United States: Pair Of California Anti-Spam Decisions Change Legal Landscape For Commercial Emailers

Court Paves Way for Wide Array Of "From" Names And Sending Domains
Last Updated: October 31 2014
Article by Ari N. Rothman and Melissa C. McLaughlin

Court Paves Way for Wide Array of "From" Names and Sending Domains

This week yielded two tremendous wins for commercial emailers. Yesterday, the California Court of Appeal ruled in a putative class action, Rosolowski et al. v. Guthy-Renker LLC, that a commercial email header does not violate California's anti-spam statute "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 email."

This decision, and the unpublished People Media decision handed down on the same day, allows email marketers to use "from" names that are not official business names, and domain names that are not traceable using a WHOIS database, so long as the advertisers are identified in the emails.

Guthy-Renker also clarified that marketers may qualify statements made in email subject lines by including qualifying language in the email bodies without violating California's anti-spam statute. But, "falsified, misrepresented, or forged header information" and misleading subject lines remain unlawful. Therefore, these decisions have limits, and implementing them requires prudence and even some restraint.

California's Anti-Spam Statute

California Business & Professions Code Section 17529.5(a)(2) makes it unlawful "for any person or entity to advertise in a commercial e-mail advertisement either sent from California or sent to a California electronic mail address under any of the following circumstances: The e-mail advertisement contains or is accompanied by falsified, misrepresented, or forged header information." Similarly, Section 17529.5(a)(3) prohibits any "e-mail advertisement [that] has a subject line 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."

Consumers, and email marketers and the advertisers employing them, have litigated what constitutes "falsified, misrepresented, or forged header information" and misleading subject lines under Section 17529.5 for several years now. While the court decisions resulting from prior cases yielded some guidance, they also incentivized plaintiffs to file a large number of new cases across California that caused some confusion and much debate. We discuss the two leading decisions briefly below.

Kleffman and Trancos

In 2010, the California Supreme Court held in Kleffman v. Vonage Holdings Corp. that using a domain name in a single email that "does not make clear the identity of either the sender or the merchant-advertiser on whose behalf the e-mail advertisement is sent" is not prohibited by Section 17529.5(a)(2). Kleffman determined such use does not in fact make any representation, express or implied, regarding the email's source.

The California Court of Appeal decided Balsam v. Trancos, Inc. two years later. There, none of the emails at issue identified the actual sender – Trancos – in the header of the email or the body, and none of the emails had traceable domain names. Finding that Trancos intentionally concealed its identity from email recipients, the court held "that header information in a commercial e-mail is falsified or misrepresented for purposes of section 17529.5(a)(2) when it uses a sender domain name that neither identifies the actual sender on its face, nor is readily traceable to the sender using a publicly available online database such as WHOIS."

Since Trancos, plaintiffs filed numerous lawsuits arguing that the failure to disclose the actual sender or advertiser of a commercial email in the email header is an independent violation of Section 17529.5. Likewise, plaintiffs argued that using a non-registered or privately registered domain name is in itself a violation of Section 17529.5. These plaintiffs claimed that fully disclosing the advertiser or sender in the email bodies is irrelevant, and that from names that are not literally false but that do relate to the email contents – such as "Mature Single" for a dating site – independently violate the statute. Email marketers and advertisers pushed back and continue to do so because the requirements imposed by these plaintiffs are neither grounded in legal jurisprudence nor the realities of consumer marketing, unlike the Guthy-Renker and People Media decisions. These later decisions, therefore, provide the clearest and best guidance to date for email marketers and advertisers employing commercial email as a marketing channel.

Guthy-Renker and People Media: From Names and Sending Domains under Section 17529.5(a)(2)

The plaintiffs in Guthy-Renker alleged that the emails they received contained from names that "are not names of existing companies or persons, there are no such entities or persons, and no such entities or persons are registered as fictitious business names." They also contended that the senders "were not the people or entities advertising in the emails" and that the domains were not traceable to the advertiser or the sender. Rather, the emails contained from names like "Proactiv Special Offer" or "Wen Healthy Hair." The emails clearly identified Guthy-Renker: they each provided a hyperlink to Guthy-Renker's website, and provided an unsubscribe notice as well as a physical address in Palm Desert, California.

On these facts, the California Court of Appeal held that "a header line in a commercial email advertisement 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 from an online database, provided the sender's identity is readily ascertainable from the body of the email." The court held that "[p]laintiffs cannot plausibly allege that Guthy attempted to conceal its identi[t]y, as the clear purpose of emails was to drive traffic to Guthy's website."

The court in People Media made a similar finding. There, the plaintiffs alleged that the emails failed to identify the advertiser or sender and used untraceable domains. The emails advertised People Media's website and contained from lines such as "Mature Single" and "Mature Singles Dating" which, according to the court, were "entities which do not exist and which are not registered as fictitious names." Like Guthy-Renker, the court found that the from names and sending domains did not violate Section 17529.5(a)(2).

Guthy-Renker: Subject Lines under Section 17529.5(a)(3)

The plaintiffs also alleged in Guthy-Renker that the subject lines of the emails stated that the email recipients were entitled to a free gift, but only disclosed that that the gift was contingent upon a purchase in the bodies of the emails. Noting the appellate court's prior ruling in Hypertouch, Inc. v. Valueclick, Inc., the court held that "[t]he body of the emails made clear that free shipping or free gifts were contingent upon a purchase" and "a reasonable sender would not have reason to believe that commercial missives 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'" under Section 17529.5(a)(3). Unlike the court of appeal in Hypertouch which reviewed the email subject lines in isolation, the Guthy-Renker court followed the language in Section 17529.5(a)(3) and read the subject lines in conjunction with the email bodies to support its holding.

Practical Effect

The Guthy-Renker and People Media decisions provide email marketers and the companies that hire them greater flexibility to create from names that will increase visibility and deliverability without the threat of violating Section 17529.5. But, email marketers and advertisers should make the from names relevant to the emails themselves, and never use any false information in any part of any email header. Likewise, email marketers and advertisers should continue to do as much as they feasibly can to identify actual senders and advertisers in the from name, and use traceable mailing domains, because the plaintiff's bar surely will challenge these rulings either directly in these or other pending cases, or through the filing of other lawsuits. And, although Guthy-Renker held that the email bodies can qualify subject lines, subject lines must never be false or misleading, and the Federal Trade Commission and state attorneys general can still investigate or even sue companies for deceptive marketing. Consulting legal counsel to update current email marketing guidelines, terms and conditions, and advertiser and publisher agreements is recommended.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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