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Kleffman v. Vonage Holdings Corp.

June 21, 2010

CRAIG E. KLEFFMAN, PLAINTIFF AND APPELLANT,
v.
VONAGE HOLDINGS CORP. ET AL., DEFENDANTS AND APPELLANTS.



9th Cir. No. 07-56171 C.D. Cal. No. CV-07-02406-GAF

The opinion of the court was delivered by: Chin, J.

Business and Professions Code section 17529.5, subdivision (a)(2)*fn1 (section 17529.5(a)(2)) provides that it is unlawful to advertise in a commercial electronic mail (e-mail) advertisement -- commonly known as "spam" -- if the advertisement "contains or is accompanied by falsified, misrepresented, or forged header information." The issue this case presents is whether, under this section, it is unlawful to send commercial e-mail advertisements from multiple domain names for the purpose of bypassing spam filters. We hold that, on the undisputed facts of this case, the answer is "no."

FACTUAL BACKGROUND

"The Internet is an international network of interconnected computers" that enables millions of people "to communicate with one another and to access vast amounts of information from around the world." (Reno v. American Civil Liberties Union (1997) 521 U.S. 844, 849-850.) "In order for the Internet to function, each entity connected to it (e.g., computer, router, network, etc.) must have a unique numeric 'address.' A unique identifier is required to enable one connected computer or network to identify and send information to another connected computer or network. Those unique addresses are known as Internet Protocol Addresses or 'IP addresses.' [Citation.]" (National A-1 Advertising, Inc. v. Network Solutions, Inc. (D.N.H. 2000) 121 F.Supp.2d 156, 159 (National A-1 Advertising).) An IP address consists of "four sets of numbers separated by periods" (Kremen v. Cohen (9th Cir. 2003) 325 F.3d 1035, 1038), such as "12.34.56.78." "IP addresses function much like Social Security numbers or telephone numbers: each IP address is unique and corresponds to a specific entity connected to the Internet." (National A-1 Advertising, supra, at p. 159.)

Because the number strings that make up IP addresses can be difficult to remember, the Internet community developed the Domain Name System, which enables users to link a numeric IP address to a unique and easier to remember domain name, "thereby making it more convenient for users to access particular addresses on the Internet." (National A-1 Advertising, supra, 121 F.Supp.2d at p. 159.) "Domain names -- e.g., bettyandnicks.com -- consist of at least two groups of alphanumeric characters, each known as a string, separated by a period or dot. The last string -- the farthest to the right -- denotes the top-level domain. The second-to-last string is the second-level domain name and identifies the person's or organization's Internet computer site."*fn2 (Thomas v. Network Solutions, Inc. (D.C. Cir. 1999) 176 F.3d 500, 503.)

In March 2007, plaintiff Craig E. Kleffman filed this class action in state court against defendants Vonage Holdings Corp., Vonage America, Inc., and Vonage Marketing, Inc. (Vonage), asserting a claim under section 17529.5(a)(2). As noted above, that section makes it unlawful to advertise in a commercial e-mail advertisement that "contains or is accompanied by falsified, misrepresented, or forged header information." In relevant part, Kleffman alleged the following: Vonage, by and through its marketing agents, sent him 11 unsolicited e-mail advertisements for its broadband telephone services using "11 different domain names: superhugeterm.com; formycompanysite.com; ursunrchcntr.com; urgrtquirkz.com; countryfolkgospel.com; lowdirectsme.com; yearnfrmore.com; openwrldkidz.com; ourgossipfrom.com; specialdlvrguide.com; and struggletailssite.com." These "11 different domain names can [all] be traced to a single physical address" in Nevada where Vonage's marketing agent "is located." "None of these domain names provides any indication to the recipient (or its spam filter) that the advertisement is from Vonage." Vonage's "use of these multiple domain names . . . reduces the likelihood that an internet service provider [ISP] will identify these . . . advertisements as spam and block them before they reach the email inboxes of [Kleffman] and class members." An ISP " 'may block a message because . . . [a] domain name is associated with the sending of high volumes of spam,' " so recipients "could easily block all of" Vonage's e-mail advertisements "[i]f Vonage and its marketing agents were to use a single domain name to send [those] advertisements." Vonage "could have easily (and less expensively)" sent all of its e-mail advertisements "using a single domain name," and "the only reason" it used "multiple domain names is to mislead email service providers and recipients, and their spam filters." "In other words, Vonage essentially creates multiple identities, as represented by the multiple domain names, in order to 'spread out' the total volume of [its e-mail advertisements] and reduce the volume sent via each domain name, a strategy deliberately calculated to trick the ISPs into believing there are multiple senders, when in actuality the emails are sent for the ultimate single beneficiary: Vonage." "The multitude of 'from' identities falsifies and misrepresents the true sender's identity and allows unwanted commercial email messages to infiltrate consumers' inboxes." Vonage's use of "multiple domain names to bypass spam filters," its "failure" to use "a single domain name" in sending its advertisements, and its "failure to identify Vonage in the domain name from which the . . . advertisements were sent, i.e., through the use of a generic subdomain name such as adfor.vonage.com, constitute[] falsified and misrepresented header information prohibited by" section 17529.5(a)(2).

After Vonage removed the case to federal court, it moved to dismiss the complaint, arguing the complaint failed to state a claim under section 17529.5(a)(2). The district court agreed and dismissed the action with prejudice and without leave to amend, stating: "Kleffman does not actually allege that the content of Vonage's email was false, misrepresented or forged, and indeed points to nothing misleading about any single given email." "The headers are allegedly falsified because, though they literally and truthfully identify the sender, they are part of a mechanism to avoid anti-spam legislation and therefore imply that they originate from different sources. However, under the plain language of the statute, which requires that an email message contain a falsified, misrepresented or forged header, the claim fails. The failure to send mail from a single domain name that includes the word 'Vonage' is simply not a misrepresentation in any ordinary sense of the word." "Moreover, while [Kleffman] might characterize an email as containing the implicit misrepresentation 'I am not from the same sources as the others,' . . . this is more than the plain language of the statute would bear."*fn3

Kleffman appealed to the United States Court of Appeals for the Ninth Circuit. Pursuant to rule 8.548 of the California Rules of Court, the Ninth Circuit asked us to decide the following question: "Does sending unsolicited commercial e-mail advertisements from multiple domain names for the purpose of bypassing spam filters constitute falsified, misrepresented, or forged header information under [section] 17529.5(a)(2)?" We granted the Ninth Circuit's request.*fn4

DISCUSSION

At issue here is the scope of section 17529.5(a)(2), which makes it "unlawful . . . to advertise in a commercial e-mail advertisement" that "contains or is accompanied by falsified, misrepresented, or forged header information." " 'As in any case involving statutory interpretation, our fundamental task [in considering this issue] is to determine the Legislature's intent so as to effectuate the law's purpose.' [Citation.]" (People v. Cole (2006) 38 Cal.4th 964, 974-975.)

In resolving the parties' disagreement over the meaning of section 17529.5(a)(2), it is useful to begin by noting the matters on which they agree. There is no dispute here that the domain names in question were part of the e-mails' "header information" within the meaning of section 17529.5(a)(2).*fn5 There also is no dispute that the domain names used to send Vonage's e-mail advertisements, and reflected in the header information of these e-mail advertisements, actually exist and are technically accurate, literally correct, and fully traceable to Vonage's marketing agents. Finally, there is no dispute that, in light of this conceded fact, the e-mails neither contained nor were accompanied by "falsified . . . or forged header information" within the meaning of section 17529.5(a)(2). Thus, the parties agree that the question here is whether the e-mails contained or were accompanied by "misrepresented . . . header information" within the meaning of that section.

Vonage's answer to this question is relatively straightforward. It asserts that header information is not "misrepresented" within the meaning of section 17529.5(a)(2) unless it contains "a false representation of fact." Vonage reasons that, when the Legislature drafted the statute, this was "the established legal definition" of the term "misrepresent" for purposes of the tort of misrepresentation, and nothing indicates the Legislature intended to use the term in section 17529.5(a)(2) to convey some other meaning. Applying this definition, Vonage argues that e-mail advertisements from multiple domain names with fully accurate and traceable header information do not violate the statute because they contain no false representation.

Kleffman, quoting Cooley v. Superior Court (2002) 29 Cal.4th 228, 249, asserts that Vonage's construction violates the rule of statutory construction that " ' "[c]ourts should give meaning to every word of a statute if possible, and should avoid a construction making any word surplusage. " ' " He reasons that because section 17529.5(a)(2) also expressly prohibits "falsified" header information, "misrepresented" header information must encompass something in addition to a false statement of fact; otherwise, the term "misrepresented" adds nothing to the statute and has no meaning.

Instead, Kleffman asserts, in defining the term "misrepresented" for purposes of section 17529.5(a)(2), we should look to "other statutory claims in the false advertising sections of the Business and Professions Code, such as section 17200, which prohibits fraudulent business practices, and section 17500, which prohibits false or misleading advertising." These statutes, Kleffman argues, apply where advertising " 'is not actually false, but thought likely to mislead or deceive, or is in fact false. By their breadth, [they] encompass not only those advertisements which have deceived or misled because they are untrue, but also those which may be accurate on some level, but will nonetheless tend to mislead or deceive.' " In Kleffman's view, this established legal definition is what we should presume the Legislature had in mind when it drafted section 17529.5(a)(2) to prohibit "misrepresented" header information. ...


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