Designer Skin LLC v. S & L Vitamins, Inc., et al.
Kenneth Aitken v. Communications Workers of America
496 F.Supp.2d 653 (E.D. Va., July 12, 2007)
Court denied motion to dismiss complaint charging the defendant Union and two of its organizers with violating the CAN-SPAM Act by sending email solicitations promoting union membership to Verizon employees which purported to come from Verizon managers who did not authorize their transmission. The Virginia District Court held that it could exercise personal jurisdiction over the non-resident Union organizers because both the corporate servers used to transmit these emails, as well as some of the employees who received them, were located in Virginia.
The Court further held that plaintiff Verizon had stated valid CAN-SPAM claims against the defendants. In reaching this result, the Court rejected defendants’ contentions that their solicitations constituted non-commercial speech promoting union membership exempt from the strictures of CAN-SPAM. Because the Union rendered a service – representation of employees – for a fee – union dues – the emails constituted commercial speech. As such, held the Court, the failure of these emails to accurately describe their source, or to appropriately advise that they were, in fact, advertisements, as well as their failure to provide mandated opt-out instructions, rendered their senders potentially liable for violations of CAN-SPAM.
Defendant Communications Workers of America (“CWA”) is a labor union. Defendants Harry Arnold and Pam Tronsor are organizers for the CWA who reside in Pennsylvania. On behalf of the CWA, the individual defendants set-up emails accounts at Yahoo in the name of 19 Verizon business managers. These business managers did not authorize defendants to take such actions.
Defendants used these accounts to transmit email solicitations to Verizon employees that promoted the benefits of CWA Union membership. These emails did not identify themselves as advertisements in their subject line and, as stated above, misrepresented their source. The emails also failed to provide specific opt-out instructions that advised the recipient of steps to take to avoid receipt of further communications from the sender. Nor did the emails contain the defendants’ physical addresses. The emails did, however, contain contact information for defendants Arnold and Tronsor, which could be used to obtain further information concerning the CWA.
Plaintiff Verizon Business Network Services (“Verizon”) commenced suit, charging defendants with violating the CAN-SPAM Act, 15 U.S.C. Section 7704. This Act prohibits the transmission of commercial email messages that fail to (i) identify that they are advertisements, (ii) provide a valid physical postal address of the sender, or (iii) provide the recipient of notice of the opportunity to decline to receive further commercial emails from the sender. The Act also prohibits the transmission of either commercial email messages or “transactional or relationship” emails that contain header information that is materially false or misleading as to the email’s source.
The defendants moved to dismiss on the ground that the complaint failed to state a valid claim for violation of CAN-SPAM. The non-resident organizer defendants also moved to dismiss on the ground that the Virginia District Court could not exercise personal jurisdiction over them. The Court denied both motions.
The Court held that Virginia’s long arm statute permitted the exercise of specific personal jurisdiction over the defendants as to claims arising out of the transmission of the emails at issue. These emails were sent to Verizon employees, some of whom resided in Virginia, at company ‘@verizonbusiness.com’ email addresses. These emails were transmitted to Verizon employees over Verizon servers located in Virginia. As a result, held the Court, defendants caused tortuous injury by acts committed in Virginia, and thus fell within the reach of the state’s long arm statute. Said the Court: “Virginia’s long arm statute, by its terms, authorizes personal jurisdiction over Arnold and Tronsor because they sent the allegedly tortuous email messages to Virginia computers over Virginia servers, thereby causing the Virginia computers and networks to perform functions for which they were generally designed.”
Moreover, the exercise by Virginia of personal jurisdiction over the defendants in these circumstances passed constitutional muster. By these acts, defendants purposefully availed themselves of the privileges of conducting activities in the forum. Said the Court:
Because the claims arose out of such contacts, and exercise of jurisdiction over the defendants in these circumstances was reasonable, the Court denied defendants’ motion to dismiss for want of personal jurisdiction.
The Court also denied the defendants’ motion to dismiss the CAN-SPAM act claims advanced in the complaint on the grounds that they failed to allege a viable claim against them.
Defendants argued that their emails were exempt from the strictures of CAN-SPAM because they constituted non-commercial speech that promoted membership in a union, a not-for-profit entity.
The Court rejected this argument, holding that solicitations encouraging union membership do indeed constitute “commercial speech” subject to the Act’s strictures. The Act “defines ‘commercial’ emails as those ‘the primary purpose of which is the commercial advertisement or promotion of a commercial product or service …”. 15 U.S.C. Section 7702(2)(A). According to applicable FTC regulations, only emails that qualify as ‘commercial speech’ within the meaning of the First Amendment constitute commercial speech within the meaning of CAN-SPAM.
The Court held that “whether speech is commercial depends on whether it ‘proposes a commercial transaction’ or promotes specific products or services.” Because that it precisely what the emails at issue did, the Court held they were indeed commercial speech. Said the Court:
In reaching this result, the Court rejected defendants’ argument that the emails were exempt from the Act’s requirements because they promoted the services of a not-for-profit entity. The Court also rejected defendants’ claims that because the emails did not solicit a direct transaction – i.e. join the Union now – but rather only promoted its benefits and sought contact information for further communications – they were similarly exempt.
Finding the emails in question subject to the strictures of the CAN-SPAM Act, the Court denied defendants’ motion to dismiss. Verizon had clearly stated a claim that the emails ran afoul of the Act because they: (i) contained false headers that misrepresented that they were sent by Verizon managers, (ii) failed to conspicuously display and specify the manner in which employees could opt out of receiving future emails, (iii) failed to include the physical address of their senders, and (iv) failed to contain conspicuous notices that they constituted a commercial advertisement. The Court, at this stage of the proceedings, was unwilling to hold as a matter of law that the deficiencies identified in these emails were overcome by the presence of defendants’ contact information or the fact that the recipients could easily identify the CWA as their source.