In the Courts: Email Litigation, FTC Enforcement, Righthaven’s Losing Streak and More

Michigan Email Law Preempted Under CAN-SPAM

A Michigan Federal Court dismissed a complaint under Michigan’s commercial email statute finding that it was preempted by the CAN-SPAM Act of 2003.  As interpreted, the federal law only permits state regulation dealing with material  falsity or deception in emails, but the court found that the Michigan law was not covered by this exception to preemption of state email laws since the Michigan statute “proscribes e-mail that misrepresents certain information about the point of origin or transmission path . . . but it does not set a materiality standard for misrepresentation.”  The court also noted that the “none of the terms of the Michigan Act explicitly addresses claims of falsity or deception” and  concluded that “the technical violations regarding header, sender, and opt-out information that Plaintiff alleges as violations of the Michigan statute are not allegations of materially deceptive actions. His allegations are thus subject to preemption under CAN-SPAM.”

More Info:   Hafke v. Rossdale Group, LLC  (W.D. Mich.; Oct. 7, 2011).


Ohio Split Decision: Lawyer Can’t Claim Damages for Email Ads He Knew Were Misleading, But Need Not Plead Deception

An Ohio appeals court ruled against a lawyer who sued in response to 85 email sent on behalf of Dish Network and Direct TV because they “failed to state on the face of the email all of the applicable terms and conditions” of the offers and because the emails used the word “FREE” in the emails for services that were not free.   The lawyer had admitted to realizing that the emails were deceptive and then accumulating and saving them for purposes of the lawsuit and in fact had .  The court found that  because the lawyer “through prior litigation, had prior knowledge of the facts such that he was not and could not be deceived by [the emails] because he was aware of the terms he alleges were excluded before he received the emails in question.”   In a related case, however, the court ruled in favor of another lawyer/serial plaintiff John Ferron, holding that it was not necessary that the plaintiff allege he was deceived to avoid a motion to dismiss.

More Info: Ohio Attorney Sues Over Misleading Emails, Even Though He Wasn’t Misled (Above the Law); Cicero v. American Satellite, Inc., 2011-Ohio-4918 (Ohio Ct. App. Sept. 27, 2011);  Ferron v. Dish Network, LLC,  2011 Ohio 5235  (Ohio Ct. App. October 11, 2011).


Federal Trade Commission Wins $29.8 Million in “Bogus Government Grant” Scheme; Enters Flash Cookie Consent Decree

The Federal Trade Commission won a $29.8 million judgment finding that marketers of “Grant Connect” programs  1) deceptively marketed dietary supplements using claims unsupported by scientific research; 2) failed to adequately disclose that their credit offers were merely memberships to a shopping club; 3) made unsupported claims that consumers could earn thousands of dollars per month with a work-from-home business opportunity; 4) failed to adequately disclose that consumers who bought their products or services would be enrolled in continuity plans with significant monthly fees, often for a variety of unrelated products; 5) used fake testimonials to promote their products; and 6) debited consumers’ bank accounts on a recurring basis without obtaining consumers’ permission.   The order banned the defendants from offering grant-related products and services; credit-related products;  work-from-home and business opportunities; and dietary supplements and nutraceuticals.

The FTC also announced settlements in its enforcement actions against Scan Scout for representing that “consumers could opt out of receiving targeted ads by changing their computer’s web browser settings to block cookies,” when in fact Scan Scout used Flash Cookies which browsers could not block.

More Info:  Grant Connect and Scan Scout Press Releases.


Effort to Interfere With Web Presence Triggered Liability Under Lanham Act and Common Law
Two parties battled over the trade name “Elizabeth Sky,” with the junior interest holder succeeding in using DMCA take down notices to remove the senior holder from multiple websites.  A Florida federal court  awarded damages to the senior user for trademark, defamation and tortious interference.

More Info: Ordonez v. Icon Sky Holdings LLC (S.D. Fla. Aug 30, 2011); Eric Goldman Blog Post


ERSP: Facebook “Like” Promotion Must Disclose Material Terms

The National Advertising Review Council’s Electronic Retailing Self Regulatory Program found that a Facebook promotion for Coastal Contacts urging website visitors to “Like This Page! So you too can get your free pair of glasses!”” must disclose material terms prior and not after the consumer hits the “like” button.

More Info:  ERSP Press Release.


Righthaven’s Losses Mount, May Face Class Action

Judges continue to spank copyright troll Righthaven for seeking to enforce a copyright it did not even own as depicted in the image to the left.  Now, a Columbia, South Carolina class action firm is seeking plaintiffs for a class action suit against Righthaven.

More info: