Antitrust Law Daily Wrap Up, ADVERTISING—Cal. App.: Consumers fail to state claims of misleading email advertising, (Oct 30, 2014)

By Greg Hammond, J.D.

People Media, Inc. and Guthy-Renker LLC, in separate actions, successfully evaded consumers’ claims that they the California unsolicited commercial email advertising law by sending email advertisements that identified the sender by various fictitious names or that promised a “free gift.” The California Court of Appeals in Los Angeles affirmed the lower court’s dismissal, finding that the plaintiffs failed to state a cause of action under the statute (Rosolowski v. People Media, Inc., October 29, 2014, Klein, J.) (Rosolowski v. Guthy-Renker LLC, October 29, 2014, Klein, J.).

Background. Plaintiff and Appellant Greg Rosolowski and various other consumers filed separate suits against People Media, Inc. and Guthy-Renker LLC, alleging that the companies sent unsolicited commercial email advertisements that listed several unregistered and fictitious names in the “from” line, in violation of section 17529.5(a)(2). Such names included: “Mature Single,” “Mature Singles,” “Mature Singles Dating,” “Big Beautiful Women,” “Proactiv Special Offer,” “Wen Hair Care,” “Proactiv Special Bonus Deal,” “Wen Healthy Hair,” “Wen by Chaz Dean,” “Proactiv Bonus Deal,” “Proactiv Bonus Gift,” and “Proactiv: Special Offer.” The consumers complained that the domains were not traceable to the defendants, and a “WHOIS search” would not identify People Media or Guthy-Renker as the registrants of the domains.

In addition, the consumers alleged that Guthy-Renker violated section 17529.5(a)(3) by asserting in the subject lines that recipients were entitled to a free or complimentary gift, without mentioning the gift was contingent upon a purchase. The trial court dismissed both complaints, and the consumers appealed.

Fictitious names. On appeal, both People Media and Guthy-Renker argued that the plaintiffs’ section 17529.5(a)(2) claims should be dismissed, because they were preempted by the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the CAN-SPAM Act). The court never reached this argument, however, finding that the plaintiffs failed to state a cause of action under California’s Business and Professions Code.

Section 17529.5(a)(2) prohibits email advertisements that contain or are accompanied by falsified, misrepresented, or forged header information. The court reasoned that, although the identity of the senders in the defendants’ emails could not be discovered though a WHOIS search, the bodies of the emails were sufficient to enable the recipient to identify the sender. Specifically, the emails provided a hyperlink to the companies’ websites, an opt-out notice, and the companies’ street address. The plaintiffs could not plausibly allege that the defendants attempted to conceal their identity, because the clear purpose of the emails was to increase traffic to the defendants’ websites, the court noted. Consequently, the court held that: “a header line does not misrepresent the identity of the sender merely because it does not identify the official name of the entity which sent the email, or merely because it does not identify an entity whose domain name is traceable via a database such as WHOIS, provided the sender’s identity is readily ascertainable from the body of the email.”

Free gifts. Guthy-Renker also argued that the consumers’ California statutory claim was preempted by the federal CAN-SPAM Act. However, once again, the court never reached this argument, finding that the consumers’ failed to state a sufficient claim under the Business and Professions Code.

Section 17529.5(a)(3) prohibits email advertisements that contain subject lines that a person knows would be likely to mislead a recipient, acting reasonably under the circumstances, about a material fact regarding the contents or subject matter of the message. The consumers alleged that Guthy-Renker violated this section, because various email advertisements stated that consumers were entitled to a free or complimentary gift or shipping without mentioning the gift was contingent upon a purchase. The court determined, however, that the body of the emails made clear that the free shipping or free gifts were contingent upon a purchase, and that a reasonable sender would therefore not have reason to believe that commercial advertisements like these were likely to deceive a recipient, acting reasonably under the circumstances, about a material fact regarding the contents or subject matter of the message.

The case number is B250482 and 250951.

Attorneys: Morse Mehrban for Plaintiffs and Appellants. P. Craig Cardon and Jay Ramsey (Sheppard, Mullin, Richter & Hampton LLP) for People Media, Inc. Harry A. Zinn, Stephanie M. Saito (Young, Zinn & Bate LLP), and John T.A. Rosenthal (Harrington, Ocko & Monk, LLP) for Guthy-Renker LLC.

Companies: People Media, Inc.; Guthy-Renker LLC

Cases: Advertising CaliforniaNews