrial, Inc., Waukesha Engine Division v. Gradall Co., 965 F.2d 1442 (7th Cir. 1992).........................................................30
Dundee Cement Co. v. Howard Pipe & Concrete Products, Inc., 722 F.2d 1319 (7th Cir. 1983).....................................................26, 28, 33
Durasys, Inc. v. Leyba, 992 F.2d 1465 (7th Cir. 1993)..........................33
EEOC v. Severn Trent Serv., Inc., 358 F.3d 438 (7th Cir. 2004).............39
Ebay Inc. v. Mercexchange, LLC, 126 S.Ct. 1837 (2006)..................37, 38
Eden v. Klaas, 165 Neb. 323 (Neb. 1957).............................................29
Entertainment Software Associate v. Blagojevich, 404 F.Supp.2d 1051 (N.D. Ill. 2005)..................................................................44, 45
First National Bank of Louisville v. Bezema, 569 F.Supp. 818 (S.D. Ind. 1983)..............................................................................18
Flaks v. Koegel, 504 F.2d 702 (2d Cir. 1974)........................................31
Francis v. Flinn, 118 U.S. 385 (1886).............................................46, 47
Gaudiya Vaishnava Social v. San Francisco, 952 F.2d 1059 (9th Cir. 1991)................................................................................42
vi
Geddes v. United Finance Group, 559 F.2d 557 (9th Cir. 1977).............37
Greater New Orleans Broad. Associate, Inc. v. United States, 527 U.S. 173 (1999)...............................................................................45
Greyhound Exhibitgroup, Inc., v. E.L.U.L. Realty Corp., 973 F.2d 155 (2d Cir. 1992)...........................................................................31
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984).............................................................................................21
Homer v. Jones-Bey, 415 F.3d 748 (7th Cir. 2005)................................10
Hurley v. Irish-American Gay, Lesbian & Bisexual Group, 515 U.S. 557 (1995)......................................................................................45
Indianapolis Colts v. Metropolitan Baltimore Football Club Ltd. Partnership, 34 F.3d 410 (7th Cir. 1994).........................................25
Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (1982)...........................................................49
Integrated Bus. Information Services, Ltd. v. Dunn & Bradstreet Corp., 714 F.Supp. 296 (N.D. Ill. 1989)............................................23
Johnson v. Nordstrom, Inc., 260 F.3d 727 (7th Cir. 2001).....................29
Kampmier v. Emeritus Corp., 472 F.3d 930 (7th Cir. 2007)...................41
Klump v. Duffus, 71 F.3d 1368 (7th Cir. 1995).....................................17
LaSalle National Bank v. Vitro, S.A., 85 F.Supp.2d 857 (N.D. Ill. 2000)................................................................................21
Lifeway Foods, Inc. v. Fresh Made, Inc., 940 F.Supp. 1316 (N.D. Ill. 1996)................................................................................25
McGee v. International Life Insurance Co., 355 U.S. 220 (1957).............25
Merrill Lynch Mortg. Corp. v. Narayan, 908 F.2d 246 (7th Cir. 1990).....31
Michael J. Neuman & Associates, Ltd. v. Florabelle Flowers, Inc., 15 F.3d 721 (7th Cir. 1994)..................................................................24
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Minnesota Mining & Manufacturing Co. v. Pribyl, 259 F.3d 587 (7th Cir. 2001)................................................................................37
Morrell v. Mock, 270 F.3d 1090 (7th Cir. 2001).....................................49
Neb. Press Association v. Stuart, 427 U.S. 539 (1976)...........................47
Organization for a Better Austin v. Keefe, 402 U.S. 415 (1971)..............43
Oshana v. Coca-Cola Co., 472 F.3d 506 (7th Cir. 2006)........................41
Pennekamp v. Florida, 328 U.S. 331 (1946)..........................................47
Plaintiffs A, B, C, D, E, F v. Zemin, No. 02-C07530, 2003 U.S.Dist. LEXIS 17673 (N.D. Ill. Oct. 15, 2003)........................................18, 19
Pretzel & Stouffer v. Imperial Adjusters, Inc., 28 F.3d 42 (7th Cir. 1994)................................................................................17
Publ'ns International, Ltd. v. Burke/Triolo, Inc., 121 F.Supp.2d 1178 (N.D. Ill. 2000)........................................................................21
Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773 (7th Cir. 2003).........................................................................21
RAR Inc. v. Turner Diesel, Ltd., 107 F.3d 1272 (7th Cir. 1997)..............17
Riemer v. KSL Recreation Corp., 348 Ill.App.3d 26, 807 N.E.2d 1004 [283 Ill. Dec. 163] (2004)........................................................24
Robinson Engineering Co. Pension Plan & Trust v. George, 223 F.3d 445 (7th Cir. 2000).........................................................................10
SEC v. Everest Management Corp., 87 F.R.D. 100 (S.D.N.Y. 1980)........16
Schmidt v. Lessard, 414 U.S. 473 (1974)..............................................40
Sequoia Books, Inc. v. Ingemunson, 901 F.2d 630 (7th Cir. 1990)...10, 42
Shelton v. Tucker, 364 U.S. 479 (1960).................................................46
Stafford v. Mesnik, 63 F.3d 1445 (7th Cir. 1995)............................10, 33
Swaim v. Moltan Co., 73 F.3d 711 (7th Cir. 1996).................................20
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System Pipe & Supply, Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322 (5th Cir. 2001).........................................................................19
Thompson v. Whitman, 85 U.S. (18 Wall.) 457 (1874)............................49
Travelers Casualty & Surety Co. v. Interclaim (Berm.) Ltd., 304 F.Supp.2d 1018 (N.D. Ill. 2004).......................................................21
Tuli v. Republic of Iraq, 172 F.3d 707 (9th Cir. 1999)............................19
Turner Broad. System v. FCC, 512 U.S. 622 (1994)...............................45
Ty, Inc. v. Jones Group, Inc., 237 F.3d 891 (7th Cir. 2001)....................38
United States v. County of Cook, 167 F.3d 381 (7th Cir. 1999)..............49
United States v. De Frantz, 708 F.2d 310 (7th Cir. 1983)......................28
United States v. Di Mucci, 879 F.2d 1488 (1989).............................28, 37
United States v. Kaun, 827 F.2d 1144 (7th Cir. 1987)...........................43
United States v. Wilson, 154 F.3d 658 (7th Cir. 1998).....................10, 42
In re Uranium Antitrust Litigation, 473 F.Supp. 382 (N.D. Ill. 1979).......32
Va. State Board of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748 (1976)........................................................................45
Wallace v. Herron, 778 F.2d 391 (7th Cir. 1985)...................................25
Webber v. Eye Corp., 721 F.2d 1067 (7th Cir. 1983).............................33
White v. Cleveland Foundry Co., 24 Ohio C.C. (n.s.) 180 (1902)............19
White v. Ratcliffe, 285 Ill.App.3d 758, 674 N.E.2d 906 [211 Ill. Dec. 113] (1996).....................................................................................14
Wooley v. Maynard, 430 U.S. 705 (1977)..............................................45
Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997).........................................................................21, 22
Zuelzke Tool & Engineering Co. v. Anderson Die Castings, Inc., 925 F.2d 226 (7th Cir. 1991)..................................................................15
ix
STATUTES
28 U.S.C. § 1291...................................................................................2
Communications Decency Act ("CDA") of 1996, 47 U.S.C. § 230, et seq..............................................................................................34
Controlling the Assault of Non-Solicited Pornography and Marketings (CAN-SPAM) Act of 2003, 15 U.S.C. §§ 7701-7713...34, 35
Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”), Nov. 15, 1965, 20 U.S.T. 361, 658 U.N.T.S. 163.............................................................................14, 15
RULES
Fed. R. Civ. P. 4(c)(2)(c)(ii)....................................................................16
Fed. R. Civ. P. 4(f)(1) ...........................................................................14
Fed. R. Civ. P. 4(h)...............................................................................14
Fed R. Civ. P. 5....................................................................................16
Fed. R. Civ. P. 52...........................................................................32, 33
Fed. R. Civ. P. 55(b)..................................................................15, 16, 17
Fed. R. Civ. P. 56.................................................................................29
Fed. R. Civ. P. 60(b)...................................................................8, 10, 51
Fed. R. Civ. P. 65..................................................................4, 10, 39, 40
MISCELLANEOUS
5 C.J.S. Appeal & Error § 718 (1993)...................................................27
M. Nimmer, Nimmer on Freedom of Speech §4.03 (1984).......................43
JURISDICTIONAL STATEMENT
This appeal arises from a Complaint filed by Plaintiffs-Appellees, David Linhardt and e360 Insight, LLC (“e360”) on June 21, 2006 in the Circuit Court of Cook County, Illinois County Department, Chancery Division, against Defendant-Appellant, The Spamhaus Project (“Spamhaus”) (App. 5-20), and removed to the United States District Court for the Northern District of Illinois, Eastern Division, on July 21, 2006. (A. 1-4.) The Complaint alleged four state law claims against Spamhaus. (A. 12-20.) The parties are of diverse citizenship and the Complaint sought compensatory and punitive damages exceeding $10 million, as well as injunctive relief. (A. 1-2.) Spamhaus is a company organized under the laws of the United Kingdom, with its principal place of business in London, United Kingdom, and is not now nor ever has been a citizen of Illinois. (Id.)
David Linhardt is a citizen of the State of Illinois. (A. 2.) e360 is an Illinois Limited Liability Company located in Wheeling, Illinois. (A. 6.) Its members listed with the Illinois Secretary of State’s Office include Maverick Direct Marketing Solutions, Inc., an Illinois Corporation with its principal place of business in Wheeling, Illinois; and David Linhardt, the President of Maverick Direct Marketing Solutions, Inc. in Highland Park, Illinois. Both e360 and Maverick Direct Marketing Solutions, Inc. list Darren M. Green in Chicago, Illinois, as their registered agent.
On July 21, 2006, Spamhaus filed a Notice of Removal (A. 1-4) and its Answer, expressly reserving its personal jurisdiction and service of process-related defenses. (A. 24-33.) The case was removed to the United States District
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Court for the Northern District of Illinois before the Honorable Charles P. Kocoras. (A. 1.)
On September 13, 2006, the district court entered an Order for default judgment against Spamhaus. (A. 140-43.) On October 13, 2006, new counsel for Spamhaus filed an Appearance and a Notice of Appeal from the entry of default judgment. (A. 144.)
On October 26, 2006, Spamhaus filed a Motion to Vacate Default Judgment and For Leave to File a Memorandum in Support under Federal Rule of Civil Procedure 60(b). (A. 150-154.) On October 31, 2006, the district court denied the Motion to Vacate without granting leave to file a memorandum in support. (A. 158.) On November 28, 2006, Spamhaus filed a Notice of Appeal from the denial of the Motion to Vacate. (A. 194.)
This Court has jurisdiction under 28 U.S.C. § 1291.
ISSUES PRESENTED
1. Whether the district court erred by entering a default judgment against Spamhaus, a United Kingdom-based non-profit organization with no contacts in the State of Illinois, (a) despite the lack of any evidence in the record that service was properly effected under the Hague Convention; (b) without considering whether it has personal jurisdiction over the defendant; and (c) when the well-pleaded allegations of the complaint, taken as true, failed to state a claim upon which relief may be granted, and the court awarded damages without a hearing and sufficient evidentiary support?
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2. Whether the district court violated the Constitution in entering an injunction constituting a prior restraint on Spamhaus’ First Amendment rights, when the injunction was entered without application of the traditional four-part test for injunctive relief, and without consideration of the requirements of Federal Rule of Civil Procedure 65?
3. Whether the district court erred by denying Spamhaus’ Motion to Vacate the Default Judgment without allowing it an adequate opportunity to brief its motion to vacate the default judgment and present extrinsic evidence regarding defective service of process and lack of personal jurisdiction?
STATEMENT OF THE CASE
e360 filed suit against Spamhaus on June 21, 2006 in the Circuit Court of Cook County, alleging state law claims for tortious interference with contract, tortious interference with prospective economic advantage, defamation per se, and defamation per quod. (A. 12-20.) On July 21, 2006, Spamhaus removed the case to the United States District Court for the Northern District of Illinois, Eastern Division (A. 1-4) and answered the complaint, expressly reserving its personal jurisdiction and service of process-related defenses. (A. 24-33.)
On August 23, 2006, the district court granted Spamhaus’ Motion to Withdraw the Appearances of Counsel (A. 117) and oral Motion for Leave to Withdraw its Answer to the Complaint. (Id.) At the same time, the court granted e360’s oral Motion for Entry of Default (Id.) and converted a Temporary Restraining Order entered on July 20, 2006 by the Circuit Court of Cook
4
County into a Preliminary Injunction, without conducting a hearing or reviewing the Temporary Restraining Order. (Id.; see A. 159-66.)
On September 13, 2006, the district court entered an order for default judgment against Spamhaus, without considering whether service of process was proper under the Hague convention or whether the court had personal jurisdiction over Spamhaus. (A. 140-43; see A. 167-69.) Spamhaus timely filed its Notice of Appeal on October 13, 2006, which was docketed by the United States Court of Appeals for the Seventh Circuit as Case No. 06-3779. (A. 144.) On October 17, 2006, this Court entered an initial briefing schedule for this appeal, which was revised on November 3, 2006, pursuant to Circuit Rule 33.
On October 26, 2006, Spamhaus filed a Motion to Vacate Default Judgment and For Leave to File a Memorandum in Support under Federal Rule of Civil Procedure 60(b), arguing that based on the information then available to its newly-retained counsel the district court erred in entering the default judgment because it did not consider (a) whether service of process was proper, (b) whether it had personal jurisdiction over Spamhaus, and because (c) the injunctive relief entered did not comply with Fed. R. Civ. P. 65 and violated the First Amendment. (A. 150-54.) Spamhaus requested an opportunity to brief the motion because, although the transcripts of the prior proceedings had been ordered, they had not yet been provided. (A. 154.) Despite that request, the court denied the Motion to Vacate on October 31, 2006, without granting Spamhaus leave to file a memorandum in support. (A. 158; see A. 174-84.)
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Spamhaus timely filed its second Notice of Appeal from the denial of the Motion to Vacate on November 28, 2006 (A. 194), which was docketed by this Court as Case No. 06-4169. On December 5, 2006, this Court consolidated Case Nos. 06-3779 and 06-4169.
STATEMENT OF FACTS
Spamhaus is a United Kingdom non-profit limited liability company located in London, United Kingdom, and operating through its website located at http://www.spamhaus.org. (A. 6.) Spamhaus is not a citizen of Illinois, and conducts its business solely within the United Kingdom. (A. 191.) Spamhaus has no employees in Illinois; pays no salaries or taxes in Illinois; has no real property, offices, warehouses, distributors, agents, employees, mailboxes, bank accounts, or business operations in Illinois; does not target advertising at Illinois; does not maintain a registered agent for service of process in Illinois; and does not now nor has it ever provided goods or services to persons in Illinois, derived revenue from goods provided or services rendered in Illinois, nor been a party to any contract with any person or entity located in Illinois or requiring performance in Illinois. (A. 191-92.)
Spamhaus operates as an internet watch dog group, tracking purveyors of unsolicited e-mail solicitations and messages (“spam”) in order to aid interested internet service providers (“ISPs”) in protecting their users from unwanted spam e-mails. (A. 8.) As part of its operations, Spamhaus generates the Register of Known Spam Operations (“ROKSO”) list, identifying individuals or entities that have been terminated from ISPs three or more times for engaging
6
in spam offenses. (Id.) In December 2003, Spamhaus listed e360 and Linhardt on the ROKSO list for “being assigned to, under the control of, or providing service to a known professional spam operation run by Brian Haberstroh / Atriks.” (A. 34.) e360 responded by filing a Complaint on June 21, 2006, for Injunctive Relief and Damages against Spamhaus in the Circuit Court of Cook County. (A. 5-20.) An Amended Complaint was filed on June 23, 2006. (Id.)
On July 21, 2006, Spamhaus filed a Notice of Removal in the United States District Court for the Northern District of Illinois, asserting that citizenship is diverse and damages in excess of $10 million was sought. (A. 1-2.) That same day, Spamhaus filed its Answer, expressly reserving its jurisdiction-related defenses, denying any wrongful acts, and asserting fourteen affirmative defenses, including lack of personal jurisdiction and improper service of process. (A. 24-33.)
At a hearing on August 23, 2006, the district court noted “[w]e need some better presentation as to the citizenship of the parties, particularly since the plaintiff is a limited liability company whose citizenship is not akin to a corporate citizenship.” (A. 160.) Subsequently, Spamhaus’ counsel asked to withdraw its appearance and the answer. (A. 161.) The district court allowed the withdrawal of the appearance and the answer, but stated that because “it was a dead-bang certainty that default is going to be entered without any resistance to the lawsuit — I am going to enter a default order today.” (A. 164.) The district court entered the default order, advising counsel for e360 that if Spamhaus failed to defend the case any further, they were to “submit a copy of
7
[a default judgment] motion — or motions — or serve the other side in the normal way…then, I will call it up,” and Spamhaus would lose the case by means of a default judgment. (A. 165.)
On September 12, 2006, the hearing on the motion for default judgment was conducted in the district court, with only e360 present. (A. 167-69.) In this proceeding, e360 claimed that the motion for default judgment had been “served…in four different ways: Once on their old counsel; once by e-mail; once by Fed Ex; and, once by in-person service in the United Kingdom.” (A. 168.) The district court questioned whether there was any issue regarding federal jurisdiction. (Id.) e360 responded only that there was no issue because Spamhaus sought to remove it. (Id.) The district court granted the default judgment without conducting a hearing on damages (A. 167-69), and the next day issued its default judgment order granting e360 a default judgment and charging Spamhaus with $11,715,000 in compensatory damages and $1,971.05 in litigation costs, as well as issuing an injunction ordering Spamhaus to “not take any action to cause email sent by [e360] or their affiliates, subsidiaries, or related companies…to be blocked, delayed, altered, or interrupted in any way…unless Spamhaus can demonstrate by clear and convincing evidence that Plaintiffs have violated relevant United States law.” (A. 140-43.) There was no evidence or affidavit in the record before the district court regarding the service of process, and the district court failed to address the propriety of the service.
8
On October 13, 2006, Spamhaus’ current counsel was retained and filed both a Notice of Appeal of the Default Judgment to the Seventh Circuit Court of Appeals (A. 144) and appearances by its attorneys with the district court. (Atty. Appearances, Oct. 13, 2006, Docket Nos. 32-34.) On October 26, 2006, in response to e360’s Citation to Discover Assets, Spamhaus filed (1) a Motion to Quash Plaintiff’s Citation to Discover Assets (A. 148-49); (2) a Motion to Stay Enforcement of the Judgment Pending Appeal (A. 155-57); and (3) a Rule 60(b) Motion to Vacate the District Court’s Default Judgment and For Leave to File a Memorandum in Support. (A. 150-54.) Because counsel for Spamhaus had not yet received any transcripts of earlier proceedings in the district court upon which they could base their arguments, the Rule 60(b) Motion to Vacate requested that a briefing schedule be set to allow Spamhaus an opportunity to file a Memorandum in Support of its Motion. (A. 154.)
The district court addressed those motions on October 31, 2006, where counsel for Spamhaus repeatedly stressed its contention that the district court’s default judgment was void and should be vacated under Fed. R. Civ. P. 60(b)(4) for lack of proper service and lack of personal jurisdiction over Spamhaus. (A. 174-84.) Spamhaus also asserted that it had not yet received transcripts and needed a briefing schedule to fully present its arguments; that the damages award in the case was granted without a required hearing; and that the scope of the injunction was improper. (Id.) The district court disagreed, holding that “yes, we do have to have jurisdiction over subject matter, as well as the person or presence of a defendant in the first instance.” (A. 181-82.)
9
Furthermore, the court held that Spamhaus’ failure to participate in litigation and present its jurisdictional arguments prevented those issues from being “crystallized by way of counter-affidavits or some other such thing,” and thus “[t]here was not anything about this case that at least suggested itself to me that I lacked personal jurisdiction, either over the person of the defendant or the subject matter of the case.” (Id.) The court denied all of Spamhaus’ motions. (A. 158.)
On November 28, 2006, Spamhaus filed a Notice of Appeal from the district court’s denial of Spamhaus’ Rule 60(b) Motion to Vacate the Default Judgment. (A. 194.)
SUMMARY OF ARGUMENT
The district court’s entry of default judgment and permanent injunction must be reversed because they contain fatal errors. First, the district court failed to determine whether service of process was proper prior to entering default judgment, which violates the Hague Convention. Second, prior to entering the default judgment, the district court failed to determine whether it had personal jurisdiction over Spamhaus, even though Spamhaus had properly raised this argument in earlier proceedings. Third, the default judgment was improperly entered because the well-pleaded allegations of the complaint fail to state a claim upon which relief may be granted, and the damages were awarded without either a hearing or sufficient evidentiary support.
The permanent injunction entered by the district court also must be vacated because the court failed to apply the traditional test for injunctive relief and
10
disregarded Fed. R. Civ. P. 65. Furthermore, the permanent injunction as entered violates the First Amendment because it is a prior restraint, impermissibly compels speech, and is overbroad.
Finally, the district court also erred when it denied Spamhaus’ Rule 60(b) motion without allowing Spamhaus an opportunity to brief the motion. At the time the court denied the Rule 60(b) motion, Spamhaus’ new counsel had been retained for less than three weeks, and, although counsel had ordered the transcripts in the case, they had not yet been received. Counsel needed an opportunity to review the prior court proceedings in order to properly and ethically develop its Rule 60(b) arguments.
STANDARD OF REVIEW
An appellate court reviews a district court's entry of a default judgment and a district court's decision on a Rule 60(b) motion to vacate a default judgment for an abuse of discretion. Homer v. Jones-Bey, 415 F.3d 748, 753 (7th Cir. 2005); Robinson Eng’g Co. Pension Plan & Trust v. George, 223 F.3d 445, 448 (7th Cir. 2000). Constitutional issues, however, are reviewed de novo. United States v. Wilson, 154 F.3d 658, 662 (7th Cir. 1998); Sequoia Books, Inc. v. Ingemunson, 901 F.2d 630, 633 (7th Cir. 1990).
ARGUMENT
“While this circuit no longer disfavors default judgments…a default judgment should not be considered a ready response to all litigant misbehavior.” Stafford v. Mesnik, 63 F.3d 1445, 1450 (7th Cir. 1995) (internal citations omitted). When a district court imposes a default judgment, that
11
judgment must be legal and valid, having been arrived at by observation of proper procedural requirements. In this case: (1) the district court's failure to ensure the validity of service of process; (2) the court's lack of personal jurisdiction over Spamhaus; (3) the non-existence of legal claims upon which relief can be granted; and (4) the unconstitutionality of the injunctive relief entered, all constitute grounds to reverse the default judgment.
I. The Entry of Default Judgment Must Be Reversed Because the District Court Failed to Find that Service of Process was Properly Effected on Spamhaus and that Failure Violates International and United States Law.
A. Prior to entering the default judgment, the district court violated international and United States law by failing to consider whether service of process was properly effected on Spamhaus.
On September 13, 2006, the district court entered a default judgment against Spamhaus. (A. 140-43.) This decisions must be reversed and this matter must be remanded. First, in its decision, the district court did not give due consideration to Spamhaus’ threshold argument that e360 failed to comply with applicable rules for service of process. Second, under either a binding international agreement or Illinois law, the district court’s decisions were based on an inadequate factual record and service was improper.
1. The District Court Failed to Consider Spamhaus’ Threshold Argument That Service Was Not Proper.
Although Spamhaus clearly informed the district court that it had not been properly served (A. 2, 31), the court failed to consider whether service was proper prior to entering the default judgment and permanent injunction. (A. 140-43; see A. 167-69.) The facts relevant to this issue are simple and
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illustrate the need for reversal and remand. First, when the case was removed to federal court, Spamhaus immediately raised the issue of lack of service of process in its removal petition. (A. 2.) (“service has not been perfected against Spamhaus”). Second, nothing in the documents attached to the removal petition indicated whether Spamhaus was served or, if it was served, the method of service used, let alone whether any attempt of service was proper. Third, nothing that e360 subsequently submitted to the district court ever explained, or even addressed, the issue of service of process. Therefore, the entire record on which the district court based its entry of default judgment lacked any facts regarding the method used to serve Spamhaus or whether service was proper. At the same time, the district court was on notice of potential service issues because the Complaint plainly acknowledged that Spamhaus was a foreign corporation based in the United Kingdom, without any physical presence in the United States. (A. 6.)
The transcripts from the district court proceedings demonstrate the absence of facts indicating proper service. The court failed to even address the issue when hearing the motion for default judgment. (A. 167-69.) Even though Spamhaus raised improper service in its removal petition (A. 2), the district court simply stated, “I am going to grant your [e360’s] motion on the basis that there is no opposition to it, and it appears none is in the offing.” (A. 169.) The court also failed to acknowledge or address Spamhaus’ objections to service of process in any of its written orders. (A. 117, 140-43, 146-47, 158.)
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The transcript from the hearing on Spamhaus’ Motion to Vacate Default Judgment shows the district court’s complete disregard for the requirement that a court must determine that service was proper prior to entering default judgment. (A. 174-84.) During that hearing, Spamhaus again informed the court that service was not proper by noting, “I have not seen any finding that there was proper service, as required by the Hague Convention. And the finding of service is a requirement for default judgment.” (A. 179.) e360 provided no argument to show that the summons and complaint were served or that service was proper. (A. 174-84.) Moreover, the court responded only by stating that findings of jurisdiction and “whatever else you think I neglected to do” are “often ma[de] . . . relying on affidavits which. . . . [is] the routine way that we consider what . . . . judgments to enter in default cases.” (A. 182.) However, the district court did not have any such affidavits in the record before it. Only five affidavits were in the record before the district court. (A. 124-34; Linhardt Aff., Document 17-2, 5:1-12:35, Aug. 21, 2006; Linhardt Aff., Document 26-2, 7-10, Sept. 26, 2006; Hutcheson Aff., Document 26-2, 12:1-13:8, Sept. 28, 2006.) None of those affidavits addressed whether service of process was effected on Spamhaus, and if it was, what method was used. The affidavits also did not respond to Spamhaus’ objection that it was not properly served.
Spamhaus repeatedly claimed that service was improper in this case. However, the district court simply ignored those assertions without looking into the record. A review of the record establishes that the district court had no information regarding whether service had been attempted, what method may
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have been used, whether Spamhaus received the service, or whether any service was proper. The court failed to address Spamhaus’ objections regarding improper service of process and failed to determine whether service was proper prior to entering default judgment in this case.
2. Under International and United States Law, the District Court’s Entry of Default, Prior to Making Findings on Service of Process, Was Improper.
i. Under the Hague Convention, the Entry of Default Judgment Was Improper.
Because Spamhaus is a United Kingdom company, the issue of service is governed by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”), Nov. 15, 1965, 20 U.S.T. 361, 658 U.N.T.S. 163. See Fed. R. Civ. P. 4(f)(1) & 4(h); see also Chung v. Tarom, S.A., 990 F. Supp. 581, 584 n.2 (N.D. Ill. 1998). Because the district court had no evidence regarding service on Spamhaus, a remand is necessary to determine whether service was proper under the Hague Convention.
Article 15 of the Hague Convention provides:
where a writ of summons or an equivalent document had to be transmitted abroad for the purpose of service, under the provisions of the present Convention, and the defendant has not appeared, judgment shall not be given until it is established that:
(a) the document was served by a method prescribed by the internal law of the State addressed for the service of documents in domestic actions upon persons who are within its territory, or
(b) the document was actually delivered to the defendant or to his residence by another method provided for by this Convention . . .
Hague Convention, supra, art. 15.
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Article 15 has been recognized as part of United States law by both state and federal courts. Burda Media, Inc. v. Viertel, 417 F.3d 292, 299-300 (2d Cir. 2005); White v. Ratcliffe, 285 Ill. App. 3d 758, 765-66, 674 N.E.2d 906, 911-12, 211 Ill. Dec. 113 (1996). Prior to entering default, a court must determine “(1) that service was proper under the internal law of the country where the defendant is to be served; (2) that the document was actually delivered to the defendant; and (3) that service was effected in sufficient time for the defendant to defend.” Id. at 768, 674 N.E.2d at 914.
Although Spamhaus specifically informed the district court that, under the Hague Convention, it must make a finding regarding service of process prior to the entry of default judgment, the court failed to address that argument. (A. 179.) By ignoring Spamhaus’ objections to service of process, see discussion supra Part I.A.1, and failing to determine whether the summons and complaint were actually served by a method prescribed by the United Kingdom, the court failed to comply with Article 15 of the Hague Convention. (A. 174-84.) Therefore, the entry of default judgment was improper as a matter of law and must be reversed and remanded.
ii. The District Court Improperly Entered Default Judgment without First Determining Whether the Motion for Default Judgment was Properly Served.
A defaulting party who has appeared in an action must be served with written notice of an application for default judgment at least three days prior to the hearing on that application. Fed. R. Civ. P. 55(b)(2). A party has appeared “where that party has actually made some presentation or submission to the
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district court in the pending action.” Zuelzke Tool & Eng’g Co. v. Anderson Die Castings, Inc., 925 F.2d 226, 230 (7th Cir. 1991) (emphasis omitted). In this case, while preserving its objection to personal jurisdiction and service of process, Spamhaus removed the action to the federal court, filed an answer, and originally appeared. (A. 1-2, 24-33.) Accordingly, it was entitled to proper service of e360’s application for default judgment. Fed. R. Civ. P. 55(b)(2).
Spamhaus never received proper service of e360’s Motion for Default Judgment. (A. 118-123.) In the Certificate of Service attached to the Motion for Default Judgment, e360 asserts that it effectuated service on Spamhaus in three different ways: via email to Spamhaus’ former attorneys, via Federal Express, and via in-hand delivery on Spamhaus. (A. 123.) However, all three of those methods are insufficient under Rule 5. Fed R. Civ. P. 5(b).
First, at the time this motion was filed, Spamhaus was no longer represented by counsel. (A. 117, 118-123.) Thus, email notification sent to Spamhaus’ former counsel was an ineffective means of service. Fed R. Civ. P. 5(b)(1); see also SEC v. Everest Mgmt. Corp., 87 F.R.D. 100, 102 n.1 (S.D.N.Y. 1980) (“If a party is no longer represented by an attorney . . . service must be made on the party [it]self”). Second, this Court has never held delivery by Federal Express to be an adequate form of service “by mail.” Audio Enter., Inc. v. B & W Loudspeakers, 957 F.2d 406, 409 (7th Cir.1992) (holding that Federal Express is not first class mail and thus failed to satisfy Fed. R. Civ. P. 4(c)(2)(C)(ii)). Lastly, although e360 claims it served Spamhaus by in-hand delivery, there is no evidence in the record demonstrating how this service was
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purportedly perfected. (A. 123.) In fact, no authorized representative of Spamhaus has ever been properly served with in-hand delivery of any document by plaintiffs.
Thus, e360 failed to properly serve Spamhaus with the three-day notice of its Motion for Default Judgment as required under Fed. R. Civ. P. 55(b)(2), and that failure is grounds for reversal of a default judgment when attacked on direct appeal. Anilina Fabrique de Colorants v. Aakash Chems. & Dyestuffs, Inc., 856 F.2d 873, 877 (7th Cir. 1988).
B. The Default Judgment is Void and Must Be Vacated Because the District Court Lacks Personal Jurisdiction Over Spamhaus.
While an appellate court will reverse a district court’s default judgment only upon finding an abuse of discretion, Pretzel & Stouffer v. Imperial Adjusters, Inc., 28 F.3d 42, 45 (7th Cir. 1994), this Court has held that a district court abuses its discretion by entering a default judgment without personal jurisdiction. Bally Exp. Corp. v. Balicar, Ltd., 804 F.2d 398, 400 (7th Cir. 1986). Because the district court lacked personal jurisdiction over Spamhaus, this Court must reverse the district court’s default judgment.
1. The Entry of Default Judgment is Void and Must be Vacated Because the District Court Entered Default Judgment Without Inquiring into or Determining Whether it had Personal Jurisdiction over Spamhaus.
Whether a court has personal jurisdiction over a party is a question of law, Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995), and the legal conclusion that personal jurisdiction exists over a defendant is reviewed by an appellate court de novo. RAR Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir.
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1997). In this case, the record is bereft of any inquiry or findings, much less a conclusion, by the district court that it actually had personal jurisdiction over Spamhaus. During the hearing on August 23, 2006, the court noted that “[w]e need some better presentation as to the citizenship of the parties, particularly since the plaintiff is a limited liability company whose citizenship is not akin to a corporate citizenship. You have to go find out where the parties are positioned.” (A. 160.) However, after mentioning the possibility of a subject matter jurisdiction problem based on the presence of a foreign-based entity, the district court never again inquired into whether personal jurisdiction was proper.
District courts within the Seventh Circuit have held that a court has an affirmative duty to determine personal jurisdiction sua sponte before imposing default judgment against an absent, foreign-based defendant. See e.g., First Nat’l Bank of Louisville v. Bezema, 569 F. Supp. 818, 819 (S.D. Ind. 1983); Plaintiffs A, B, C, D, E, F v. Zemin, No. 02-C07530, 2003 U.S. Dist. LEXIS 17673, at *4 (N.D. Ill. Oct. 15, 2003); Doe v. Xudong, No. 04-C-4097, 2005 U.S. Dist. LEXIS 33377, at *4-5 (N.D. Ill. Dec. 15, 2005). In Bezema, the court addressed a motion for default judgment against a non-resident defendant who had failed to answer or otherwise respond to the complaint, and held that “the rule that a court may not sua sponte dismiss for lack of personal jurisdiction does not apply where a defendant has not entered an appearance by filing a motion.” 569 F. Supp. at 819. Recently, two other district courts in this Circuit have noted that “it is well established that a Court may (and perhaps must)
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consider the issue of personal jurisdiction sua sponte when addressing the imposition of a default judgment.” Zemin, 2003 U.S. Dist. LEXIS 17673, at *4; Xudong, 2005 U.S. Dist. LEXIS 33377, at *4-5. Other federal circuits have also held that a district court has an affirmative duty to inquire sua sponte into personal jurisdiction before entering a default judgment against a defendant who has failed to answer or appear in the case. See Sys. Pipe & Supply, Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322, 324 (5th Cir. 2001); Tuli v. Republic of Iraq, 172 F.3d 707, 712 (9th Cir. 1999); Dennis Garberg & Associates, Inc. v. Pack-Tech International Corp., 115 F.3d 767, 771 (10th Cir. 1997).
This case demonstrates why the Seventh Circuit should recognize that due process places an affirmative duty upon district courts to inquire into personal jurisdiction before entering a default judgment. Spamhaus is “a United Kingdom non-profit limited liability company…located in London, England.” (A. 6.) Given Spamhaus’ non-resident status, the internet-related subject matter of the suit (which raises complicated personal jurisdiction questions in its own right), and Spamhaus’ failure to answer the Complaint,1 the district court should have been aware that personal jurisdiction was an issue in this case that needed to be resolved sua sponte before imposing default judgment. The court recognized that the citizenship of the parties was an issue before
1 Although Spamhaus had filed an Answer to e360’s Complaint, the district court later granted Spamhaus’ counsel’s Motion to Withdraw the Answer. No objection was raised by e360’s counsel to this request. Once Spamhaus’ Answer was withdrawn, Spamhaus was in the position as if it had never filed such an answer. See White v. Cleveland Foundry Co., 24 Ohio C.C. (n.s.) 180, 183 (1902) (“permission having been given to the defendant to withdraw his answer, the case stood as if no answer had been filed”).
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Spamhaus was permitted to withdraw its answer and appearance, thus leading to its default. (A. 160.) Despite this recognition that personal jurisdiction was an issue, the district court entered default judgment without making any inquiry or determination regarding its personal jurisdiction over Spamhaus. (A. 140-43; see A. 167-169.)
If the district court had undertaken its own inquiry, it would have found it had no personal jurisdiction over Spamhaus and dismissed the case, as discussed infra at Section I.B.2. Instead, the district court entered the default judgment without performing this affirmative duty, and for this error the default judgment should be reversed.
2. The Jurisdictional Statements in e360’s Complaint are Insufficient to Confer Personal Jurisdiction over Spamhaus and the Default Judgment is Therefore Void and Should be Vacated.
The district court’s failure to inquire into personal jurisdiction sua sponte has left Spamhaus in the position of asking this Court to “review[ ] no exercise of discretion for an abuse of discretion.” Swaim v. Moltan Co., 73 F.3d 711, 717 (7th Cir. 1996). This Court is thus forced to “decide questions of fact that were never considered by the district court” without the benefit of any factual findings on personal jurisdiction by the district court. Id. at 719.
Compounding this error is the uncontroverted evidence that Spamhaus has no offices, employees, or property in Illinois, and conducts no regular business in Illinois. (A. 191-92.) As the Supreme Court has held, general personal jurisdiction exists when a defendant has “continuous and systematic general
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business contacts” with the forum state, Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984), and these “contacts must be so extensive as to make it ‘fundamentally fair to require [defendant] to answer in any [Illinois] court in any litigation arising out of any transaction or occurrence taking place anywhere in the world.’” Travelers Cas. & Sur. Co. v. Interclaim (Berm.) Ltd., 304 F. Supp. 2d 1018, 1024 (N.D. Ill. 2004) (quoting Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 787 (7th Cir. 2003) (emphasis in original)). Had the district court inquired into its personal jurisdiction over Spamhaus, the absence of any contact between Spamhaus and Illinois would have prompted the district court to find that it lacked personal jurisdiction over Spamhaus.
Furthermore, an inquiry into its personal jurisdiction over Spamhaus would have revealed to the district court that Spamhaus exists solely as an “information-only” website with minimal interactivity and no commercial purpose. As one Illinois court has noted, “[t]he type of Internet activity that is sufficient to establish personal jurisdiction remains an emerging area of jurisprudence.” Bombliss v. Cornelson, 355 Ill. App. 3d 1107, 1114, 824 N.E.2d 1175, 1180, 291 Ill. Dec. 925 (2005).
On this issue, courts in the Seventh Circuit have adopted the “sliding scale” analysis of Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997). See e.g., LaSalle Nat’l Bank v. Vitro, S.A., 85 F. Supp. 2d 857, 861 (N.D. Ill. 2000); Publ’ns Int’l, Ltd. v. Burke/Triolo, Inc., 121 F. Supp. 2d 1178, 1182 (N.D. Ill. 2000); Berthold Types Ltd. v. European Mikrograf Corp.,
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102 F. Supp. 2d 928, 932 (N.D. Ill. 2000). In Zippo, the district court described the “sliding scale” as follows:
At one end of the spectrum are situations where a defendant clearly does business over the Internet…. At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive website that does little more than make information available to those who are interested in it is not grounds for the exercise of personal jurisdiction.
Zippo, 952 F. Supp. at 1124. Thus, had Spamhaus been allowed to demonstrate to the district court that it merely “makes information available to those who are interested in it,” the district court would have found that it lacked personal jurisdiction over Spamhaus, regardless of Spamhaus’ website’s accessibility to Illinois Internet users.
Even without this evidentiary record, this Court should vacate the district court’s default judgment against Spamhaus because the allegations in e360’s complaint regarding personal jurisdiction are vague legal conclusions, not “well-pleaded facts” sufficient to support a finding of personal jurisdiction over Spamhaus. (A. 5-7.) In its complaint, e360 makes only two allegations regarding the court’s personal jurisdiction over Spamhaus. (A. 6.) First, it states that “Spamhaus does business in Illinois by, among other things, marketing its services to companies, and specifically Internet Service Providers (ISP), located in Illinois.” (Id.) Based on this allegation, e360 contended that the court had broad, general jurisdiction over Spamhaus. (Id.) Second, e360’s complaint states that “Jurisdiction is proper because a substantial part of the events or omissions giving rise to the claims alleged herein occurred in Illinois,
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or a substantial part of the property that is the subject of the action is situated in Illinois.” (Id.) Neither of these allegations is sufficient to confer personal jurisdiction over Spamhaus, let alone general jurisdiction.
The question of whether a company is “doing business” in Illinois under Illinois’s long-arm statute is a legal conclusion, not a factual allegation, and therefore this Court need not conclude that Spamhaus was doing business in Illinois just because e360’s complaint and affidavits assert that it is so. Integrated Bus. Info. Servs., Ltd. v. Dunn & Bradstreet Corp., 714 F. Supp. 296, 299 (N.D. Ill. 1989); see also Club Assistance Program, Inc. v. Zukerman, 594 F. Supp. 341, 351 (N.D. Ill. 1984) (“Even the Rules’ notice pleading requires the allegation of facts, not mere legal conclusions”); Black v. Lane, 22 F.3d 1395, 1399 (7th Cir. 1994) (holding that when a default judgment is entered, facts alleged in the complaint may not be contested but a defaulted party can challenge the sufficiency of the complaint). Because e360’s allegation in its complaint that “Spamhaus does business” is a legal conclusion — and, thus, is not presumptively “true” like facts alleged in a defaulted complaint — the district court’s jurisdiction over Spamhaus must come from the allegation that Spamhaus’ “marketing [of] its services to companies…located in Illinois” constitutes “doing business” for purposes of Illinois long-arm personal jurisdiction. (A. 6.) This allegation is insufficient to support a finding of personal jurisdiction over Spamhaus as a matter of law.
The assertion that “marketing” to Illinois companies alone constitutes “doing business” for purposes of long-arm jurisdiction has been rejected by Illinois
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courts. As this Court has noted, personal jurisdiction under Illinois’ long-arm statute for “doing business” involves a “regularity of activities in Illinois,” and a company must be operating in the state “not occasionally or casually, but with a fair measure of permanence.” Michael J. Neuman & Assocs., Ltd. v. Florabelle Flowers, Inc., 15 F.3d 721, 724 (7th Cir. 1994) (internal quotations omitted). While “there is no fixed ‘doing business’ test, most Illinois courts finding personal jurisdiction over foreign corporations have based their determinations on facts such as whether the defendant has maintained offices or engaged in sales activities in Illinois,” and “[n]otably, mere advertisement, even through the Internet, participation in trade shows, or solicitation by an employee or agent who lacks authority to do more have not been enough to sustain personal jurisdiction in Illinois.” Riemer v. KSL Recreation Corp., 348 Ill. App. 3d 26, 36, 807 N.E.2d 1004, 1013, 283 Ill. Dec. 163 (2004) (internal citations omitted).
e360 made no allegations in its complaint that Spamhaus had employees, offices, or property in the state of Illinois, nor did e360 make any allegations in its complaint that Spamhaus had sold or delivered its ROKSO list to companies or individuals located in Illinois. (A. 5-20.) e360’s lone allegation that Spamhaus is “doing business” in Illinois by “marketing” its ROKSO list to Illinois companies through Internet advertising is insufficient under Riemer’s holding that such advertising alone does not sustain personal jurisdiction.
e360’s second jurisdictional allegation is that “[j]urisdiction is proper because a substantial part of the events or omissions giving rise to the claims
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alleged herein occurred in Illinois, or a substantial part of the property that is the subject of the action is situated in Illinois.” (A. 6.) While e360 is “an Illinois Limited Liability Company located in Wheeling, Illinois,” and its owner David Linhardt “is an individual who resides … [in] Highland Park, [Illinois],” (Id.) the citizenship of the plaintiff is irrelevant to establishing personal jurisdiction — “jurisdiction is proper [only]…where the contacts proximately result from actions by the defendant himself that create a ‘substantial connection’ with the forum state.” Burger King v. Rudzewicz, 471 U.S. 462, 473 (1985) (quoting McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223 (1957)). Furthermore, “[a]n Illinois court does not acquire jurisdiction simply because the ‘last act’ of the tort is an economic loss felt in Illinois when all the conduct contributing to the injury occurred outside of Illinois…[and] an economic injury, by itself does not support the conclusion that a tortious act was committed in Illinois.” Lifeway Foods, Inc. v. Fresh Made, Inc., 940 F. Supp. 1316, 1319-20 (N.D. Ill. 1996); see also Indianapolis Colts v. Metro. Baltimore Football Club Ltd. P’ship, 34 F.3d 410, 412 (7th Cir. 1994) (requiring more than simply causing injury in the forum state); Wallace v. Herron, 778 F.2d 391, 394 (7th Cir. 1985).
As e360’s complaint acknowledges, “Spamhaus is…a United Kingdom non-profit limited liability company…located in London, England,” and e360 has stated nothing in its complaint that indicates that Spamhaus took any action in Illinois with regard to publishing its ROKSO list. (A. 6.) If Spamhaus owns no property in the state of Illinois and all its conduct occurred outside of Illinois, a court sitting in Illinois lacks personal jurisdiction over Spamhaus. If
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e360 does have a cause of action against Spamhaus, personal jurisdiction would exist only where the defendant’s conduct occurred or where the defendant is located — namely, the United Kingdom.
Because the factual allegations in e360’s complaint are insufficient as a matter of law to establish the district court’s personal jurisdiction over Spamhaus, the district court’s default judgment is void. This Court should therefore vacate the default judgment against Spamhaus for lack of personal jurisdiction.
C. The District Court’s Entry of Default Judgment Must Be Vacated Because the Claims are Insufficient to State a Claim for which Relief can be Granted, a Hearing on Damages was not Held, and the Damages were Awarded Without Sufficient Evidentiary Support.
An appellate court reviews a lower court’s entry of default judgment using an abuse of discretion standard. Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1322 (7th Cir. 1983). Because Spamhaus timely filed a notice of appeal, the propriety of the underlying judgment order has been preserved for appellate review. Id. at 1323 n.6.
In this case, the district court abused its discretion in denying Spamhaus’ motion to vacate the default judgment without conducting any inquiry into Spamhaus’ bases for relief. (A. 158; see A. 174-84.) The entry of default judgment should be reversed for three reasons. First, the district court abused its discretion by not considering whether e360’s claims were sufficient to state a claim for relief. Second, the district court erred by not conducting the required hearing on damages. Third, the district court awarded excessive
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damages without proper findings or any admissible evidence on which to base them.
1. e360’s Allegations Are Insufficient To State A Claim For Relief.
Upon default, all of the plaintiff’s well-pleaded factual allegations are taken as true. Black v. Lane, 22 F.3d 1395, 1399 (7th Cir. 1994). Generally, therefore, a default judgment establishes liability against the defendants as to each well-pled count in the complaint. Id. However, entry of default judgment does not bar a party from challenging the sufficiency of the complaint, because a party in default does not admit mere conclusions of law. Id.; see also Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (default judgment set aside because claims were legally unsupportable); 5 C.J.S. Appeal & Error § 718 (1993). Therefore, prior to entering default judgment, the court has a responsibility to apply the unchallenged facts of the complaint to the elements of the asserted claims to determine if the facts alleged constitute a legitimate cause of action. Id.
Here, there is no indication that the district court ever considered whether the facts alleged by e360 sufficiently state claims for tortious interference with contract, tortious interference with prospective economic advantage, defamation per se, and defamation per quod. The district court never considered any of the elements of these claims and never applied the facts of the case to the elements of those claims to determine whether the facts
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sufficiently supported them. This failure alone by the district court is an abuse of discretion warranting reversal of its order.
2. The District Court Abused Its Discretion When It Entered Default Judgment Against Spamhaus Without Holding A Hearing On the Damages Amount.
Upon default judgment, allegations relating to damages are not taken as true. United States v. Di Mucci, 879 F.2d 1488, 1497 (1989). Rather, damages must be proved, and a judgment may not properly be entered without an evidentiary hearing on damages unless the amount claimed is “liquidated or capable of ascertainment from definite figures contained in the documentary evidence or in detailed affidavits.” Dundee Cement Co. v. Howard Pipe & Concrete Products, Inc., 722 F.2d 1319, 1323 (7th Cir. 1983); United States v. De Frantz, 708 F.2d 310, 312 (7th Cir. 1983) (“Rule 55(b)(2) of the Federal Rules of Civil Procedure requires a hearing after entry of default judgment if ‘necessary . . . to determine the amount of damages’”).
As an initial matter, the district court agreed to grant e360’s Motion For Default Judgment prior to even considering whether this motion was amply supported. (A. 169.) (“I am going to grant your motion [for default judgment] on the basis that there is no opposition to it, and it appears none is in the offing.”) Without even a cursory glance at the motion or affidavits allegedly supporting it, the district court agreed to let e360 “win everything by default.” (A. 169.) The district court’s disregard of its responsibility to make even a threshold determination of whether the affidavits were sufficiently detailed to support the
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requested damages was a paramount abuse of discretion. Based on this error alone, the default judgment should be reversed.
Moreover, e360 was awarded $11,716,971.05 in un-liquidated damages claims without an evidentiary hearing. (A. 140-43; see A. 167-169.) The court based its award solely on the conclusory affidavits submitted by e360, which contained no evidence supporting the determinations set forth. The district court took the affidavits at face value without conducting any examination into the sufficiency of those affidavits. Had the district court examined the affidavits, it would have discovered that they were deficient and incapable of supporting any damages award, let alone one in excess of $11 million. Instead, the district court awarded $11,716,971.05 without conducting a damages hearing (A. 140-43), relying solely on the affidavits of David Linhardt, the President of e360, and his attorney, Bartly Loethen. (A. 124-34.)
For an affidavit to be sufficient, it must be based on personal knowledge, set forth facts that would be admissible in evidence, and show affirmatively that the affiant is a competent witness on those matters. Fed. R. Civ. P. 56(e); Johnson v. Nordstrom, Inc., 260 F.3d 727, 736 (7th Cir. 2001). Statements in affidavits about opinion, belief, or conclusions of law are to be given no effect. See Eden v. Klaas, 165 Neb. 323, 328 (Neb. 1957). In this case, Linhardt’s affidavit in support of e360’s requested damages is deficient on its face because it contains opinions, speculation, unqualified expert opinion, and facts not supported by documentary evidence. (A. 129-31.) For instance, in paragraph 32, Linhardt states that e360 lost $2,465,000 in revenue because certain active
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and pending contracts were cancelled. (A. 129.) Although Linhardt provides the names of alleged cancelled contracts, he failed to submit copies of those contracts, and further failed to offer details about the duration or amounts of those contracts. (Id.) Additionally, Linhardt neglected to provide any basis for how the revenue losses from those lost contracts was calculated. (Id.) Conclusory, self-serving affidavits that are unsupported by an evidentiary record have been held insufficient to support factual findings. Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir. 2001). Accordingly, the court should have conducted a damages hearing and given Spamhaus an opportunity to dispute these unsupported claims.
In addition, Linhardt claims to have lost $9,250,000 in future business opportunities, but failed to adequately support this amount with any documentary evidence. (A. 129.) Although Linhardt states how he calculated “lost enterprise value,” this calculation is based on merely speculative, hearsay statements about the value of unique opt-in email addresses for “most email marketing companies,” but not for e360 in particular. Id. This Court has held that “lost profits…must be supported by credible evidence and not based upon mere guesswork or speculation.” Dresser Indus., Inc., Waukesha Engine Div. v. Gradall Co., 965 F.2d 1442, 1447 (7th Cir. 1992). Because Linhardt is not an expert on calculating lost profits, and failed to present any expert qualifications to make that conclusion, the speculative statements in his affidavit lack a proper foundation and are insufficient to adequately support e360’s damages
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request. By entering a default judgment on this insufficient evidentiary record, the district court abused its discretion and should therefore be reversed.
3. The District Court Abused Its Discretion By Entering a Damages Judgment Against Spamhaus Without Sufficient Evidentiary Support.
A district court’s damages award on default judgment is typically upheld unless the award is clearly excessive. Merrill Lynch Mortg. Corp. v. Narayan, 908 F.2d 246, 253 (7th Cir. 1990). However, recovery on default judgment is limited to damages arising from the acts and injuries proximately caused by the defendant. Greyhound Exhibitgroup, Inc., v. E.L.U.L. Realty Corp., 973 F.2d 155, 158-159 (2d Cir. 1992). Thus, even though liability may be established as a result of the default judgment, e360 must still prove the amount of damages suffered as a result of Spamhaus’ allegedly wrongful conduct. Id.; Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974).
In this case, e360 failed to prove that its damages proximately flowed from Spamhaus’ acts. None of the factual allegations or affidavits submitted by e360 contain evidence of what services were contracted for, or how Spamhaus’ acts interfered with those contracts. In fact, these cancelled contracts and lost opportunities could be completely unrelated to any conduct by Spamhaus. Nonetheless, the district court entered judgment against Spamhaus in excess of $11 million dollars with no discussion of the supporting evidence. (A. 140-41.) Accordingly, the district court abused its discretion in entering this clearly excessive award.
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4. The District Court Abused Its Discretion By Failing To Enter Findings Of Fact In Support Of The Damages Amount Awarded In The Default Judgment.
Fed. R. Civ. P. 52(a) requires a district court to make findings of fact on damages when entering a default judgment. See In re Uranium Antitrust Litig., 473 F. Supp. 382, 391 (N.D. Ill. 1979). Compliance with Rule 52(a) is mandatory in all actions tried upon the facts without a jury. Dearborn Nat'l Cas. Co. v. Consumers Petroleum Co., 164 F.2d 332, 333 (7th Cir. 1947). Thus, in this case, the district court had an affirmative duty to analyze the proof offered by e360 regarding damages and issue findings of fact supporting its damages award. Despite this affirmative duty, the court failed to make sufficient findings of fact when granting e360’s Motion for Default Judgment, and the default judgment should be reversed.
Indeed, the district court merely stated that e360 had “submitted affidavits to support [its] request for compensatory damages totaling $11,715,000 for tortious interference with existing contractual relations and prospective economic advantage and $1,971.05 in litigation costs.” (A. 140.) Awarding the amount requested by e360, the district court noted that “Spamhaus has not countered Plaintiffs’ claims of entitlement to this relief or the amounts requested.” Id. However, the district court made no findings of fact concerning the sufficiency of the evidence presented by e360 in support of the requested damages. By relying solely on e360’s deficient affidavits without so much as a cursory inspection of whether those affidavits adequately supported the claimed damages, the court neglected its responsibility of holding e360 to its
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burden of proving damages to a reasonable certainty. Dundee Cement Co. v. Howard Pip & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983); Durasys, Inc. v. Leyba, 992 F.2d 1465, 1470 (7th Cir. 1993). Thus, because the district court made no findings of fact supporting its award and failed to comply with the mandatory requirements of Rule 52(a), the default judgment should be reversed.
D. Reversing the District Court’s Default Judgment Conforms With the Seventh Circuit’s Preference for Cases to be Tried on the Merits, and Would Allow Spamhaus the Opportunity to Present Its Meritorious Defenses.
Finally, the default judgment should be reversed to comport with the Seventh Circuit’s preference for resolving litigation through the adversarial process. While this court has acknowledged that default judgments are not completely disfavored in this circuit, this court has also held that default judgment should not be used to respond to all litigant misconduct. Stafford v. Mesnik, 63 F.3d 1445, 1450 (7th Cir. 1995). This Court has long held that “[t]he philosophy of modern federal procedure favors trials on the merits,” Dormeyer Co. v. M.J.Sales & Distributing Co., 461 F.2d 40, 43 (7th Cir. 1972) (internal quotations omitted), and that “[a] dismissal with prejudice is particularly disfavored with relatively young cases.” Webber v. Eye Corp., 721 F.2d 1067, 1070 (7th Cir. 1983).
Given that the default judgment was ordered at an early stage in the proceedings before Spamhaus had filed an answer presenting its arguments on the defective service of process and the court’s lack of personal jurisdiction,
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this Court should reverse the trial court’s default judgment. By reversing the default judgment, this Court would allow Spamhaus an opportunity to fully brief and present these arguments, and these important jurisdictional issues at stake in this suit would be resolved through the preferred adversarial process.
Furthermore, reversing the default judgment would allow Spamhaus the opportunity to contest e360’s causes of actions on the merits. Not only does Spamhaus have traditional defenses against e360’s defamation and tortious interference causes of action, Spamhaus is also immune from e360’s claims based on federal statutes — namely the Communications Decency Act (“CDA”) of 1996, 47 U.S.C. § 230, and the Controlling the Assault of Non-Solicited Pornography and Marketings (CAN-SPAM) Act of 2003, 15 U.S.C. §§ 7701-7713. Under the CDA and CAN-SPAM, Spamhaus and ISPs using Spamhaus’ ROKSO list are defined as “internet access servers.” 47 U.S.C. § 231(e)4); 15 U.S.C. § 7702(11). As an “internet access server,” Spamhaus and the users of its ROKSO list are immune from liability related to their blocking of selected e-mail transmissions. According to the CDA:
(2) 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 obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected; or (B) any action taken to enable or make available to information content providers or others the technical means to restrict access to [such] material.
47 U.S.C. § 230(C)(2); see also CAN-SPAM, 15 U.S.C. § 7707(c) (2003) (“[n]othing in this Act shall be construed to have any effect on the lawfulness or
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unlawfulness, 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”).
All of e360’s claims for relief are based on allegations that Spamhaus and ISP’s using the ROKSO list are blocking e360’s e-mail transmissions. Since the CDA and CAN-SPAM expressly protect “internet access servers” from liability for adopting e-mail blocking policies, the CDA and CAN-SPAM serve as a complete defense for Spamhaus. In order to allow this defense to be presented to the district court and fully litigated, this Court should reverse the district court’s default judgment, and allow this case to proceed to a trial on the merits.
II. The District Court’s Injunction Must be Vacated Because the District Court Failed to Apply the Traditional Test Required for Injunctive Relief, Neglected its Duties under Federal Rule of Civil Procedure 65, and Issued an Injunction that Violates the First Amendment.
On July 20, 2006, one day prior to the removal of this case to the federal court, the Circuit Court of Cook County issued a temporary restraining order against Spamhaus, ordering it to remove any references to e360 or Linhardt from the Spamhaus Registry of Known Spam Operations (“ROKSO”). (A. 21-23.) The TRO however, did not preclude Spamhaus from determining, based on its own criteria, that e360 or Linhardt’s future actions warrant inclusion on the ROKSO list. Id. The TRO remained in effect until August 23, 2006, when the district court converted the TRO, which it was not previously aware of until, to
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a Preliminary Injunction in conclusory fashion. (A. 117, 15-66.) On that same day, the district court entered a default order against Spamhaus. (A. 117.]
After the district court entered default, e360 moved for the issuance of a permanent injunction. (Pl.’s Mot. for Default Judgment and Permanent Injunction, Aug. 20, 2006, Docket No. 20.] In its motion for a permanent injunction, e360 failed to cite any authority regarding the requirements for entry of an injunction, failed to list the inquiry the court should undertake, and failed to allege any irreparable injury, inadequate remedies at law, why an equitable remedy is warranted when balancing the hardships of the plaintiff and defendant, and that the public interest would not be disserved by the issuance of the injunction. Id. Despite the lack of the requisite showing, the district court orally granted e360’s motion for default judgment and order for a permanent injunction. (A. 169.) At that time, the court indicated that it would consider the proposed permanent injunction and sign it if “it comports with what I think is appropriate.” Id.
The court entered a permanent injunction on September 13, 2006, ordering Spamhaus to (1) remove e360 from the SBL and ROKSO listing and not take further action, unless Spamhaus demonstrates by “clear and convincing evidence that Plaintiffs have violated relevant United States law;” (2) refrain from listing entire networks or ranges of IP addresses owned by Plaintiffs simply because the addresses are registered to Plaintiffs, without meeting the “clear and convincing evidence” standard for that IP address; (3) post, for a period of six months, “on its website at both the main home page and at the
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ROKSO jump page, a message of 1 inch by 1 inch, the text of which is to be reasonably approved by Plaintiffs, and which, generally, indicates that Plaintiffs were erroneously listed on the website as spammers and that Plaintiffs are not spammers;” (4) refrain from contacting any of e360’s customers or suppliers in an effort to cause that customer to cease doing business with e360; and (5) refrain from contacting any customer or supplier of e360 and allege or assert that Plaintiffs are “spammers” or other like term. (A 140-41.)
In issuing the permanent injunction, the district court failed to apply the traditional test for permanent injunctions and failed to comply with the requirements of Fed. R. Civ. P. 65. A district court’s decision to grant a permanent injunction is reviewed for abuse of discretion. Ebay Inc. v. Mercexchange, LLC, 126 S.Ct. 1837, 1839 (2006). While factual determinations are reviewed for clear error, and legal conclusions are reviewed de novo, either a “factual or legal error may be sufficient to establish an abuse of discretion.” Minnesota Mining & Mfg. Co. v. Pribyl, 259 F.3d 587, 597 (7th Cir. 2001).
A. The District Court erred in not applying the traditional four-part test prior to granting injunctive relief.
This Court has established that a hearing on affirmative injunctive relief is appropriate even when “the facts establishing the necessity for affirmative injunctive relief are not likely to be different from the facts already legally determined by the entry of the default judgment.” United States v. Di Mucci, 879 F.2d 1488, 1497-98 (1989); Geddes v. United Fin. Group, 559 F.2d 557 (9th Cir. 1977). Thus, by entering the permanent injunction without first holding an
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evidentiary hearing, the district court abused its discretion, and the district court’s default judgment should therefore be reversed.
In addition to showing a likelihood of success on the merits, a plaintiff seeking a permanent injunction must prove: (1) it has suffered irreparable injury; (2) any remedies available at law (i.e. money damages) are inadequate to compensate for the injury; (3) when considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) the public interest would be served by the issuance of the permanent injunction. Ebay Inc. v. Mercexchange, LLC, 126 S.Ct. 1837, 1839 (2006) (reiterating the long-standing requirements for the entry of a permanent injunction); see also Ty, Inc. v. Jones Group, Inc., 237 F.3d 891, 895 (7th Cir. 2001). In Ebay, the Supreme Court vacated an injunction because neither the district court nor the court of appeals applied the traditional four-factor test for injunctive relief. 126 S.Ct. at 1841.
Similarly, in this case, the injunction should be vacated because e360 failed to establish any of the requisite proof under the four-factor test and the district court failed to apply this test. First, when the district court converted the TRO issued by the state court into a preliminary injunction, it appears that the court did not even read the TRO to determine whether it comported with the proper principles of law. (A. 162-64) (court questioned whether a TRO had been entered by the state court and whether it was still effective). When the district court made the preliminary injunction determination, it had no evidence before it about any irreparable injury, inadequate remedies at law, the balance of
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hardships, or public interest considerations. (See, e.g., A. 118-34.) Second, when the district court converted the preliminary injunction into a permanent injunction, it still had no evidence regarding any of these factors. In fact, e360’s motion for entry of a permanent injunction was completely devoid of any of the law or analysis that must be undertaken prior to the entry of an injunction in federal court. Furthermore, the district court failed to enter any findings to support the injunctive relief. In this case, the court never conducted an evidentiary hearing prior to either the entry of the preliminary injunction or the permanent injunction to determine whether it was proper, and failed to consider the requisite factors for injunctive relief. For these reasons, the entry of the permanent injunction should be vacated.
B. The District Court erred because the injunctive relief issued does not comport with the requirements under Federal Rule of Civil Procedure 65.
Federal Rule of Civil Procedure 65 proscribes the requirements for injunctive relief. Rule 65(d) requires specificity in the terms of an injunction:
[e]very order granting an injunction . . . shall set forth the reasons for its issuance; shall be specific in terms; shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained . . ..
This Court has held that injunctions that fail to adequately explain the reasons for issuance should be vacated. For example, in EEOC v. Severn Trent Serv., Inc., 358 F.3d 438, 442, 446 (7th Cir. 2004), this Court vacated an injunction that lacked adequate explanation, finding that “[a]n injunction so poorly buttressed by explanation flunks Fed. R. Civ. P. 65(d).” EEOC, 358 F.3d
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at 442. Although the explanation can be oral or written and the absence of an explanation can be forgiven if the justification is clear from the record, EEOC, 358 F.3d at 442, the “specificity provisions of Rule 65(d) are no mere technical requirements,” Atiyeh v. Capps, 449 U.S. 1312, 1317 (1981) (quoting Schmidt v. Lessard, 414 U.S. 473, 476 (1974)). Rather, Rule 65 is intended to prevent confusion and uncertainty about an injunctive order and to allow for proper appellate review of the injunction. Atiyeh, 449 U.S. at 1317. Both the preliminary injunction entered on August 23, 2006 and the permanent injunction entered on September 13, 2006 fail to provide any reasoning, much less adequate reasoning, for their issuance. (See A. 117, 140-41.)
Furthermore, the permanent injunction issued in this case is vague and overbroad. “A court has an independent duty to assure that the injunctions it issues comply with the directive of Fed. R. Civ. P. 65(d).” Chicago Bd. of Ed. v. Substance, Inc., 354 F.3d 624, 632 (7th Cir. 2003) (internal citations omitted) (finding the injunction at issue “appallingly” bad because it contained gibberish, and some terms were opaque and overbroad). A “district court has not only the power but also the duty to refuse to enter a defective injunction even if neither party objects.” Chicago & North Western Trans. Co. v. Ry. Labor Exec. Assoc., 908 F.2d 144, 149 (7th Cir. 1990). The district court, in this case, failed to comply with that duty.
The permanent injunction issued has many defects. First, the injunction is not specific in terms of who is covered. Linhardt has a multitude of businesses that he regularly creates for the purpose of sending “bulk” email. (See e.g., A.
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34-110.) It is unclear whether the injunction is meant to cover only the companies owned or controlled by e360 at the time of the entry of the injunction or forever into the future. Second, the injunction is unclear about who is included as a customer or supplier of e360, let alone how Spamhaus could determine that. (A 140-41.) Also, the injunction requires that Spamhaus keep e360 and Linhardt off the SBL and ROKSO lists “unless Spamhaus can demonstrate by clear and convincing evidence” that a U.S. “law” has been violated. (A. 140-41.) However, the injunction requires that e360 be provided with an opportunity to show that the offending email was not sent in violation of U.S. law. (A. 141.) This requirement is vague because there is no indication of what kind of proof on the part of e360 or what standard is required for this proof.
Furthermore, the legal standard of “clear and convincing” is inconsistent with federal law, making the injunction confusing and unclear. Ordinarily, federal civil actions apply a “preponderance of the evidence” burden of proof. See Kampmier v. Emeritus Corp., 472 F.3d 930, 942 (7th Cir. 2007) (applying a “preponderance of the evidence” standard in a case involving the ADA, Title VII, and ERISA claims); Oshana v. Coca-Cola Co., 472 F.3d 506, 510-11 (7th Cir. 2006) (applying a “preponderance of the evidence” standard in a consumer class action). The injunction requires Spamhaus to prove by “clear and convincing evidence” that e360 violated U.S. law prior to placing the company back on the SBL or ROKSO listing. In issuing the injunction, the court failed to provide any basis for shifting the burden of proof onto Spamhaus or for
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requiring the heightened “clear and convincing” standard. (See, e.g., A. 140-41.) The “clear and convincing” standard imposes a higher burden on Spamhaus than was originally placed on e360 to prove defamation or other liability.
Thus, the injunction does not comport with the requirements established in Fed. R. Civ. P. 65(d), requiring specificity in terms to prevent confusion and uncertainty and to allow for proper appellate review of the injunction issued by the district court. The injunction fails to meet those specifications and should be vacated.
C. The Permanent Injunction Issued by the District Court Violates the First Amendment and Must be Reversed.
The injunction violates the First Amendment because it constitutes an impermissible prior restraint on speech, compels speech, and is impermissibly broad. Constitutional issues are reviewed de novo by federal circuit courts. United States v. Wilson, 154 F.3d 658, 662 (7th Cir. 1998); Sequoia Books, Inc. v. Ingemunson, 901 F.2d 630, 633 (7th Cir. 1990); see also Gaudiya Vaishnava Soc. v. San Francisco, 952 F.2d 1059, 1062 (9th Cir. 1991) (reviewing de novo a permanent injunction for constitutional infirmity). By broadly restricting Spamhaus’ ability to list e360 as a “spammer,” the district court’s injunction constitutes an unconstitutional prior restraint on Spamhaus’ First Amendment freedoms and must be reversed. By ordering Spamhaus to post a specific opinion message on its website, the injunction unconstitutionally compels speech and must be reversed.
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1. The Injunction Constitutes an Impermissible Prior Restraint and is Facially Invalid.
The Supreme Court defines an injunctive “prior restraint” as a judicial order “forbidding certain communications when issued in advance of the time that such communications are to occur.” Alexander v. United States, 509 U.S. 544, 550 (1993) (quoting M. Nimmer, Nimmer on Freedom of Speech §4.03, p. 4-14 (1984)). Prior restraints on speech and publication are the most serious and the least tolerable infringements on First Amendment rights. United States v. Kaun, 827 F.2d 1144, 1154 (7th Cir. 1987) (Ripple, J., concurring). An injunction that suppresses, on the basis of previous publications, the distribution of literature of any kind, is an unconstitutional prior restraint on defendants’ First Amendment rights and must be vacated. Org. for a Better Austin v. Keefe, 402 U.S. 415, 418-19 (1971).
Further, the unpopular or bothersome nature of the message content to its recipients does not remove the message from the reach of the First Amendment. See Keefe, 402 U.S. at 419 (overturning an injunction prohibiting leaflet distributors who were “engaged openly and vigorously in making the public aware of” practices they believed to be wrong). Even expressions that are unacceptable may not be subjected to a prior restraint, provided the means of communication are peaceful. See id.; Alexander, 509 U.S. at 550 (a permanent injunction is a classic prior restraint, even if it is imposed after a finding of liability). Here, the injunction issued by the district court constitutes a prior restraint because it prohibits Spamhaus’ communications before they occur.
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(A. 140-41.) Specifically, the injunction suppresses Spamhaus’ publication of the SBL and ROKSO listings and its expressions of opinion regarding future conduct by e360 on the basis of prior publications and opinions relating to the pre-suit conduct of e360. (Id.) Thus, the trial court’s injunction is presumptively invalid.
The injunction’s requirement that Spamhaus must overcome a “clear and convincing” hurdle before expressing its opinions ignores the nature of First Amendment protections. Although the published assertion that e360 is a “spammer” may be unpopular to e360 or any other listeners, the unpopular nature of the opinion expressed in that message does not place the message outside the scope of the First Amendment. The activities of Spamhaus “openly and vigorously” make the “public aware of” practices that it believes to be wrong; the activities were also conducted in a peaceful manner. They are, thus, absolutely protected. The injunction’s requirement that, prior to publishing its opinions, Spamhaus must demonstrate by “clear and convincing evidence” that e360 was in violation of United States law flouts the First Amendment. (A. 141.)
For the foregoing reasons, the injunctive relief that e360 sought and successfully obtained constitutes a blatant violation of the First Amendment, and should thus be reversed.
2. The Injunction Amounts to Impermissible Compelled Speech.
The First Amendment embodies the principle that “‘each person should decide for himself or herself the ideas and beliefs deserving of expression, consideration, and adherence.’” Entm’t Software Assoc. v. Blagojevich, 404 F.
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Supp. 2d 1051, 1071 (N.D. Ill. 2005) (quoting Turner Broad. Sys. v. FCC, 512 U.S. 622, 641 (1994)). Except in the context of commercial advertising,2 the government may not compel affirmance of a belief with which the speaker disagrees. Hurley v. Irish-American Gay, Lesbian & Bisexual Group, 515 U.S. 557, 574-75 (1995); Wooley v. Maynard, 430 U.S. 705, 714 (1977) (the First Amendment protects the right to refrain from speaking at all); Entm’t Software Assoc., 404 F. Supp. 2d at 1069 (holding statutes that required defendants to affix a sticker on video games to be in violation of First Amendment, where statutes required retailers to replace its chosen method of describing a rating system with a type of presentation mandated by the State).
This injunction constitutes impermissible compelled speech. It requires Spamhaus to publish a message expressing an opinion in the shape of a 1 inch by 1 inch square containing the assertion that although e360 is not a “spammer,” and was “erroneously listed on the website as” a “spammer.” (A. 141.) The injunction strong-arms Spamhaus into disseminating on its website an opinion about the nature of e360’s activities that contradicts its own opinion. It forces Spamhaus to revisit its assertion that e360 is a “spammer,” arrived at on the basis of established spamming trap technologies and
2 The activity by Spamhaus is not commercial speech because it does not even propose a commercial transaction. See Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 771 (1976). If, however, the Court deemed it commercial speech, the activity is still protected by the First Amendment because the expressions at issue concern lawful activity and are not misleading, and there is no substantial government interest served by the speech restriction. Greater New Orleans Broad. Assoc., Inc. v. United States, 527 U.S. 173, 174 (1999).
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supported by the internet industry, and to displace it with a message that is mandated by the district court. This injunction cannot withstand constitutional review.
3. The Injunction is Impermissibly Broad.
As the Supreme Court has noted, an injunctive “order issued in the area of First Amendment rights must be couched in the narrowest terms that will accomplish the pin-pointed objective permitted by constitutional mandate and the essential needs of the public order,” and thus the “order must be tailored as precisely as possible to the exact needs of the case.” Carroll v. President and Com’rs of Princess Anne, 393 U.S. 175, 183-84 (1968). When employing an injunction, a court may not “broadly stifle fundamental personal liberties when the end can be more narrowly achieved.” Shelton v. Tucker, 364 U.S. 479, 488 (1960).
The district court’s permanent injunction against Spamhaus is not tailored to the exact needs of the case. First, the injunction does not specify which businesses owned or controlled by e360 are covered under the injunction, nor does it make clear who constitutes a “customer or supplier” of e360. (See, e.g., A. 140-41.) Given the injunction’s uncertain terms, it creates a potential “chilling effect” on Spamhaus’ ability to freely