Antitrust Law Daily Wrap Up, ADVERTISING—DSD: CAN-SPAM Completely Preempted State Law Spam Email Claims , (Jan 28, 2013)

By Jody Coultas, J.D.

Gage E. Services, an Internet service provider, failed to state a South Dakota Deceptive Trade Practices and Consumer Protection Law (DTPA) claim against AngelVision Technologies, Inc. because the claim was completely preempted by federal law, according to the federal district court in Sioux Falls, South Dakota (Gage E. Services, LLC v. AngelVision Technologies, Inc., January 24, 2013, Schreier, K.).

Gage Services alleged that AngelVision sent or caused to be sent unsolicited commercial email advertisements to South Dakota email addresses owned by Gage Services in violation of the DTPA. AngelVision argued that the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN–SPAM) completely preempted the DTPA claim and argued that Gage Services failed to state a claim. Gage Services moved for remand.

A person who initiates the transmission of a commercial email that was materially false or misleading violates CAN-SPAM. The express preemption clause contained in the statute provides that any state law that expressly regulates the use of electronic mail to send commercial messages or rule prohibiting falsity or deception in an email is preempted. State laws that are not specific to email or that relate to acts of fraud or computer crime are not preempted. In order to have standing under CAN-SPAM, a party must show that they have a private right of action under the statute as an Internet access service provider.

CAN–SPAM completely preempted the DTPA claim, according to the court. Federal preemption applies to issues dealing with unsolicited email marketing and the application of CAN–SPAM. A state law is completely preempted when a federal statute makes a particular area of law necessarily federal. Courts must look at whether it was the intent of Congress to make the federal statute the exclusive cause of action for the claim asserted. Based on a review of the language of the statute, the court concluded that Congress intended CAN–SPAM to completely preempt the types of claims at issue. The plain language of the statute also points to the need for uniformity over spam emails.

Gage Services was granted leave to amend to assert a CAN–SPAM claim and to assert its claim as an Internet access services provider, according to the court. A factor in considering preemption is whether the plaintiff has a federal private right of action to pursue in lieu of the state claim and whether the federal act sets form procedures or remedies governing the claim. Gage Services had a private right of action under CAN–SPAM as a provider of Internet access services. Justice required granting Gage Services leave to plead its status as an Internet access service provider. The court declined to make a determination on whether an amendment would be futile.

The case is No. 12-4115-KES.

Attorneys: Patrick J. Glover (Meierhenry Sargent, LLP) for Gage E. Services, LLC. Alex M. Hagen (Cadwell, Sanford, Deibert & Garry, LLP) for AngelVision Technologies, Inc.

Companies: Gage E. Services, LLC; AngelVision Technologies, Inc.

Cases: Advertising StateUnfairTradePractices SouthDakotaNews