California Judge Rules In Favor Of ValueClick
A judge in California has thrown out a multimillion-dollar false advertising lawsuit, ruling in favor of online advertising firm ValueClick Inc.
The lawsuit was filed last year by Internet service provider Hypertouch Inc.
Hypertouch claimed that ValueClick was engaged in a massive e-mail advertising campaign that consisted of false and misleading claims. The suit sought $45 million in injunctive relief and statutory damages.
“The suit alleges that the Defendants use spam email advertisements with fraudulent and misleading headers, often to randomly generated, harvested or stolen email addresses,” Hypertouch said on its Web site.
“Further, many of the emails use deceptive offers of "free" products that in reality impose costs and other obligations on the consumer, and are linked to lead generation for third party advertisers.”
Los Angeles Superior Court Judge Richard Adler ruled in favor of the Westlake Village, Calif-based advertising firm, stating that Hypertouch’s claims were preempted by the CAN-SPAM Act, signed into law by President George W. Bush in 2003.
The CAN-SPAM, or Controlling the Assault of Non-Solicited Pornography And Marketing, Act of 2003 marked the creation of the first federal standards for commercial e-mail. The act is enforced by the Federal Trade Commission.
"Because plaintiffs cannot establish any of the traditional fraud elements for even a single asserted email, CAN-SPAM’s preemption clause mandates dismissal of (the) claims," Judge Adler stated in an opinion filed on Monday.
The decision is considered to be the first in a California court to address anti-spam preemption.
Lawrence Riff of Steptoe & Johnson LLP, Hypertouch’s attorney, told Reuters that the issue had been addressed by federal trial courts in California, Maryland and Washington, all of which came to different conclusions regarding preemption of state anti-spam statutes.
Although Hypertouch "has taken no firm decision as to its next steps, I expect and look forward to seeking appellate review in the California court of appeal," said Riff.
"It is important to the people of California that the law be clarified. Judge Adler’s carefully considered decision provides an excellent record for appellate review,” he added.
Kevin Rosen and Ashlie Berenger of Gibson Dunn & Crutcher in Los Angeles, attorneys for ValueClick, said the ruling sets a precedent for other commercial advertisers across the nation.
"The California statute has the most aggressive damages scheme of any state statute in the country … and that’s why plaintiffs have been focusing primarily on bringing claims (here)," Berenger told Reuters.
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