February 09, 2015

Venable trial team secures appeals court victory in $600 million junk email suit

2 min

The U.S. Court of Appeals for the Fourth Circuit upheld the post-trial dismissal of a $600 million suit against Kraft Foods and Connexus Corp. accusing them of sending hundreds of thousands of unlawful emails in violation of California and Maryland law. In a published opinion, the appeals court agreed with a lower court’s ruling that the plaintiff, a purported internet service provider, consented to and even invited the harm it claimed to suffer by creating fake email addresses and embedding them in websites so they could be found by automated email systems. Citing the plaintiff’s litigation history of suing to obtain litigation settlements that supported almost all of its revenue stream, the appeals court ruled plaintiff could not recover damages and affirmed the dismissal in favor of Kraft and Connexus.

Venable partners Doug Baldridge, Lisa Jose Fales and Ari Rothman represented Connexus in the trial, and Rothman argued the appeal.

Speaking with Bloomberg BNA about the court’s decision, Rothman said, “While the decision is fact-specific, it also stands for the broader principle that any plaintiff — whether an ISP or an individual — who invites and consents to these e-mails will be barred from bringing suit under these statutes.” He also said “a common misconception exists that the statutes bar unsolicited e-mail, when actually they only bar fraudulent and misleading information, often targeting header information and subject lines.” Rothman recommended a robust compliance effort on a campaign-specific basis to ensure “from” and “subject” lines are truthful, accurate and not misleading to consumers.

Rothman added that this is the first case he is aware of under California and Maryland law to go to trial because the $1,000 statutory damages per email typically incentivizes smaller companies to settle. “Because of the high statutory damages prospect,” he said, “multiple plaintiffs have been able to pool their claims and sue together for large recoveries without having to jump through the procedural hurdle of class certification.”