In the

United States Court of Appeals

For the Seventh Circuit ____________

Nos. 06-3779 & 06-4169

e360 INSIGHT, an Illinois

Limited Liability Co., and

DAVID LINHARDT,

Plaintiffs-Appellees,

v.

THE SPAMHAUS PROJECT,

a Company Limited by Guarantee

and Organized Under the Laws

of England also known as

THE SPAMHAUS PROJECT, LIMITED,

Defendant-Appellant.

____________

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 06 C 3958—Charles P. Kocoras, Judge.

____________

ARGUED JUNE 6, 2007—DECIDED AUGUST 30, 2007

____________

Before RIPPLE, KANNE and EVANS, Circuit Judges.

RIPPLE, Circuit Judge. e360 Insight, LLC, and David

Linhardt (collectively, “e360”) brought this action in the

Cook County Circuit Court, alleging various tort claims

against The Spamhaus Project (“Spamhaus”). Spamhaus

removed the case to the United States District Court for
2 Nos. 06-3779 & 06-4169

the Northern District of Illinois. Spamhaus answered the

complaint and then, one month later, in open court, moved

to withdraw its answer. The court granted that motion, as

well as a motion by Spamhaus’ counsel to withdraw.

Because Spamhaus had elected not to defend the action,

the court also entered a default, issued a preliminary

injunction and requested evidence from e360 to support a

default judgment against Spamhaus. Upon receiving e360’s

response, the court entered judgment, awarding to e360

$11,715,000 in damages, plus costs, and a permanent

injunction. Spamhaus, then represented by new counsel,

challenged the judgment in a Rule 60(b) motion to the

district court. That motion was denied. Spamhaus timely

appeals both the default judgment and the district court’s

denial of its Rule 60(b) motion. For the reasons stated in

this opinion, we affirm the entry of a default judgment, but

vacate the award of damages and injunctive relief and

remand for further proceedings consistent with this

opinion.

I

BACKGROUND

A. Facts

Spamhaus is a non-profit company limited by guarantee

and organized under the laws of the United Kingdom. It is

an internet watchdog group in the business of identifying

and blocking internet “spam,” or unsolicited bulk e-mail.

In that capacity, it maintains the “Register Of Known

Spam Operations” (“ROKSO”), a “3 strikes list” for internet

users it believes are responsible for creating and distributing spam messages. R.1, Ex. A at 4. Through the ROKSO,

Spamhaus publishes a sort of blacklist of persons or
Nos. 06-3779 & 06-4169 3

businesses that have been thrown off a minimum of three

internet service providers (“ISPs”) for violating the terms

of use of the ISP; Spamhaus classifies persons or entities

who have had at least “three strikes” as “spammers.”

Although the process is not entirely clear from the record,

it appears that ISPs can access Spamhaus’ ROKSO list

(either directly or through the use of other anti-spam

databases into which the ROKSO is integrated); if an ISP

then elects, it can employ the ROKSO as part of its own

screening process for incoming messages directed to its

customers—its “spam filter.” That is, an ISP could see that

a particular internet protocol (“IP”) address had been

marked as a spammer on Spamhaus’ ROKSO and then, as

a result, might refuse to allow a message sent from that

IP address to reach the e-mail’s intended recipient.

e360 is an internet marketing company operated by

David Linhardt out of Wheeling, Illinois. e360 maintains

that, at the time it was listed on the ROKSO, it never had

been excluded by an ISP. It also claims that it operates

in accordance with ISP terms of use and within all applicable laws. e360 uses e-mail to market products for other

businesses. The value of its service to the businesses it

represents lies in its ability to reach potential individual

customers for those businesses via e-mail.

In December 2003, Spamhaus placed e360 Insight, LLC,

and Mr. Linhardt on the ROKSO list. e360 claims that it

contacted Spamhaus to inform it that a mistake had been

made, but nevertheless it remains on the ROKSO list. e360

also claims that Spamhaus cross-lists businesses who

partner with companies and individuals on the ROKSO list

and refuses to remove these partners from the blacklist

until they terminate their relationship with the primary

spammer on the ROKSO list.
4 Nos. 06-3779 & 06-4169

B. District Court Proceedings

e360 brought this action in state court, claiming that

Spamhaus was liable in tort for losses e360 suffered as a

result of its placement on the ROKSO. Specifically, the

complaint alleged that Spamhaus’ placing e360 on the

ROKSO list amounted to tortious interference with contractual relations, tortious interference with prospective

economic advantage, defamation per se and defamation

quod. It sought compensatory and punitive damages, as

well as an injunction requiring Spamhaus both to remove

e360 from the list and to place a notice on the Spamhaus

website that e360 had been included on the ROKSO list

in error.

Spamhaus removed the case to the district court on the

basis of diversity of citizenship. Spamhaus then answered

the complaint on July 21, 2006. In that answer, it denied

many of e360’s allegations and asserted fourteen affirmative defenses. Among those defenses were lack of personal jurisdiction, insufficient process and insufficient

service of process. R.6 at 8.

On August 23, 2006, counsel for both sides appeared

before the district court at a status call. The court began

addressing the issue of diversity of citizenship when thencounsel for Spamhaus interrupted the court and the

following exchange ensued:

MR. BROWN [then-counsel for Spamhaus]: Your

Honor, if I may, before we get too far down what we

are talking about here today, I have been authorized

by my client to do precisely two things here this

morning; and, I do acknowledge that it is a bit of an

unconventional maneuver. My client wants to—

THE COURT: You represent who?
Nos. 06-3779 & 06-4169 5

MR. BROWN: The defendant—

THE COURT: Okay.

MR. BROWN: Spamhaus.

And my client wants to participate in the defense no

further.

I am not authorized to do anything more today than

to ask this Court that the answer be withdrawn; and,

then, once we hear from this Court on that, to get a

ruling on our motion to withdraw as counsel.

[the Court engages counsel for the plaintiffs.]

THE COURT: All right.

Do you know whether your client has another law

firm in hand or what their position is?

MR. BROWN: My position—or my understanding—from them is that they want to do absolutely

nothing.

So, I don’t know for certain—

THE COURT: Do they want to lose?

 I mean, that is what is on the horizon if they want to

do nothing. You have to defend the case.

MR. BROWN: They have been fully informed of the

fact that the default judgment is a real possibility. And

they are aware of that and are prepared to take that

risk.

[exchange regarding motion to withdraw as counsel]

THE COURT: Okay.

Here is what we are going to do. I am going to give

you leave to withdraw the answer; I am going to give
6 Nos. 06-3779 & 06-4169

you leave to withdraw; and, in light of the fact that

your client is aware of that—and, apparently, has sent

no one here to disagree with the request to withdraw;

and, I assume you told them it was a dead-bang

certainty that default is going to be entered without

any resistance to the lawsuit—I am going to enter a

default order today.

[court reinstates TRO entered in state court]

THE COURT: [granting the motion to withdraw as

counsel]

And I will ask you, as your, if not your final act, at

least approaching finality, to let you[r] client know

what happened this morning. And tell them it is not

just a risk that they will lose the case, but it is a deadbang certainty. And the first step has been undertaken

with the entry of a default.

But no judgment, just a default. Okay?

R.56-1 at 2-3, 6-7.

A week later, e360 filed a motion for a default judgment,

supported by an affidavit from Mr. Linhardt that stated the

amounts in which he believed his business had been

harmed by being placed on the ROKSO. On September 13,

2006, the district court entered judgment and awarded the

full amount of compensatory damages stated in Mr.

Linhardt’s affidavit, $11,715,000.00, as well as $1,917.50

in costs. It denied attorney’s fees and punitive damages.

The court also entered a permanent injunction, the details

of which we shall examine shortly.

Spamhaus filed a timely Rule 60(b) motion to vacate the

default and the default judgment. At the hearing on that

motion, new counsel for Spamhaus articulated several
Nos. 06-3779 & 06-4169 7

bases for the motion. First, Spamhaus reasserted its challenge to “the fundamental power of the Court to exercise

jurisdiction for default or other purposes over a UK-based

Internet company.” R.56-4 at 7. According to Spamhaus,

that defense could be “independently raise[d], [and] ha[d]

nothing to do with whether the attorney appeared . . . or

not. Because when they did appear, they properly asserted

these defenses.” Id. at 7. Spamhaus also advised the district

court that it had received conflicting legal advice and that

its instruction that prior counsel withdraw was based on a

misunderstanding of the applicable law. Finally, Spamhaus

raised various objections to the propriety of the specific

relief awarded. The district court gave the following

response:

I do not think there was anything unknowing or

unintentional about the decision made not to defend

this case once it got over here at some point. . . .

. . . [T]he idea that Rule 60 accommodates at least

what may have seemed at the time an intelligent

decision—and an intentional one—should be used to

reopen the consequence of the decision, knowingly

made, I am not sure that is what Rule 60 is about.

Secondly, yes, we do have to have jurisdiction over

subject matter, as well as the person or presence of

a defendant in the first instance. There is no question

about that.

 That was apparently, you say, pressed by way of an

affirmative defense—or, at least, it was suggested as an

affirmative defense, but not pressed.

. . . .

We do not undertake to take one side of a case and

look for, as meticulously as we can, for holes in the
8 Nos. 06-3779 & 06-4169

1 Spamhaus also had moved to quash a citation to discover

assets, arguing again the defense of lack of jurisdiction and

improper service. The court responded simply: “That defense

will not carry the day.” R.56-4 at 11.

conduct of the party seeking some relief because the

other side has failed to defend this case, or at least

chose to abandon the defense of the case.

. . . .

So, I think it would be unfair to the plaintiff at this

point to, if you will, pretend as if none of these things

took place before; no opportunity to defend this case;

no decision made to knowingly abandon the defense;

and, then, start over and give somebody a brand new

track.

Id. at 8-10. Although briefing was requested by Spamhaus,

the court immediately denied the motion.1

Spamhaus timely appealed both the entry of default

judgment and the denial of its Rule 60(b) motion to vacate

that judgment.

II

DISCUSSION

Spamhaus raises many challenges to the district court’s

entry of default judgment, the character of the relief

awarded and the failure of the court to grant its Rule 60(b)

motion and to reopen for factual development certain of

the issues decided in the default. Specifically, Spamhaus

challenges the district court’s authority to enter a default

judgment without affirmatively inquiring into the factual

basis for personal jurisdiction and effective service.
Nos. 06-3779 & 06-4169 9

Spamhaus also claims that it may assert lack of jurisdiction

and improper service in this court and be relieved of the

default judgment. On the question of the specific relief

awarded, Spamhaus challenges the district court’s calculation of damages based on Mr. Linhardt’s affidavit alone.

It also challenges the grant of injunctive relief and claims

that, as written, the injunction violates the First Amendment and is overbroad.

A. Validity of the Default

We review both the district court’s decision to enter a

default judgment and the denial of a motion to vacate

the judgment for an abuse of discretion. Homer v. JonesBey, 415 F.3d 748, 753 (7th Cir. 2005).

1. Personal Jurisdiction and Service

Default judgments rendered without personal jurisdiction are void and, therefore, we shall “set aside a default

judgment as a per se abuse of discretion if the district court

that entered the judgment lacked jurisdiction.” Swaim v.

Moltan Co., 73 F.3d 711, 716 (7th Cir. 1996); see also Homer,

415 F.3d at 753; Robinson Eng’g Co. Pension Plan & Trust v.

George, 223 F.3d 445, 448 (7th Cir. 2000); Bally Export Corp.

v. Balicar, Ltd., 804 F.2d 398, 400 (7th Cir. 1986).

In support of its argument that the judgment is void,

Spamhaus contends that the district court abused its

discretion in entering judgment without first conducting an

affirmative inquiry into whether it had personal jurisdiction over Spamhaus and whether service of process was

effected in compliance with applicable rules. Spamhaus

concedes that this court has not imposed an affirmative

duty on the district court to inquire into the factual bases
10 Nos. 06-3779 & 06-4169

2 Spamhaus relies on System Pipe & Supply, Inc. v. M/K Viktor

Kurnatovsky, 242 F.3d 322, 324 (5th Cir. 2001), Tuli v. Republic of

Iraq, 172 F.3d 707, 712 (9th Cir. 1999), and Dennis Garberg &

Associates, Inc. v. Pack-Tech International Corp., 115 F.3d 767, 771

(10th Cir. 1991), as well as several district court cases from

within this circuit in which personal jurisdiction was examined by the court sua sponte prior to entering a default

judgment.

3 Indeed, Spamhaus alternately asks this court to treat it as an

appearing party; as we shall examine shortly, Spamhaus urges

(continued...)

for jurisdiction or service prior to entering a default.

Instead, at oral argument, Spamhaus asked this court

to craft a special rule, applicable in cases involving a

foreign, not-for-profit, internet-based defendant. Such a

rule is justified, claims Spamhaus, by the emerging jurisprudence on internet-based entities and personal jurisdiction and by a series of other cases in which other courts

have imposed such a duty in cases involving foreign

defendants.2

The cases on which Spamhaus relies involve foreign

defendants who had not appeared in the action. See Dennis

Garberg & Assocs., Inc. v. Pack-Tech Int’l Corp., 115 F.3d 767,

772 (10th Cir. 1997) (“[A] district court must determine

whether it has jurisdiction over the defendant before

entering judgment by default against a party who has not

appeared in the case.” (emphasis added)). We need not

decide whether we would impose the same rule on district courts in this circuit if faced with that situation

because it is not the one we face here: Spamhaus removed

the case, actually appeared through counsel in federal court

and filed an answer specifically challenging personal jurisdiction.3
Nos. 06-3779 & 06-4169 11

3 (...continued)

this court to hold that a supposed failure of the plaintiff to

comply with certain notice requirements of Federal Rule of Civil

Procedure 55(b)(2), which apply only where the defendant “has

appeared in the action,” requires reversal.

We see no reason to require the district court to raise sua

sponte affirmative defenses, which may, of course, be

waived or forfeited, on behalf of an appearing party who

elects not to pursue those defenses for itself. See TruServ

Corp. v. Flegles, Inc., 419 F.3d 584, 589 (7th Cir. 2005) (noting

that personal jurisdiction may be waived). For similar

reasons, we do not believe that the district court was

obligated to consider the validity of the judgment on

jurisdictional grounds in its ruling on the Rule 60(b)

motion. Nor do we see any reason why this court should

reexamine the issue of personal jurisdiction. We acknowledge that under Rule 60(b)(4), a party generally may

challenge a default judgment as void for lack of personal

jurisdiction at any time. See Swaim, 73 F.3d at 717 (noting

that this rule “recognizes that it is unfair to strip parties

of a defense that may explain the omission that is potentially the basis for judgment against them”). However, that

general rule does not preserve in perpetuity a party’s

claim regarding personal jurisdiction, regardless of any

strategy it pursues in the district court.

As is clear from its oral ruling on Spamhaus’ 60(b)

motion, the district court interpreted its conduct preceding default as a waiver of the previously asserted defenses.

See R.56-4 at 10 (noting that the court would not “pretend

as if none of these things took place . . . [and there had

been] no opportunity to defend this case[,] no decision

made to knowingly abandon the defense”); id. at 8-9
12 Nos. 06-3779 & 06-4169

(“[T]he idea that Rule 60 accommodates at least what may

have seemed at the time an intelligent decision—and an

intentional one—should be used to reopen the consequence

of the decision, knowingly made, I am not sure that is what

Rule 60 is about. . . . [Spamhaus] chose to abandon the

defense of the case.”). We review the factual determinations upon which a district court predicates a finding

of waiver for clear error and the legal question of whether the conduct amounts to waiver de novo. Ernst & Young

LLP v. Baker O’Neal Holdings, Inc., 304 F.3d 753, 756 (7th

Cir. 2002).

We perceive no error in the district court’s conclusion

that Spamhaus intentionally elected to abandon its available defenses when it withdrew those defenses from

consideration by the court and indicated that it was

prepared to accept a default. Spamhaus’ then-counsel

confirmed that it wished to “participate in the defense no

further” and “do absolutely nothing.” See R.56-1 at 3, 5. It

was not erroneous to treat this kind of voluntary abandonment of defenses, raised but not pursued, as a waiver. See

Johnson v. Zerbst, 304 U.S. 458, 464 (1938); Trs. of Cent.

Laborers’ Welfare Fund v. Lowery, 924 F.2d 731, 732-33 (7th

Cir. 1991) (noting that courts have recognized “privileged

defenses referred to in Rule 12(h)(1)[] may be waived by

‘formal submission in a cause, or by submission through

conduct,’ ” even before an answer is filed (quoting Marcial

Ucin, S.A. v. SS Galicia, 723 F.2d 994, 996-97 (1st Cir. 1983)).

Based on its conduct before the court, we have no doubt

that Spamhaus understood the defenses available to it,

consistently asserted those defenses in the early stages of

those proceedings and then affirmatively elected to abandon those defenses before the district court. We see no

reason to allow Spamhaus to escape the consequences of
Nos. 06-3779 & 06-4169 13

4 Spamhaus also claims that the district court had an affirmative

obligation to find that the complaint was served consistent

with the Hague Convention on the Service Abroad of Judicial

and Extrajudicial Documents in Civil or Commercial Matters,

opened for signature Nov. 15, 1965, 20 U.S.T. 361 (appended to

Fed. R. Civ. P. 4). Specifically, Spamhaus relies on Article 15 of

the Convention, which provides, in pertinent part: “Where a

writ of summons or an equivalent document had to be transmitted abroad for the purpose of service, under the provisions of

the present Convention, and the defendant has not appeared,

judgment shall not be given until it is established” that service

was effected in a manner approved of by the Convention. The

difficulty for Spamhaus is that, as we already have determined,

it is not a defendant that “has not appeared.” It did appear in the

action and raise improper service of process under the Hague

Convention as an affirmative defense. It withdrew that defense

along with the answer. Article 15, by its terms, does not apply

to a party who has appeared. The court did not have an affirmative obligation, under these circumstances, to raise service of

process on behalf of Spamhaus prior to entering the default.

5 Rule 55(b)(2) provides, in pertinent part:

If the party against whom judgment by default is sought has

appeared in the action, the party (or, if appearing by representative, the party’s representative) shall be served with written

(continued...)

that decision in the later stages of this proceeding.4

2. Notice of the Default Judgment

Spamhaus also claims that the default judgment entered

was invalid because Spamhaus was not served with the

written notice of the application for a default judgment as

provided by Federal Rule of Civil Procedure 55(b)(2)5

 and
14 Nos. 06-3779 & 06-4169

5 (...continued)

notice of the application for judgment at least 3 days prior to the

hearing on such application.

(emphasis added).

in a manner approved by Rule 5. Our review of the sufficiency of service of notice of a motion for a default judgment is de novo. Homer, 415 F.3d at 753. Spamhaus requests a remand to determine whether, as a factual matter,

service was proper.

A certificate of service attached to the motion for default

and signed by an attorney for e360 states that service of

the motion was effected in three ways: (1) electronic filing with the clerk of the court, “which will send notification of such filing” to listed attorneys with the firm that

formerly represented Spamhaus; (2) “Federal Express via

International Priority”; and (3) “caus[ing] to be hand

delivered” to the Spamhaus Project. R.20 at 6. Under Local

Rule 5.5(a)(1), this certification made by an attorney of

record qualifies as proof of service. Accordingly, the

remaining question is whether any of these methods of

service was acceptable under Rule 5 of the Federal Rules.

Federal Rule of Civil Procedure 5 lists the acceptable

methods of service of process under the Federal Rules.

Included among the acceptable forms of service is:

(A) Delivering a copy to the person served by:

(i) handing it to the person;

(ii) leaving it at the person’s office with a clerk or

other person in charge, or if no one is in charge

leaving it in a conspicuous place in the office; or
Nos. 06-3779 & 06-4169 15

(iii) if the person has no office or the office is

closed, leaving it at the person’s dwelling house or

usual place of abode with someone of suitable age

and discretion residing there.

Fed. R. Civ. P. 5(b)(2)(A). In-hand delivery is, therefore, a

specifically approved method of service under the Rules.

Spamhaus’ conclusory allegation that “no authorized

representative of Spamhaus has ever been properly served

with in-hand delivery of any document,” Appellant’s Br. at

17, without more, does not defeat the proof of service

provided to the district court, nor does it require this

court to remand to allow further factual development in the

face of a certificate of service by an officer of the court. Nor

has Spamhaus cited any precedent in support of its contention that the record must contain more specific evidence

“demonstrating how . . . service was purportedly perfected.” Id. at 16-17.

Moreover, although a party is not required to file a

Rule 60(b) motion in the district court to raise challenges

to the entry of a default judgment, this court has recognized that when a party does so, the failure to raise certain

defenses specifically may waive those defenses for purposes of appeal of the underlying judgment. See Swaim, 73

F.3d at 718-19. Although our cases applying this rule have

dealt with issues of personal jurisdiction, service to bring

a party into the action and capacity to be sued, id., the logic

employed in those cases applies with equal force to the

particular defense of failure of notice under Rule 55(b). In

each case, the request made on appeal from the underlying default judgment is that we remand for factual findings that would justify relief from the judgment because

the district court has the special competence to make those

findings of fact. See id. Sensibly, then, when a party chooses

to move for relief from judgment under Rule 60(b) in the
16 Nos. 06-3779 & 06-4169

district court, that party should raise those defenses

which require factual development that it anticipates

raising in an appeal taken from the underlying judgment.

As we stated in Swaim v. Moltan Co., 73 F.3d 711 (7th Cir.

1996), this approach

promotes the twin concerns of juridical efficiency and

respect for the unique factfinding capability of a

district court. . . . This is not to deny our jurisdiction to

entertain a direct appeal from a default judgment, see

28 U.S.C. § 1291, but when a party chooses to utilize the

attention and limited resources of a district court in a

motion under Rule 60(b), we think it just and proper

that it be required to put before the district court

whatever infirmities support setting aside the default

judgment. This brings to bear the district court’s

factfinding function and unique knowledge of the

case and maintains the court of appeals’ role as a

forum for resolving disputed questions of law—not

fact.

Id. at 719. In its 60(b) motion in this case, Spamhaus never

asserted that e360 had failed to comply with the notice

requirements of Rule 55 and that this failure justified

relief from judgment. Its only contention regarding service of process was a failure of service to bring it into the

case, in connection with its argument that the district

court lacked in personam jurisdiction. Spamhaus now

seeks an opportunity to offer countervailing proof on the

issue of service of the motion for default judgment; that is

an argument that Spamhaus should have addressed to the

district court in the first instance when, as here, a Rule

60(b) motion challenging the default judgment also was

filed.
Nos. 06-3779 & 06-4169 17

Because the jurisdictional challenges Spamhaus now

seeks to raise have been waived and neither the district

court nor this court has the duty to resurrect them, the

district court did not abuse its discretion in entering

judgment of liability nor in denying the motion for Rule

60(b) relief. Accordingly, we affirm the district court’s

judgment on liability.

B. Remedial Issues

Spamhaus asserts that the district court erred in entering judgment in an amount of more than $11 million on

the basis of Mr. Linhardt’s affidavit alone. It also cites a

host of objections to the district court’s entry of injunctive

relief. We consider each of its objections in turn.

1. Damages

As we have noted, at the hearing in which Spamhaus

withdrew its answer and prior counsel withdrew their

appearance, the district court informed e360 that it would

be required to prove up its damages. At minimum, according to the court, the affidavit of a knowledgeable person

would be required. In response, e360 filed a formal motion

for default judgment and attached Mr. Linhardt’s affidavit.

In his affidavit, Mr. Linhardt stated that e360 had lost

“actual and pending contracts,” the value of which he had

calculated to be $2,465,000. R.20, Ex. A at 6. He further

stated that he had lost “numerous opportunities to

obtain future work” and that he had calculated “the lost

value of the business as a result of the inability to monetize

the revenue potential from the company and in the lost

enterprise value to be at least $9,250,000.” Id. He then
18 Nos. 06-3779 & 06-4169

provided a cursory statement of his calculation of the lost

value to his enterprise. On the basis of this evidence, the

district court entered judgment for compensatory damages in the full amount requested, more than $11 million.

Generally, this court will not reverse a damages award

in a default judgment unless it is clearly excessive. Merrill

Lynch Mortgage Corp. v. Narayan, 908 F.2d 246, 253 (7th Cir.

1990). A default judgment establishes, as a matter of law,

that defendants are liable to plaintiff on each cause of

action alleged in the complaint. United States v. Di Mucci,

879 F.2d 1488, 1497 (7th Cir. 1989). We also have stated,

however, that,

[e]ven when a default judgment is warranted based on

a party’s failure to defend, the allegations in the

complaint with respect to the amount of the damages

are not deemed true. The district court must instead

conduct an inquiry in order to ascertain the amount

of damages with reasonable certainty.

In re Catt, 368 F.3d 789, 793 (7th Cir. 2004) (citing Credit

Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d

Cir. 1999)). Under the law of this circuit, judgment by

default may not be entered without a hearing on damages

unless “the amount claimed is liquidated or capable of

ascertainment from definite figures contained in the

documentary evidence or in detailed affidavits.” Dundee

Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d

1319, 1323 (7th Cir. 1983) (collecting authority).

Mr. Linhardt’s affidavit is a conclusory statement of the

lost value of his business, based largely on his calculations

of lost future profits. It provides a list of businesses involved in “actual and pending contracts” and a total

calculation of his calculation of loss, but says nothing
Nos. 06-3779 & 06-4169 19

6 We do not believe that the fact that the district court declined

the request for punitive damages and attorney’s fees demonstrates, as e360 asserts, that it undertook an adequate evaluation

of the evidence of damages presented to it. As is made clear

by the court’s order, it believed that absent countervailing

evidence from Spamhaus, the affidavit justified the full amount

of compensatory damages requested. Given the nature of the

damages sought and the conclusory statements in the affidavit,

we cannot say that this scrutiny was sufficient.

about the status of his relationship with those businesses

before e360 was listed on the ROKSO. That is, the affidavit

claims profit loss in absolute numbers, but provides no

information whatsoever to support a finding that such

future profits were certain prior to Spamhaus’ act. Particularly given the difficulties that Illinois courts have acknowledged in proving non-speculative amounts of lost future

profits, see, e.g., SK Hand Tool Corp. v. Dresser Indus., Inc.,

672 N.E.2d 341, 348 (Ill. App. Ct. 1996); see also TAS Distrib.

Co. v. Cummins Engine Co., ___ F.3d ___, 2007 WL 1704114,

No. 05-1371, slip op. at 12-16, (7th Cir. June 14, 2007)

(collecting Illinois authority on the difficulty of proving

lost future profits as damages), this affidavit alone cannot provide the requisite “reasonable certainty” for a

damages award without the necessity of a hearing.6

 We

therefore vacate the damages award and remand to the

district court for a more extensive inquiry into the damages to which e360 is entitled.

2. Injunctive Relief

Spamhaus also raises a number of challenges to the

district court’s entry of a permanent injunction. Under the

terms of the injunction, Spamhaus is prohibited from
20 Nos. 06-3779 & 06-4169

(1) “tak[ing] any action to cause email sent by Plaintiffs or

their affiliates, subsidiaries, or related companies owned or

controlled by Plaintiffs to be blocked, delayed, altered, or

interrupted in any way, (including, without limitation, by

listing Plaintiff’s [sic] on Spamhaus’ ROKSO list . . . ) unless Spamhaus can demonstrate by clear and convincing

evidence that Plaintiffs have violated relevant United States

law”; (2) listing other networks owned or operated by e360

as spammers without demonstrating that the clear and

convincing standard had been met; and (3) contacting “any

customers or suppliers” of e360 “in efforts to cause said

customers or suppliers to cease doing business” with e360

or to “allege or assert that Plaintiffs are spammers or other

like term.” R.24 at 2. The injunction also requires that

Spamhaus post a notice on its website that e360 was

erroneously listed as a spammer and that it is not a

spammer. The language of this notice was to be approved

by e360, was to occupy a one inch by one inch space on the

website and was to remain in place for six months. See id.

We review the court’s entry of a permanent injunction

for an abuse of discretion. eBay Inc. v. MercExchange, L.L.C.,

126 S. Ct. 1837, 1839 (2006).

a.

First, Spamhaus contends that the district court’s entry

of a permanent injunction should be vacated because the

court never considered whether injunctive relief was

appropriate and, in its order granting such relief, failed to

comply with Rule 65 in setting forth reasons for its issuance. See Fed. R. Civ. P. 65(d).

As we already have stated, although a default judgment

establishes liability, it does not answer whether any
Nos. 06-3779 & 06-4169 21

particular remedy is appropriate. See Di Mucci, 879 F.2d at

1497 (“Because . . . liability was established by default,

the law in this circuit indicates that in a case such as this, an

evidentiary hearing may be required to establish what type

of relief is necessary.” (emphasis added)). This principle

applies with equal if not greater force in the context of

equitable relief, for which the law imposes a requirement that the party seeking the injunction demonstrate

the inadequacy of legal relief. See Walgreen Co. v. Sara

Creek Property Co., B.V., 966 F.2d 273, 275 (7th Cir. 1992)

(“The plaintiff who seeks an injunction has the burden of

persuasion--damages are the norm, so the plaintiff must

show why his case is abnormal. . . . [W]hen, as in this case,

the issue is whether to grant a permanent injunction . . . the

burden is to show that damages are inadequate . . . .”).

The district court concluded that e360’s success by

default and the failure of Spamhaus to interpose objections

to relief simply entitled e360 to a permanent injunction.

We conclude that a more substantial inquiry by the district court was necessary prior to the entry of equitable

relief. See eBay, 126 S. Ct. at 1839 (“According to

well-established principles of equity, a plaintiff seeking

a permanent injunction must satisfy a four-factor test

before a court may grant such relief. A plaintiff must

demonstrate: (1) that it has suffered an irreparable injury;

(2) that remedies available at law, such as monetary

damages, are inadequate to compensate for that injury;

(3) that, considering the balance of hardships between the

plaintiff and defendant, a remedy in equity is warranted;

and (4) that the public interest would not be disserved by

a permanent injunction.”); see also Fed. R. Civ. P. 65(d)

(“Every order granting an injunction and every restraining

order shall set forth the reasons for its issuance . . . .”).
22 Nos. 06-3779 & 06-4169

7 The origin of the injunctive relief was a temporary restraining order (“TRO”) issued in state court before the case was

removed. We are unpersuaded by e360’s contention that,

because the state court conducted an appropriate inquiry, no

independent inquiry into the propriety of injunctive relief was

required of the district court before issuing a preliminary and

then a permanent injunction. In any event, the state proceedings, aside from the TRO itself, are not of record in this matter,

and we see no evidence in the record that indicates that they

were fully before the district court.

Absent some statement explaining the necessity of injunctive relief, we are hampered in our review of the district court’s exercise of its equitable powers. See United

States v. Jordan, 485 F.3d 982, 985 (7th Cir. 2007) (noting

that, for the Court of Appeals to exercise properly its

review function over a discretionary determination, “the

record should reflect an exercise of discretion based on

the evidence and the applicable legal standard”); United

States v. Cunningham, 429 F.3d 673, 679 (7th Cir. 2005)

(“[W]henever a district judge is required to make a discretionary ruling that is subject to appellate review, we

have to satisfy ourselves, before we can conclude that

the judge did not abuse his discretion, that he exercised

his discretion, that is, that he considered the factors

relevant to that exercise.”).7

 The proceedings leading to

the entry of the injunction were deficient, and, therefore,

remand is necessary for the district court to consider the

propriety of any injunctive relief.

b.

As currently written, the injunction suffers from independent legal infirmities. It fails to comply with “the rule
Nos. 06-3779 & 06-4169 23

requiring courts to tailor injunctive relief to the scope of the

violation found.” Nat’l Org. for Women, Inc. v. Scheidler,

396 F.3d 807, 817 (7th Cir. 2005), rev’d on other grounds, 547

U.S. 9, 23 (2006). On its face, the relief awarded does not

bear a legitimate relationship to the facts necessary to

support the entry of a default judgment.

In our evaluation of the injunction, we are mindful that

it followed a default judgment, and, therefore, we take as

true the facts of the complaint. See Black v. Lane, 22 F.3d

1395, 1399 (7th Cir. 1994). In this case, the facts upon

which the judgment is supported demonstrate only that

at the time that Spamhaus initially posted that e360 was a

“spammer”—the posting upon which the cause of action

was based—the posting was false. That the label was

false when originally posted does not mean that, applying Spamhaus’ generally applicable criteria for determining what a spammer is, e360 ought to be given a free pass

for all time. Rather, it simply means that, whatever the

initial factual basis Spamhaus had used to list e360 on the

ROKSO, Spamhaus may not rely on that basis in the future.

If Spamhaus were to discover additional evidence that

e360 meets the ROKSO criteria and subsequently were to

place e360 on the ROKSO on the basis of that new evidence,

Spamhaus would be entitled to a separate judicial determination that this new label is in fact false and that it is liable

for defamation. An injunction that bars Spamhaus from

referring to e360 as a spammer prospectively, without

taking account of the actual grounds for liability in this

action, is not tailored to the scope of the violation. For the

same reason, the injunction’s requirement that Spamhaus

post notice to the effect that e360 is not a spammer cannot

be sustained. Whether e360 is now a spammer is not a fact

determined by the default judgment. The fact determined
24 Nos. 06-3779 & 06-4169

by the judgment is that e360 was not a spammer when

Spamhaus so identified it on the date of the action giving

rise to the complaint.

The injunction as written would allow Spamhaus, under

certain circumstances, to place e360 on the ROKSO in the

future. Those circumstances, however, are an insufficient

answer to the overbreadth of the injunction because they

too bear no reasonable relationship to the facts of liability.

Specifically, the injunction states that Spamhaus may

designate e360 as a spammer if Spamhaus can demonstrate

by “clear and convincing evidence” that e360 has violated “United States law.” According to the complaint,

however, Spamhaus lists entities on the ROKSO for

violating ISP terms of use, not “United States law.” The

complaint does not allege that Spamhaus defamed e360 by

claiming that e360 operated in violation of law. The facts

supporting the default judgment, therefore, show only

that e360 improperly was listed as a “spammer” by

Spamhaus, applying Spamhaus’ own criteria. There is no

basis in the judgment for an injunction that modifies

Spamhaus’ generally applicable criteria for determining

what entities qualify as spammers. Moreover, the injunction places the burden on Spamhaus to prove the legitimacy of future statements through the lens of the clear

and convincing standard; this formulation effectively

presumes that Spamhaus’ future conduct is tortious before

there has been any opportunity for an appropriate judicial inquiry.

Finally, although we decline to address them fully in the

context of this injunction that we already have determined

cannot stand, we note that there are sensitive First Amendment issues presented in the context of permanent injunctions in defamation actions. See generally Erwin
Nos. 06-3779 & 06-4169 25

Chemerinsky, Injunctions in Defamation Cases, 57 Syracuse

L. Rev. 157 (2007) (arguing from tradition and precedent

that permanent injunctive relief should never be available as a remedy in a defamation action). “[P]ermanent

injunctions—-i.e., court orders that actually forbid speech

activities—are classic examples of prior restraints.” Alexander v. United States, 509 U.S. 544, 550 (1993); see also United

States v. Raymond, 228 F.3d 804, 815 (7th Cir. 2000). Accordingly, “[t]he usual rule is that ‘equity does not enjoin a

libel or slander and that the only remedy for defamation

is an action for damages.’ ” Cmty. for Creative Non-Violence

v. Pierce, 814 F.2d 663, 672 (D.C. Cir. 1987) (quoting

Kukatush Mining Corp. v. SEC, 198 F. Supp. 508, 510-11

(D.D.C. 1961)). We have not addressed squarely the

availability of injunctive relief in defamation cases. Although the Supreme Court recently granted certiorari to

address the question in the context of public figures in Tory

v. Cochran, 544 U.S. 734 (2005), the Court ultimately

vacated the injunction in that case on ground of

overbreadth, as we do here. Following the Court’s approach, we vacate the injunction as written and express no

opinion on the constitutional validity of any new, narrowed injunctive relief the district court might think

appropriate after considering all of the relevant factors. Id.

at 738-39; see also American Family Mut. Ins. Co. v. Roth, 485

F.3d 930, 934 (7th Cir. 2007) (noting, after holding an

injunction overbroad, that “rather than try to work out

the details of a proper injunction,” we should “remand

the case to the district court for the entry of a betterdrafted injunction”).

Conclusion

The district court’s conclusion that issues of jurisdiction

and service of process were waived by Spamhaus’ con-
26 Nos. 06-3779 & 06-4169

duct preceding the entry of the default judgment is not

clearly erroneous. We therefore affirm the judgment as to

liability and the denial of the motion for relief under

Rule 60(b). We further conclude, however, that the district court failed to undertake an inquiry into the proof

of damages and the necessity of injunctive relief and

issued an injunction that is overbroad. We affirm the

entry of a judgment of default. We vacate, however, that

portion of the court’s order granting e360’s requests for

relief and remand for proceedings consistent with this

opinion. The parties shall bear their own costs in this court.

AFFIRMED in part;

VACATED and REMANDED in part

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-02-C-0072—8-30-07