Silverstein v Keynetics Inc., 192 F. Supp. 3d 1045 (N.D. Cal. 2016)
Court: United States District Court for the Northern District of California. Judge: Magistrate Judge Donna M. Ryu. Date: 27 June 2016. Case number: 16-cv-00684-DMR.
What the case decided
A claim under California’s commercial email legislation was pre-empted by the federal CAN-SPAM Act because the alleged defects in the emails did not amount to material falsity or deception. The emails came through the LinkedIn domain they identified, and the allegations about fictitious sender names and unauthorised use of that domain were insufficient to escape federal pre-emption. The court dismissed the amended complaint but gave Silverstein permission to amend it again.
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The emails and the claim
William Silverstein belonged to the C, Linux and Networking Group on LinkedIn. He alleged that he received 86 commercial emails through his group membership between July and November 2015. They used fictitious names in the sender field and contained links to marketing websites operated by the defendants. The defendants included Keynetics, its subsidiary Click Sales, 418 Media and Lewis Howes.
Silverstein brought a proposed class action under section 17529.5 of the California Business and Professions Code. He relied on its provisions concerning use of a third party’s domain name without permission and falsified or misrepresented header information. He alleged that the defendants used LinkedIn’s domain without its permission and concealed their identities behind fictitious names. He sought statutory damages of $1,000 per email, together with costs and legal fees.
The defendants applied to dismiss the complaint. At this stage, the court treated the pleaded factual allegations as true for the purpose of testing whether they stated a legally sufficient claim. It was not deciding disputed facts after a trial.
Why federal pre-emption mattered
The CAN-SPAM Act expressly supersedes state laws specifically regulating commercial email, except to the extent that they prohibit falsity or deception in an email or its attachments. The issue was therefore not simply whether Silverstein had alleged a breach of California’s statutory wording. His claim also had to fall within the federal exception that allowed such a state-law claim to proceed.
The court applied the Ninth Circuit’s decision in Gordon v Virtumundo Inc., 575 F.3d 1040 (9th Cir. 2009). That decision distinguished materially deceptive email practices from technical inaccuracies, incomplete information and additional labelling requirements. An allegation that a header did not fully identify the advertiser did not, by itself, establish the material deception needed to avoid pre-emption.
The court’s reasoning
First, the emails accurately identified LinkedIn as their originating domain. Silverstein’s allegation that the defendants lacked permission to use that domain did not establish that they had falsely represented where the messages originated. A possible breach of LinkedIn’s terms of use was not equivalent to material deception of the recipient.
Second, the fictitious sender names did not, on the allegations before the court, impersonate particular people known to Silverstein or disguise the emails’ commercial nature. The court did not treat every invented name as automatically sufficient to bring a claim within the federal exception.
Third, the court distinguished Balsam v Trancos Inc., 203 Cal. App. 4th 1083 (2012). There, the sender had deliberately concealed its identity behind randomly chosen, untraceable domain names. Here, the emails came from the identifiable LinkedIn domain, and the complaint described links to the defendants’ websites. Silverstein did not allege in this complaint that the actual senders could not be identified.
The court also rejected the argument that having to open an email to discover its sender was itself actionable. Following Rosolowski v Guthy-Renker LLC, 230 Cal. App. 4th 1403 (2014), it considered the information available in the email’s body rather than requiring the header alone to state the sender’s official name.
Outcome and limits
The alleged header defects amounted, at most, to non-deceptive statements or omissions and demands for additional identifying information. The claims were therefore pre-empted. The court did not need to decide the defendants’ other objections, including their remaining jurisdictional arguments.
Although doubtful that further pleading would overcome pre-emption, the court could not say amendment would necessarily be futile. It allowed Silverstein 14 days to file another amended complaint. The decision did not invalidate California’s anti-spam legislation generally or establish that every use of a false sender name was permissible.
Later proceedings in the same case
On 29 December 2016, the district court dismissed the second amended complaint with prejudice. The additional allegations still did not establish material deception sufficient to avoid pre-emption. The court emphasised the commercial subject lines, the accurate originating domain and the absence of allegations that the names impersonated people known to Silverstein.
On 6 March 2018, the United States Court of Appeals for the Ninth Circuit affirmed in case number 17-15176. Its memorandum was designated unpublished and non-precedential except as provided by Ninth Circuit Rule 36-3.
Decisions: District court order, 27 June 2016; district court order, 29 December 2016; Ninth Circuit memorandum, 6 March 2018.
