Spam Arrest, LLC v. Replacements, Ltd.

SPAM ARREST, LLC, Plaintiff, v. REPLACEMENTS, LTD., et al., Defendants.

MASTER CASE NO. C12-481RAJ

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

DATED: August 29, 2013

HONORABLE RICHARD A. JONES

ORDER

I. INTRODUCTION

This matter comes before the court on a motion calendar it created on August 20 to resolve the parties' cross-motions for summary judgment. Defendants Sentient Jet, LLC and Sentient Jet Charter, LLC (collectively "Sentient Jet") moved for summary judgment against all of the claims of Plaintiff Spam Arrest, LLC. Spam Arrest filed a cross-motion for summary judgment solely as to a subset of its breach of contract claims.

On August 20, the court issued a preliminary order addressing its likely conclusions as to the motions. The court set an August 28 oral argument to give the parties the opportunity to address the preliminary order. At oral argument, Spam Arrest addressed very few of the court's conclusions from the preliminary order. It did not dispute dozens of conclusions as to the inadequacy of its evidence. It did not mention its tort claim or its statutory claims. The court has revised its preliminary order to reflect Spam Arrest's minimal argument as well as Sentient Jet's input. None of those revisions,however, change the court's ultimate conclusions. Sentient Jet is entitled to summary judgment against all of Spam Arrest's claims.

II. SUMMARY OF DECISION

Spam Arrest says that Sentient Jet owes it more than $1,000,000 because Sentient Jet sent almost 600 unsolicited emails (or "spam," as such emails are ubiquitously known)¹ promoting its jet-charter service to about 500 Spam Arrest customers. In doing so, Sentient Jet allegedly breached about 600 contracts it allegedly entered promising not to send spam to each of those Spam Arrest customers. Each contract contains a liquidated damages clause purporting to award Spam Arrest $2,000 for each piece of spam. 600 pieces of spam at $2,000 per piece is $1.2 million. But that figure accounts only for Sentient Jet's breaches of contract. Spam Arrest also claims that each piece of spam is a tortious interference with its relationship with its customers, most of whom pay a monthly fee. Spam Arrest asserts that each piece of spam is a violation of the Washington Consumer Protection Act ("CPA"). Finally, it contends that Sentient Jet violated the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030, by accessing Spam Arrest's computers without authorization.

After reviewing the parties' motions, however, the court concludes that Sentient Jet owes Spam Arrest nothing. Whereas Spam Arrest alleges that Sentient Jet breached about 600 contracts, there are open questions as to whether anyone at Sentient Jet was aware that he or she had entered even a single contract. Although the court cannot resolve those questions on summary judgment, it can determine that Spam Arrest has not offered evidence from which a jury could conclude that anyone who assented to a contract had authority to bind Sentient Jet. And even if the court were to assume that Sentient Jet entered at least one contract with Spam Arrest, Spam Arrest has not offered evidence from which a jury could conclude that Sentient Jet breached it.

Putting aside Spam Arrest's failure to raise a factual dispute as to the formation of a contract or its breach, it also has not proven any damages arising from a breach of contract. Its $2,000 liquidated damages provision is invalid, and Spam Arrest has offered no evidence that would permit a jury to conclude that Sentient Jet's alleged breach of any contract caused quantifiable damage. In particular, it cannot show that any customer left Spam Arrest as a result of email from Sentient Jet. Indeed, there is scarcely any evidence that any Spam Arrest customer has left as a result of receiving spam from anyone.

For many of the same reasons, Spam Arrest's tort claim and its statutory claims do not, as a matter of law, pass muster. Spam Arrest's tortious interference and CPA claim are not triable for the same reasons that its breach of contract claims are not. Spam Arrest's attempt to invoke the CFAA is doomed because there is no evidence that Sentient Jet has done anything that the statute prohibits.

The court will explain each of these conclusions in its later analysis. Before it does so, it explains Spam Arrest's anti-spam service and Sentient Jet's interaction with it.

III. REVIEW OF EVIDENCE

A. Spam Arrest Attempts to Require Every Person Who Emails a Customer to Enter a "Sender Agreement" Promising Not to Send That Customer Spam.

Spam Arrest sells (or in some cases gives away) an anti-spam service.² Most anti-spam services operate by filtering, i.e., by using software to scan the content of incoming email for the hallmarks of spam, then segregating suspected spam from other email.

Spam Arrest takes a different approach. Its customers give Spam Arrest access to their email accounts at third-party providers. Incoming email from a verified sender remains in a customer's inbox. Spam Arrest diverts email from unverified senders to a customer-accessible "unverified folder" on Spam Arrest's computers. An unverifiedsender must complete Spam Arrest's verification process. If she does, Spam Arrest automatically removes the email from the "unverified folder" and delivers it to its customer's inbox.³

The verification process begins with an automatically-generated "verification email" from Spam Arrest to the unverified sender. The verification email is a short message asking the sender to click on a hyperlink to "complete the verification process." Todaro Decl., Ex. 11 (Dkt. # 30-11) (p. 175 of 201). A sender who clicks the hyperlink will find herself at the "verification page" of Spam Arrest's website. A user who clicks the "Verify" button on the verification page becomes a verified sender.

According to Spam Arrest, however, clicking the "Verify" button also binds the sender to its "Sender Agreement," a two-paragraph contract at the end of the verification page, below the "Verify" button. Sentient Jet contends that no sender would have known she was entering a Sender Agreement because the verification process does not conspicuously disclose the agreement.

Prior to changes Spam Arrest made in October 2011, the verification email and verification page had no references to the Sender Agreement other than the Agreement itself. The verification email explained that "[w]hen you click the above link, you will be taken to a page with a graphic on it. Simply read the word in the graphic, type it into the form, and you're verified." Todaro Decl., Ex. 11 (Dkt. # 30-11) (p. 175 of 201).Clicking on the hyperlink would take the sender to a verification page that began with instructions to "type the verification code into the box below and click the 'verify' button to approve the delivery of the email. You will not need to do this again." Id. Just below was a CAPTCHA⁴ - in this case a graphic composed of distorted letters. The distorted letters formed a verification code, which the user entered in a box just below the graphic. Adjacent to the box was a "Verify" button.

In October 2011, Spam Arrest made two changes to the verification process. First, it modified the verification email by adding one more clause to the critical sentence, which the court emphasizes by underlining: "[w]hen you click the above link, you will be taken to a page with a graphic on it. Simply read the word in the graphic, type it into the form, accept the Sender Agreement, and you're verified." Todaro Decl., Ex. 11 (Dkt. # 30-11) (p. 176 of 201). Second, it changed the verification page such that the vertical space between the CAPTCHA graphic and the box for entry of the verification code contained the following sentence: "I accept the Sender Agreement below." Id., Ex. 13 (Dkt. # 30-13) (p. 180 of 201).

Both versions of the verification page contain a Sender Agreement below the box into which a sender inputs the verification code and the adjacent "Verify" button. The Sender Agreement, which is the same in both versions, begins with the following statement:

By clicking the "VERIFY" button above, and in consideration for Spam Arrest, LLC forwarding your e-mail (and any e-mails you may send in the future) to the intended recipient (the "Recipient"), you agree to be bound by the following Sender Agreement . . . .

Todaro Decl., Ex. 12 (Dkt. # 30-12) (p. 178 of 201). The complete Sender Agreement follows that introductory statement:

You represent and warrant to Spam Arrest and the Recipient that any e-mail you desire to send to the Recipient is not "unsolicited commercial e-mail" i.e., the e-mail does not primarily contain an advertisement or promotion of a commercial product, service or Web site; unless the Recipient expressly consented to receive the message, either in response to a clear and conspicuous request for such consent or at the Recipient's own initiative. Further, you represent and warrant that your transmission of any e-mail does not violate any local, state or federal law governing the transmission of unsolicited commercial email, including but not limited to, RCW § 19.190.020 or the CAN-SPAM Act of 2003. You understand and acknowledge that it is fair and reasonable that you agree to abide by the restrictions set forth in this agreement. You acknowledge and agree that this agreement is central to Spam Arrest's decision to forward your e-mails to the Recipient. Accordingly, if you violate this agreement, Spam Arrest and the Recipient shall be entitled to (1) temporary and/or permanent injunctive relief to restrain any further breaches or violations of this agreement; and (2) damages in the amount of two thousand dollars ($2,000.00) for each violation of this agreement. You acknowledge that such remedies are appropriate and reasonable in light of the costs and expenses Spam Arrest incurs as a result of eradicating and filtering unsolicited commercial e-mail. You acknowledge that the $

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