Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-05125/USCOURTS-cand-4_05-cv-05125-4/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

RICHIE PHILLIPS dba R&D COMPUTERS,

Plaintiffs,

 v.

WORLDWIDE INTERNET SOLUTIONS,

INC., et al., 

Defendants.

_______________________________________/

No. C 05-5125

 

ORDER

[Docket No. 33]

This Court granted Defendant Worldwide Internet Solutions, Inc.’s Motion to Dismiss for lack

of personal jurisdiction on June 20, 2006. Defendant then filed a Motion for Attorney’s Fees, which was

referred to Magistrate Judge Zimmerman for a Report and Recommendation (R&R). The matter is now

before the Court on the R&R.

Defendant sought attorney’s fees pursuant to the Controlling the Assault of Non-Solicited

Pornography and Marketing Act of 2003 (CAN-SPAM Act), 15 U.S.C. § 7706(g)(4). This section of

the statute provides that, in an action brought under the statute, “the court may, in its discretion, require

an undertaking for the payment of the costs of such action, and assess reasonable costs, including

reasonable attorneys’ fees, against any party.” Although the parties disagreed over what standard should

be applied in determining whether a prevailing defendant should be awarded attorney’s fees, Magistrate

Judge Zimmerman found it unnecessary to decide, because he found that even under the standard more

favorable to Defendant, the Motion for Attorney’s Fees should be denied. This standard was articulated

in Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), in which the Supreme Court adopted an “evenhanded

approach,” whereby the same standard is applied to prevailing plaintiffs as to prevailing defendants. 

Case 4:05-cv-05125-SBA Document 37 Filed 01/22/07 Page 1 of 4
United States District Court

For the Northern District of California

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Courts applying this approach may consider factors such as “frivolousness, motivation, objective

unreasonableness (both in the factual and in the legal components of the case) and the need in particular

circumstances to advance considerations of compensation and deterrence.” Id. at 535 n.19 (quoting Lieb

v. Topstone Industries, Inc., 788 F.2d 151, 156 (3d Cir. 1986)). The Supreme Court emphasized that

the main consideration should be the purposes of the statute at issue. Id. 

Applying the Fogarty “evenhanded approach,” Magistrate Judge Zimmerman noted that the

merits of Plaintiff’s claims had not been determined, and at there was no evidence that the suit was

frivolous or objectively unreasonable. R&R at 7. Magistrate Judge Zimmerman further noted that,

although there is some indication that members of Congress were concerned about abuse of private

actions under the statute, there is no evidence that Plaintiff’s claims were “ill-motivated or anticompetitive.” Id. at 8. Finally, Magistrate Judge Zimmerman stated that allowing an award of

attorney’s fees might serve as a disincentive to litigating violations of the CAN-SPAM Act, which

would stunt the development of this new area of law. Concluding that this is not what Congress

intended, Magistrate Judge Zimmerman recommended that Defendant’s Motion for Attorney’s fees be

denied. 

 Defendant filed objections to the Report and Recommendation. First, Defendant argues that

Magistrate Judge Zimmerman “should have determined that the evenhanded standard was clearly

applicable to CAN-SPAM attorney’s fees awards.” Objections at 1. According to Defendant,

Magistrate Judge Zimmerman’s declination to decide between the Fogerty evenhanded approach and

the standard articulated in Christianburg Garment v. E.E.O.C, 434 U.S. 412 (1978), was clearly

erroneous. Although Magistrate Judge Zimmerman did not directly decide which standard was correct,

he applied the standard which Defendant insists is correct. Thus, any error was entirely harmless, and

the Court rejects Defendant’s argument. 

Next, Defendant argues that Magistrate Judge Zimmerman incorrectly applied the evenhanded

standard by failing to address the purposes of the CAN-SPAM Act. Instead, Defendant asserts, he

considered only the frivolousness or objective unreasonableness of Plaintiff’s case (the Lieb factors).

Objections at 5-6. Defendant concedes that Magistrate Judge Zimmerman was permitted to consider

the Lieb factors under Fogerty. However, according to Defendant, the CAN-SPAM Act is intended “to

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recognize the rights of ‘legitimate business that wish to use commercial e-mail as another channel for

marketing products or services,’ balancing those rights, against those who mean to defraud or mislead

consumers.” Id. at 6 (quoting S. Rep. 108-102 at 2349, 2004 U.S.C.C.A.N. 2348). Further, Defendant

argues that the statute itself evinces an intent to protect the rights of defendants, by allowing courts to

require “an undertaking for the payment of the costs” of an action under the Act and /or award attorney’s

fees against “any party.”

However, Defendant selectively quotes from the legislative history, which earlier states that the

purposes of the Act are to:

(i) prohibit senders of electronic mail (e-mail) for primarily commercial

advertisement or promotional purposes from deceiving intended recipients or Internet

service providers as to the source or subject matter of their e-mail messages; (ii)

require such e-mail senders to give recipients an opportunity to decline to receive

future commercial e-mail from them and to honor such requests; (iii) require senders

of unsolicited commercial e-mail (UCE) to also include a valid physical address in

the e-mail message and a clear notice that the message is an advertisement or

solicitation; and (iv) prohibit businesses from knowingly promoting, or permitting

the promotion of, their trade or business through e-mail transmitted with false or

misleading sender or routing information.

S. Rep. 108-102 at 2348.

The Senate Report also stated that the Act was intended to protect the convenience and efficiency of email, and to prevent time and monetary losses to individuals and internet service providers. Id. at 6-7;

see also 15 U.S.C. § 7701(a)(2). This is presumably the reason that internet service providers were

given a private right of action under the Act, as noted by Magistrate Judge Zimmerman. See R&R at

2-3. He reasoned that awarding attorney’s fees in suits such as this one, where there is no evidence that

Plaintiff had bad intentions or that the suit was frivolous, would disincentivize the bringing of actions

under the private enforcement scheme. 

Thus, Magistrate Judge Zimmerman did consider the purposes of the statute, as required under

Fogerty, and he reasonably concluded that an award of attorney’s fees in this particular case would not

be consistent with the purpose of the CAN-SPAM Act. This Court is not persuaded by Defendant’s

argument that Magistrate Judge Zimmerman failed to consider the purposes of the Act, or that his

analysis was erroneous. 

Finally, Defendant argues that Magistrate Judge Zimmerman erred in relying on the fact that this

case was adjudicated on the basis of jurisdiction, and stating that the merits of the case were not

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determined. Objections at 8. According to Defendant, the Court’s order resolving the jurisdictional

issue went to the substance of Plaintiff’s claims. Further, the fact that Plaintiff persisted in litigating a

suit in which personal jurisdiction was so clearly lacking against Defendant rendered the suit frivolous

and/or objectively unreasonable. Id. at 9-10. In concluding that Plaintiff’s suit was not frivolous or

unreasonable, Magistrate Judge Zimmerman took into account this Court’s statement that Plaintiff was

“understandably mistaken” in his argument regarding personal jurisdiction, and the fact that this Court

allowed Plaintiff to amend his complaint to allege the proper Defendants. R&R at 7. In arguing that

this was erroneous, Defendant recites the reasons stated in the Court’s Order granting Defendant’s

Motion to Dismiss – but the fact that the Motion to Dismiss was granted does not translate into a finding

that the suit was frivolous or objectively unreasonable. The Court’s comments were directed at

Plaintiff’s efforts to establish personal jurisdiction over Defendant, not to the substance of his claims

under the Act. The fact that Plaintiff “continued to litigate” is not dispositive: all that Plaintiff did was

respond to Defendant’s Motion to Dismiss; no other action was taken in the litigation. Accordingly, this

Court rejects Defendant’s arguments and holds that Magistrate Judge Zimmerman’s analysis was

reasonable.

Having considered the report, and the recommendations therein, and for good cause appearing,

IT IS HEREBY ORDERED THAT Magistrate Judge Zimmerman's Report and Recommendation

[Docket No. 33] is ADOPTED IN ITS ENTIRETY. Defendant’s Motion for Attorney’s Fees is

DENIED.

IT IS FURTHER ORDERED THAT the Clerk shall close the file and terminate any pending

matters.

IT IS SO ORDERED.

Dated: 1/18/07 

SAUNDRA BROWN ARMSTRONG

United States District Judge

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