Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—EDNY: Email Sender May Be Liable For Misleading Subject Line, (Mar 5, 2013)

By Jody Coultas, J.D.

An email recipient stated a California Unfair Competition Law (UCL) claim on behalf of himself and other recipients against American Home Shield Corporation (AHSC), according to the federal district court in Brooklyn (Bank v. American Home Shield Corp., March 4, 2013, Block, F.).

After being sent an allegedly misleading email from AHSC, the attorney filed the UCL claim against the company on behalf of himself and at least ten thousand other recipients. The subject line of the email at issue was “Roof Repair Made Easy” and included two hyperlinks, one tagged “FIND A LOCAL ROOFER,” the other “GET MORE INFO.” Both links took the recipient to a website containing an application for an AHSC home warranty, described as a service contract covering the repair or replacement of many of the most frequently occurring breakdowns of system components and appliances

The UCL prohibits advertising in a commercial e-mail advertisement either sent from California or sent to a California electronic mail address, if the e-mail advertisement has a subject line that a person knows would be likely to mislead a reasonable recipient about a material fact regarding the contents or subject matter of the message.

The company argued it was a Tennessee-based corporation, while the email was sent from California and the email itself purported to have been sent by an entity based in California. The UCL, however, is not limited to entities that actually send or initiate the email, but applies to any entity that advertises in those emails. It was plausible that AHSC caused the emails to be sent, according to the court.

A reasonable recipient may have been misled by the email, according to the court. AHSC argued that the subject line was not misleading because the home warranty application was accessible only by clicking on a hyperlink to a separate website and the application was not part of the contents or subject matter of the message. However, the UCL requires consideration of the reaction of a reasonable recipient. The subject line implied that the email would provide information about roof repairs, but the links led to information about home warranties.

The issue of the recipient acting as both the class representative and class counsel was moot as the recipient had not moved to serve as class counsel, according to the court. Federal Rule of Civil Procedure 23(d)(1)(D) authorizes district courts to require that class action pleadings be amended to eliminate allegations about representation of absent persons. AHSC moved to strike the class allegations on the ground that Bank cannot simultaneously serve as class representative and class counsel. Courts have held that a motion to strike class allegations may be addressed prior to the certification of the class if the inquiry would not mirror the class certification inquiry and if resolution of the motion is clear. Here, the issue of the recipient serving as class counsel was not independent of the class certification inquiry and could not be applied prior to that stage of the litigation.

The case is No. 10-CV-4014.

Attorneys: Todd C. Bank, pro se. Kevin J. Harrington (Harrington, Ocko & Monk, LLP) for American Home Shield Corporation.

Companies: American Home Shield Corporation

Cases: ConsumerProtection NewYorkNews