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26 ORDER – 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

JAMES S. GORDON, Jr., a married individual,

d/b/a ‘GORDONWORKS.COM’; OMNI

INNOVATIONS, LLC., a Washington limited

liability company,

 Plaintiffs,

v.

VIRTUMUNDO, INC., a Delaware Corporation,

d/b/a ADNOWLEDGEMAIL.COM;

ADKNOWLEDGE, INC., a Delaware

Corporation, d/b/a

ADKNOWLEDGEMAIL.COM; SCOTT LYNN,

an individual; and JOHN DOES, 1-X, 

Defendants. 

CASE NO. 06-0204-JCC

ORDER

This matter comes before the Court on Defendants’ Motion to Dismiss (Dkt. No. 30) for failure

to state a valid claim under Federal Rule of Civil Procedure 12(b)(6) and failure to properly plead under

Federal Rules of Civil Procedure 8(a) and 9(b), Plaintiffs’ Response (Dkt. No. 32), and Defendants’

Reply (Dkt. No. 34). This Court has reviewed the materials submitted by the parties, as well as the

complete record, and determined that oral argument is not necessary. For the following reasons,

Defendants’ motion is hereby DENIED IN PART, and GRANTED IN PART, and Plaintiffs are granted

Case 2:06-cv-00204-JCC Document 51 Filed 12/08/2006 Page 1 of 10

Gordon v. Virtumundo Inc et al Doc. 51

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1

 Unless otherwise indicated, references to “Plaintiffs” include both Gordon and Omni. 

2

 Unless otherwise indicated, references to “Defendants” include Adknowledge, Virtumundo, and

Lynn. 

ORDER – 2

leave to amend their Complaint to cure identified deficiencies. 

I. BACKGROUND

Plaintiffs James S. Gordon (“Gordon”) and Omni Innovations, LLC (“Omni”) have brought this

action for alleged violations of the Federal CAN-SPAM Act of 2003, 15 U.S.C. §§ 7701–7711; the

Washington Commercial Electronic Mail Act (“CEMA”), WASH. REV. CODE §§ 19.190.010–.110; the

Washington “Prize Statute,” WASH. REV. CODE §§ 19.170.010–.900; and the Washington Consumer

Protection Act (“CPA”), WASH. REV. CODE §§ 19.86.010–.920. Gordon is a Washington resident and

registrant of the internet domain gordonworks.com (“Gordonworks”). Gordonworks is an interactive

computer service that, among other functions, provides e-mail accounts to individuals. (Am. Compl.

(Dkt. No. 15) ¶ 3.4.) The internet domain server on which the Gordonworks domain resides is owned by

Omni.1

 

Defendants Virtumundo, Inc. (“Virtumundo”) and Adknowledge, Inc. (“Adknowledge”) are nonWashington resident businesses that provide online marketing services to third-party clients. Virtumundo

is a Delaware corporation with its principal place of business in Kansas. Adknowledge is also a Delaware

corporation with its principal place of business in Missouri. Virtumundo and Adknowledge market

products for their clients by transmitting e-mails to interested consumers. Their services are permissionbased, meaning that consumers must voluntarily provide their contact information to the companies and

must also specify the subject matter of the advertisements that they are interested in receiving. Defendant

Scott Lynn (“Lynn”) is a Missouri citizen and serves as Chief Executive Officer of Adknowledge. He is

also the sole shareholder of both companies.2

Plaintiff Gordon alleges that between August 21, 2003 and February 15, 2006, he received

misleading, unsolicited e-mail advertisements from Defendants that were transmitted through Omni’s

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26 ORDER – 3

domain server to his e-mail address “jim@gordonworks.com,” as well as to other individuals using

Gordonworks for domain hosting. Gordon alleges that he has sent numerous direct e-mail requests to

various Virtumundo e-mail addresses to cease transmission of all e-mails, but that the e-mails nevertheless

persisted, even after the filing of the present action. (Am. Compl.)

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), this action cannot be dismissed for failure to

state a claim unless it appears beyond doubt that Plaintiffs can prove no set of facts in support of their

claims that would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45–46 (1957). All factual

allegations set forth in the Complaint are taken as true and construed in the light most favorable to the

Plaintiffs. Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1993). 

As a general rule, courts may not consider materials beyond the pleadings in a ruling on a 12(b)(6)

motion. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). Courts may, however, consider

documents referenced extensively in the complaint, documents that form the basis of the claim, and

matters of judicial notice when determining if a plaintiff has stated a claim upon which relief may be

granted. United States v. Ritchie, 342 F.3d 903, 908–09 (9th Cir. 2003). 

III. ANALYSIS

Plaintiffs allege that they were injured by e-mails sent by Defendants. These e-mails, they

contend, violated four separate statutes: (1) the federal CAN-SPAM Act, (2) the Washington CEMA, (3)

the Washington Prize Statute, and (4) the Washington CPA. Defendants argue that Plaintiffs have failed

to plead their CAN-SPAM and CEMA claims with particularity under Federal Rule of Civil Procedure

9(b), and, alternatively, that Plaintiffs have not met the liberal pleading requirements of Federal Rule of

Civil Procedure 8(a) on those claims. Defendants also assert that Plaintiffs have failed to allege both

causation and damages in their claims under the Prize Statute. Finally, Defendants argue that Plaintiffs

have not alleged a nexus between their damages and Defendants’ alleged violations of the CPA. 

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A. CAN-SPAM and CEMA claims 

Defendants contend that Plaintiffs’ CAN-SPAM and CEMA allegations sound in fraud and

therefore must be pled with particularity under Federal Rule of Civil Procedure 9(b). Alternatively,

Defendants contend that Plaintiffs’ CAN-SPAM and CEMA claims are so vague that they cannot

meaningfully respond. Defendants request that this Court require Plaintiffs to articulate how each

specific e-mail allegedly sent by Defendants violates CAN-SPAM and CEMA. (Defs.’ Mot. 4–7.) 

1. Failure to plead with particularity

Rule 9(b) requires that: “In all averments of fraud or mistake, the circumstances constituting fraud

or mistake shall be stated with particularity.” FED. R. CIV. P. 9(b). The Ninth Circuit Court of Appeals

has yet to address whether the heightened pleading requirements of Rule 9(b) apply to claims under

CAN-SPAM or CEMA. However, even if Plaintiffs do not specifically plead fraud, the Ninth Circuit

does require that cases “grounded in fraud” must be pled with particularity regardless of whether the

underlying substantive law is federal or state. Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1103–04 (9th

Cir. 2003). Where a complaint contains allegations of both fraudulent and non-fraudulent conduct, only

the specific “averments” of fraud must be pled with particularity. Id. at 1105. Fraud consists of (1) a

false representation, (2) in reference to a material fact, (3) made with knowledge of its falsity, (4) with the

intent to deceive, and (5) with action taken in reliance on the misrepresentation. Hart v. McLucas, 535

F.2d 516, 519 (9th Cir. 1976) (citing Pence v. United States, 316 U.S. 332, 338 (1942)).

In their claims under the CAN-SPAM Act, Plaintiffs allege that Defendants initiated the

transmission of commercial e-mail messages to e-mail addresses served by Plaintiffs’ domain name and

servers which (1) contained materially misleading subject lines, (2) did not include an unsubscribe option,

(3) did not disclose that they were advertisements, and (4) did not provide a postal address. Plaintiffs

also contend that Defendants illegally “harvested” their e-mail addresses. Finally, Plaintiffs contend that

Defendants continued to send them e-mails after Plaintiffs had asked not to receive further messages. 

(Am. Compl. ¶¶ 4.1.4–.8.) Each of these claims identifies an act prohibited by CAN-SPAM. See 15

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U.S.C. § 7704. Only one of these claims incorporates any of the elements of fraud. A “materially

misleading” e-mail subject line could be considered a false representation of a material fact. Plaintiffs,

however, do not allege that Defendants knew the subject lines were misleading, that they intended the emails to be deceptive, or that Plaintiffs took any action in reliance on Defendants’ alleged

misrepresentations. (See Am. Compl. ¶ 4.1.4.) Therefore, under Vess, none of Plaintiffs’ CAN-SPAM

claims constitute averments of fraud and Plaintiffs are not required to plead them with particularity. 

The result is slightly different under CEMA, however. Plaintiffs claim that e-mails sent by

Defendants violated CEMA because the e-mails misrepresented or obscured their point of origin and/or

the e-mails contained false or misleading subject lines. (Id. ¶¶ 4.2.1–.2.) Like Plaintiffs’ CAN-SPAM

claims, these allegations do not necessarily allege an intent to defraud, and therefore they are not subject

to the requirements of Rule 9(b). Plaintiffs, however, also charge that Defendants’ e-mails violated a

provision of CEMA, WASH. REV. CODE § 19.190.080, that prohibits “any action to induce a person to

provide personally identifying information . . . by representing oneself . . . to be another person.” (Am.

Compl. ¶ 4.2.3.) This claim does include an element of intent, as well as knowledge, and a material

misrepresentation. This claim thus potentially avers fraud within the meaning of Vess, alleging all of the

requirements of common law fraud except detrimental reliance. 

In another e-mail spam case brought by Gordon in the Eastern District of Washington, the court

ruled that CEMA was not a fraud-based cause of action, and therefore, that the particularity requirements

of Rule 9(b) did not apply. Gordon v. Impulse Marketing Group, 375 F. Supp. 2d 1040 (E.D. Wash.

2005). Defendants ask this Court to ignore Gordon and instead follow the Northern District of

California’s ruling in Asis Internet Servs. v. Optin Global, No. C 05-5124 CW, 2006 WL 1820902 (N.D.

Cal. June 30, 2006). (Defs.’ Mot. 5–6.) In that case, the plaintiff claimed, inter alia, that it was injured

by “fraudulent e-mail attacks,” and that defendants used “stolen or hijacked e-mail identities” to send

“deceptive” e-mails containing “falsified, misrepresented, or forged header information” as well as subject

lines “likely to mislead a recipient” about material facts related to its contents. The Asis court held that

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3

 This Court can consider these e-mails in deciding Defendants’ motion because they form the

basis of Plaintiffs’ Complaint. Ritchie, 342 F.3d at 908. 

ORDER – 6

although the plaintiff’s allegations did not meet all of the elements of common law fraud, the plaintiff still

had to plead with particularity all claims that specifically alleged that the content of defendants’ e-mails

were fraudulent. Asis Internet Servs., 2006 WL 1820902 at *4. 

Although Plaintiffs do not specifically allege “fraud” in any of their CEMA claims, by arguing that

Defendants violated Washington Revised Code section 19.190.080, Plaintiffs imply that Defendants

intentionally designed their e-mails to deceive Plaintiffs into providing personal information. Under Asis,

this amounts to an allegation that the contents of Defendants’ e-mails were fraudulent. Vess therefore

requires that Plaintiffs plead this averment of fraud with particularity. Specifically, Plaintiffs must identify

which e-mails violate section 19.190.080 and how they run afoul of the provision. Plaintiffs’ claim under

section 19.190.080 is therefore dismissed pursuant to Rule 9(b), and Plaintiffs are granted leave to amend

to cure the identified deficiencies. 

2. Failure to state a claim 

Defendants contend, in the alternative, that Plaintiffs’ CAN-SPAM and CEMA claims fail to meet

the liberal pleading requirements of Federal Rule of Civil Procedure 8(a). Specifically, Defendants argue

that Plaintiffs’ Complaint does not afford them a fair opportunity to understand the allegations against

them. (Defs.’ Mot. 10.) Rule 8(a) requires “a short and plain statement of the claims that will give the

defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Conley, 355

U.S. at 47. Although Plaintiffs’ Complaint generally tracks the statutory language of CAN-SPAM and

CEMA, these statutes are specific to commercial e-mails and Plaintiffs have specified the provisions on

which their claims are based. In addition, Plaintiffs have provided Defendants with copies of the e-mails

along with explanations of their allegedly illegal contents.3

 (See Pls.’ Am. Initial Disclosures (Dkt. No.

28).) Defendants therefore have had fair notice of the basic events and circumstances giving rise to

Plaintiffs’ claims. 

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4

 Plaintiffs’ Complaint paragraph “4.3.2” is actually two different sets of identically labeled

claims. In order to avoid confusion, the Court has added the numbers [1] and [2] to distinguish the two

different sets of “4.3.2” claims. 

5

 Claim (d)[1] in paragraph 4.3.2 of the Complaint corresponds to section 19.170.030(5), which

concerns promotions involving sales presentations. Claim (e)[1] corresponds to section 19.170.030(6),

which applies to promotions where the offeree must give some consideration before a prize is awarded. 

ORDER – 7

B. Prize Statute claims

Defendants argue that Plaintiffs fail to state a cause of action under the Prize Statute because they

do not allege that they were damaged by Defendants’ promotional offers. Defendants contend that

Plaintiffs have no standing to bring a claim under the Prize Statute unless they actually pursued an offered

prize and were damaged by Defendants’ failure to comply with the statute’s disclosure requirements. 

(Defs.’ Mot. 12.) Plaintiffs concede that they “inadvertently omitted the recital of damages” in their

cause of action under the Prize Statute and request leave to file an amended complaint. They deny,

however, that a claimant must pursue an offered prize before he can claim that he has been damaged

under the statute. (Pls.’ Resp. 19.) 

Plaintiffs’ numerous claims under the Prize Statute relate to disclosure requirements for

promotional offers (WASH. REV. CODE § 19.170.030), as well as requirements for the award of prizes

(WASH. REV. CODE § 19.170.040). Under Washington Revised Code section 19.170.030, Plaintiffs

contend that Defendants’ e-mails contained promotions for prizes which failed to identify the name and

address of the promoter and the sponsor of the promotion. (Am. Compl. ¶ 4.3.2(a)[1].4

) They also

claim that the e-mails failed to state the verifiable retail value and odds of winning each prize in the

manner required by the statute. (Id. ¶¶ 4.3.2(b)[1]–(c)[1].) Each of these claims is valid under the

statute and provides adequate notice to Defendants of their nature. See WASH. REV. CODE §

19.170.030(1), (2), (4). Plaintiffs’ claims (d)[1] and (e)[1] under section 19.170.030, however, each

describe disclosure requirements for specific types of promotional offers. Plaintiffs fail to allege that

Defendants’ e-mails contained promotions of the type to which these disclosure requirements apply.5

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(See Am. Compl. ¶¶ 4.3.2(d)[1]–(e)[1].) Plaintiffs must show how the relevant provisions of the Prize

Statute apply to Defendants’ e-mails in order for these two claims to be valid. See WASH. REV. CODE §

19.170.030(5)–(6). Plaintiffs’ claims (d)[1] and (e)[1] in paragraph 4.3.2 are therefore dismissed

pursuant to Rule 12(b)(6) and Plaintiffs are granted leave to amend to cure the identified deficiencies. 

Plaintiffs make six claims under Washington Revised Code section 19.170.040. In claim (e)[2],

Plaintiffs charge that Defendants’ e-mails failed to contain a clear and conspicuous statement of a gift

recipient’s rights regarding a rain check on their prize in the manner required by the Prize Statute. (Am.

Compl. ¶ 4.3.2(e)[2].) This claim accurately states the statutory requirement and provides Defendants

with adequate notice of the charge. See WASH. REV. CODE § 19.170.040(7). Plaintiffs’ five other claims

under this section of the statute all concern requirements for prizes that are not immediately available or

not received as advertised. Because Plaintiffs do not allege that they attempted to collect any of the

prizes purportedly offered by Defendants, they cannot claim that Defendants’ e-mails violated any of

these rain check provisions of the Prize Statute. (See Am. Compl. ¶¶ 4.3.2(a)[2], (b)[2], (c)[2], (d)[2],

(f)[2].) Plaintiffs’ claims 4.3.2(a)[2], (b)[2], (c)[2], (d)[2], and (f)[2] are therefore dismissed pursuant to

Rule 12(b)(6) and Plaintiffs are granted leave to amend to cure the identified deficiencies. 

Finally, because Plaintiffs fail to allege damages in all of their Prize Statute claims, all of these

claims are dismissed. Plaintiffs are granted leave to cure this deficiency as well. Where the Court has

dismissed a claim for multiple reasons, all deficiencies must be corrected for the claim to be valid as

amended. 

C. CPA claims

Plaintiffs allege that their CEMA and Prize Statute claims also constitute violations of the

Washington CPA. (Am. Compl. ¶¶ 4.2.4–.5.) In their Motion to Dismiss, Defendants argue that

Plaintiffs’ CEMA-based CPA claims are invalid because they do not allege that Plaintiffs suffered

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6

 Defendants do not challenge the validity of Plaintiffs’ claim that violations of the Prize Statute

are per se violations of the CPA. (See Am. Compl. ¶ 4.3.1; Defs.’ Mot. 9–10.) 

7

 Defendants selectively quote only the second clause of the second sentence in the above section

and claim that a violation of CEMA satisfies only the first of the Hangman Ridge elements. (Defs.’ Mot.

9.) 

ORDER – 9

damages cognizable under the CPA.6

 There are five elements to a CPA claim: (1) an unfair or deceptive

act or practice, (2) in trade or commerce, (3) that impacts the public interest, (4) which causes injury to

the party in his business or property, and (5) the injury must be causally linked to the unfair or deceptive

act. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 535–37 (Wash.

1986). Regarding claims under the CPA, CEMA states that: 

The legislature finds that the practices covered by this chapter are matters

vitally affecting the public interest for the purpose of applying the consumer

protection act, chapter 19.86 RCW. A violation of this chapter is not

reasonable in relation to the development and preservation of business, and is

an unfair or deceptive act in trade or commerce and an unfair method of

competition for the purpose of applying the consumer protection act, chapter

19.86. 

WASH. REV. CODE § 19.190.100. The plain text of CEMA thus clearly shows that the Washington

legislature intended that a violation of CEMA would satisfy the first three Hangman Ridge elements.7

Therefore, having already made out a claim under CEMA, Plaintiffs need only allege the last two

Hangman Ridge elements to complete their CPA claims. 

Plaintiffs have alleged causation and damages to the extent necessary to defeat Defendants’

12(b)(6) motion on Plaintiffs’ CPA claims. Plaintiffs’ Complaint states simply that they “have been

damaged as a result of Defendants’ [CEMA] violations . . . in an amount to be proved at trial.” (Am.

Compl. ¶ 4.2.5.) In their Response to Defendants’ Motion to Dismiss, however, Plaintiffs clarify that

Defendants’ allegedly large volume of illegal e-mails cost them time away from work, bandwidth, and

“other costs associated with ISP time.” (Pls.’ Resp. 17.) This statement is adequate for this Court to

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 All of Plaintiffs’ Prize Statute-based CPA claims are invalid to the extent that their underlying

Prize Statute claims are defective. 

ORDER – 10

infer an allegation of injury to business or property under the fourth Hangman Ridge element and

causation under the fifth element. Plaintiffs therefore have stated valid CPA claims as to all of their

properly pled CEMA claims.8

 

IV. CONCLUSION

For the foregoing reasons, this Court hereby ORDERS that: 

(1) Defendants’ motion to dismiss Plaintiffs’ CAN-SPAM Act claims is DENIED; 

(2) Defendants’ motion to dismiss Plaintiffs’ CEMA claims is GRANTED with respect to

Plaintiffs’ claim under Washington Revised Code section 19.190.080 and DENIED in all other respects; 

(3) Defendants’ motion to dismiss Plaintiffs’ Prize Statute claims is GRANTED with respect

to Plaintiffs’ general failure to allege damages on all Prize Statute claims; and additionally, for the reasons

set forth supra section III.B, GRANTED with respect to Plaintiffs’ deficient claims 4.3.2(d)[1] and (e)[1]

under Washington Revised Code section 19.170.030, and Plaintiffs’ deficient claims 4.3.2(a)[2], (b)[2],

(c)[2], (d)[2], and (f)[2] under Washington Revised Code section 19.170.040; 

(4) Defendants’ motion to dismiss Plaintiffs’ CPA claims is GRANTED to the extent that

Plaintiffs’ claims under Washington Revised Code section 19.190.080 and the Prize Statute are defective

and is DENIED in all other respects. 

Plaintiffs are GRANTED leave to amend their Complaint as to all invalid dismissed claims. 

 SO ORDERED this 8th day of December, 2006.

A

John C. Coughenour

United States District Judge

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