Cal Court of Appeal Decision Questions Use of Private Domains for Email

In Balsam v Trancos (Cal. Ct. App. Nos.  A128485, A129458 – February 24, 2012), the Court of Appeal affirmed the trial court’s $7,000 judgment in favor of notorious spamigator Dan Balsam under California’s anti-spam law (Business & Professions Code Section 17529 et seq.)  It is the only case under the statute to actually go to trial (excluding Small Claims matters), but not the first to be heard on appeal.

The Appellate Court’s decision calls into question the continued use of private domain registrations for email marketing absent use of a domain that otherwise identifies the company sufficient to render it “traceable”.

The trial court found found that Trancos had violated Section 17529.5(a)(2)’s prohibition on emails that “falsified, misrepresented, or forged header information” where it used

From” lines stating the sender was, respectively, “ ‘Christian Dating,’ ” “ ‘Your Promotion,’ ” “ ‘Bank Wire Transfer Available,’ ” “ ‘eHarmony,’ ” “ ‘Dating Generic,’ ” and “ ‘Join Elite.’ ”  Each purported to be from an e-mail address at a different one of the fancifully named domain names privately registered to Trancos (e.g. “moussetogether.com,” “nationalukulelee.com”).  Only one of the e-mails, e-mail No. 6 purporting to be from eHarmony, contained the name of an actual, existing company on its “From” line, although the return e-mail address, “eHarmony@minecyclic.com,” referenced a domain name privately registered by Trancos, not one belonging to eHarmony.

Slip Op. at 5.

This, however, was before the California Supreme Court’s decision in Kleffman v. Vonage Holdings Corp. 49 Cal.4th 334 (2010), where the court responded to the 9th Circuit certified question to

find that a single e-mail with an accurate and traceable domain name neither contains nor is accompanied by “misrepresented ․ header information” within the meaning of section 17529.5(a)(2) merely because its domain name is, according to Kleffman, “random,” “varied,” “garbled,” and “nonsensical” when viewed in conjunction with domain names used in other e-mail.

Id. at 346-47.

The Court of Appeal, however, was quick to distinguish Kleffman, explaining

unlike Kleffman, this case did not involve the use of domain names both parties agreed were fully traceable to Trancos.  Here, the trial court decided the fact the senders’ domain names in seven of the e-mails did not represent a real company and could not be readily traced back to Trancos, the owner of the domain names and true sender of the e-mails, constituted falsification or misrepresentation for purposes of the statute.

(Slip Op. at 11.) (emphasis in original).   Although Balsam clearly was able to ultimately identify Trancos.

The court added

We read Kleffman commonsensically in light of Gordon to mean that a domain name is “traceable” to the sender if the recipient of an e-mail could ascertain the sender’s identity and physical address through the use of a publicly available database such as WHOIS. . . .

Because Trancos hides its identity behind an impenetrable shield of made-up names, an aggrieved recipient cannot look up public information about Trancos’s business, cannot find its Web site, cannot call and speak to a Trancos employee, cannot write to Brian Nelson, cannot report Trancos to the Better Business Bureau or the Attorney General, and cannot warn others about Trancos by writing a letter to a newspaper or posting a complaint on the Internet.  Using a privately registered domain name leaves it entirely up to Trancos whether it will or will not respond to or provide redress to persons (other than determined litigants like Balsam) who are harmed, annoyed, or offended by its communications. Trancos does not explain why its business is so sensitive and so different from all other businesses that it must be free to hide its identity from the millions of individuals to whom it directed its commercial solicitations.

(Slip Op. at 14.)

The court refused to follow Asis Internet Services v. Member Source Media, LLC (N.D.Cal., Apr. 20, 2010, No. C-08-1321 EMC) 2010 WL 1610066 which rejected a similar claim finding it not be material under Gordon v. Virtumundo, Inc., 575 F.3d 1040 (9th Cir. 2009).  Instead, the court held

that header information in a commercial e-mail is falsified or misrepresented for purposes of section 17529.5(a)(2) when it uses a sender domain name that neither identifies the actual sender on its face nor is readily traceable to the sender using a publicly available online database such as WHOIS.

Slip Op at 17-18.

The  court also rejected arguments that CAN-SPAM’s preemption language limits state statutes to only those requiring proof consistent with common law fraud (i.e., materiality and reliance) and Balsam’s contention that he was a consumer under the Consumers Legal Remedies Act.

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