• by Wendy Davis  @wendyndavis, May 8, 2009

On paper, California has one of the toughest spam laws in the country. The state allows anyone -- including consumers -- to sue for spam violations, and also provides that recipients can recover $1,000 per message.

But at least two judges have recently issued rulings that defang the California law. In both instances, the judges ruled that the federal statute preempted California's law. The result was that litigants were shut out of state court.

In the most recent case, this week a Los Angeles judge dismissed a spam lawsuit brought by the Internet service provider Hypertouch against ValueClick. Hypertouch alleged that ValueClick violated California's anti-spam law by sending at least 45,000 emails with false headers and misleading subject lines. Had Hypertouch proven its case, the company could have recovered up to $45 million.

Judge Richard Adler found that Hypertouch only presented evidence linking ValueClick to 24 of the emails. More critically, he also ruled that the federal CAN-SPAM Act preempted Hypertouch's lawsuit because the Internet service provider had not alleged "fraud."

The CAN-SPAM statute says it supersedes state laws, except for laws prohibiting "falsity or deception" in messages. Adler interpreted that provision as applying only to "fraudulent" messages -- which involve more than just falsity. Fraud also requires that people relied on the messages and lost money as a result.

Adler concluded that Hypertouch had not been the victim of fraud, and consequently, threw out the case.

That decision came shortly after U.S. District Court judge Maxine Chesney in San Francisco dismissed a class-action lawsuit against Reunion.com for similar reasons. In that case, four consumers complained that Reunion.com sent them messages that appeared to have come from friends, but were actually from the site itself. Chesney found that the recipients did not allege that they lost money as a result of the emails, and therefore, couldn't proceed with a lawsuit.

If other judges follow these rulings, it will be very difficult for people to bring lawsuits under California's spam law, according to Internet law experts. "If you want to be snarky, you could say it's not actually spam until you rely on it and send the money to Nigeria," says Ethan Ackerman, a lawyer in Washington, D.C. and former legislative and technology counsel in the U.S. Senate. "If you're smart enough to hit delete, it's not spam."

Seattle-based cyberlawyer Venkat Balasubramani agreed that the decisions mean that plaintiffs in California will likely have to show "actual fraud" -- meaning that they relied on the messages and lost money as a result, to get into court. "That's a really tough hurdle for plaintiffs," he said.

Companies can still be held liable for false emails under the federal CAN-SPAM law, but individual consumers can't sue under that statute -- passed in 2003 by a Republican Congress.

But these recent cases might not be the final word on the topic. Hypertouch's lawyer did not respond to a request for comment by Online Media Daily, but told Reuters that the company expects to appeal.

In addition, at least one federal district court in California recently reached the opposite conclusion and found that an Internet service provider could sue under state spam laws without showing actual fraud. In that case, U.S. District Court judge William Alsup, in the northern district of California, ruled last month that Asis Internet Services could proceed with its spam case against Consumer Bargain Giveaways. Asis alleged that Consumer Bargain Giveaways falsified header information, but did not allege that people had lost money because they relied on such information.