Sunday, November 19, 2006, 7:15 PM

Fourth Circuit: SPAM, Anyone?

On Nov. 17, the Fourth Circuit issued its first decision interpreting the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM Act"), 15 U.S.C. 7701 et seq. In fact, the CAN-SPAM Act has been interpreted by only one other Circuit (the Fifth). Significantly, the Fourth Circuit interpeted the CAN-SPAM Act's express preemption clause. The gist of the Fourth Circuit's ruling: Mere inaccuracies in commercial spam, such as non-material mispresentations or falsities that are not tortious in the common-law sense, are not actionable under the CAN-SPAM Act and cannot be made actionable in any State.

The case, Omega World Travel, Inc. v. Mummagraphics, Inc., involved commercial spam e-mail messages sent by Cruise.com. and alleged to contain inaccuracies. First, each message stated that the recipient had signed up for the Cruise.com mailing list, when claimant did not sign up. Second, the headers were inaccurate: while each message listed Cruise.com as the sending organization, each also included the address "FL-Broadcast.net" in its header information, even though "FL-Broadcast.net" is not an Internet domain name linked to Cruise.com; and the messages contained the "from" address cruisedeals@cruise.com, even though Cruise.com had apparently stopped using that address.

In short, the messages contained errors. They were, in a loose sense, false.

The Court confirmed that the sender didn't violate the CAN-SPAM Act, because there were no "material" inaccuracies and there was no "pattern or practice" of failures to conform to the Act's opt-out requirements. "The CAN-SPAM Act addresses 'spam' as a serious and pervasive problem," the Court observed, "but it does not impose liability at the mere drop of a hat."

The more interesting ruling concerned preemption. The claimant alleged violations of Oklahoma law, specifically Oklahoma's anti-spam statute, which makes it "unlawful for a person to initiate an electronic mail message that the sender knows, or has reason to know: 1. Misrepresents any information in identifying the point of origin or the transmission path of the electronic mail message; 2. Does not contain information identifying the point of origin or the transmission path of the electronic mail message; or 3. Contains false, malicious, or misleading information which purposely or negligently injures a person."

The CAN-SPAM Act has an express preemption clause. It provides, "This chapter supersedes any statute, regulation, or rule of a State or political subdivision of a State that expressly regulates the use of electronic mail to send commercial messages, except to the extent that any such statute, regulation, or rule prohibits falsity or deception in any portion of a commercial electronic mail message or information attached thereto." 15 U.S.C. 7707(b)(1). The preemption clause thus has an exception which allows states to prohibit "falsity or deception" in commercial e-mail messages, but nothing else.

The Fourth Circuit held that this preemption exception doesn't reach beyond common law fraud and deceit--laws that reach immaterial misrepresentations or falsities sounding in tort. The Court held that Congress didn't intend to allow the States to prohibit or regulate bare errors in spam messages. To allow such a claim to proceed, the Court concluded, would make all errors in commercial e-mails actionable, a result the Court was convinced Congress did not desire, since Congress rejected a strict liability, non-material mistake standard in the CAN-SPAM Act itself. "Rather than banning all commercial e-mails or imposing strict liability for insignificant inaccuracies," the Fourth Circuit said, "Congress targeted only e-mails containing something more than an isolated error." The Court reasoned that allowing States to impose liability for non-material inaccuracies in commercial spam would disturb this balance struck by Congress "and turn an exception to a preemption provision into a loophole so broad that it would virtually swallow the preemption clause itself."

The Court also believed that its interpretation of the preemption clause avoided a "difficult" constitutional question: whether Oklahoma's anti-spam law unduly burdened interstate commerce in violation of the so-called dormant commerce clause. And the Court indicated that Oklahoma's law (as a regulation of commercial speech) might pose First Amendment problems.

N.C. has an anti-spam statute, codified at G.S. 14-453 et seq. The statute allows a private right of action against one who sends unsolicited bulk commercial e-mail into or within the State, if the e-mails "falsely identify" with an "intent to deceive or defraud the recipient," or if they contain "forged" routing or transmission information. G.S. 14-458 & 1-539.2A. This law may be preempted by the CAN-SPAM Act, insofar as the N.C. law may impose liability for non-material misrepresentations that would not rise to the level of tortious fraud. If it's not preempted, the question arises whether it passes muster under the dormant commerce clause and First Amendment. See Michael B. Edwards, Call to Arms: Marching Orders for the North Carolina Anti-Spam Statute, 4 N.C. J. L. & Tech. 93 (2002) (analyzing constitutionality of the statute).

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