Judge Rules Maryland Spam Law Unconstitutional

An e-mail marketing company that was sued for allegedly violating the U.S. state of Maryland's antispam law has prevailed, as the judge dismissed the case on the grounds that the law in question is unconstitutional.

The case is the latest of several recent cases in which questions have been raised over the constitutionality of state laws designed to regulate e-mail communications and other Internet communications and activities. Three such laws in Virginia, New York, and Vermont respectively have been declared unconstitutional for violating the Commerce Clause, while antispam laws in Washington and California have survived court challenges.

The Maryland involves First Choice Internet, based in Carle Place, New York, and its founder and president Joseph Frevola. They were sued in late 2003 for allegedly violating Maryland's Commercial Electronic Mail Act (MCEMA), which was enacted in 2002.

The plaintiffs, MaryCLE and NEIT Solutions, accused First Choice of sending misleading and unsolicited e-mail messages to MaryCLE and routed through its Internet service provider NEIT, according to the judge's decision.

MaryCLE and NEIT asked the court to forbid First Choice from sending MaryCLE "unsolicited, false, and misleading commercial e-mail messages" and sought to recover statutory damages. MaryCLE and NEIT are both registered as companies in Maryland.

Case Dismissed

First Choice filed a motion to dismiss the case, and this motion was granted earlier this month by Judge Durke G. Thompson of the Circuit Court for Montgomery County in Maryland.

First Choice gave three reasons for dismissing the case, and the judge agreed with all of them: first, that the MCEMA violates the Commerce Clause of the U.S. Constitution; second, that the Maryland court lacks jurisdiction over the defendants; and third, that Frevola shouldn't have been included in the lawsuit.

Article 1 of the U.S. Constitution, also known as the Commerce Clause, aims to protect interstate commerce from state and local laws that put an undue burden on it, and Judge Thompson found MCEMA to be one such law. He moreover stated in his decision that even if MCEMA were constitutional, the court doesn't have jurisdiction over the New York-based defendants.

"We're obviously disappointed but we think there are some pretty serious errors in the opinion," says Eric Menhart, a law student at George Washington University who founded MaryCLE in April 2003 with the primary purpose of protecting consumer interests in the online market. The company has brought several lawsuits alleging violation of MCEMA, winning one and settling several others in its favor.

Among other things, Menhart takes issue with the cases Judge Thompson used to support his decision, which Menhart maintains weren't pertinent to the case at hand. MaryCLE plans to file a motion for the judge to reconsider his decision, and if that doesn't yield the expected results, the company plans to appeal the case, Menhart says.

"It was the right decision because it made clear that when a state tries to enforce laws against companies that are doing business outside of that state, [those laws] are running afoul of the Commerce Clause," says Andrew Dansicker, the attorney who represented First Choice.

Empty Victory?

However, his client's victory could be viewed as an empty one.

At some point after the lawsuit was filed, Frevola, First Choice's president, suspended his e-mail marketing activities and became an employee of another company, says Dansicker, who works at the law firm Schulman, Treem, Kaminkow, Gilden & Ravenell.

First Choice is still in business but inactive, Dansicker says. "He [Frevola] stopped doing this type of business because he was concerned about additional lawsuits," Dansicker says.

Antispam laws, which vary from state to state, "have had a chilling effect on people trying to do Internet marketing," Dansicker says. "It's not just my client. There are other businesses that have also closed down or stopped sending out bulk e-mail."

Judge Thompson criticized the Maryland antispam law because it makes it illegal to send commercial e-mail that "contains false or misleading information in the subject line that has the capacity, tendency, or effect of deceiving the recipient." It's not clear who establishes that the subject line is deceptive and what criteria is to be used, according to the judge. "The language is too vague to be enforced," the judge wrote in his decision.

The judge also found the jurisdiction issue problematic, pointing out that the defendants were based in New York, and that MaryCLE, while registered in Maryland, has its office and primary place of business is Washington, D.C. The judge also highlighted that MaryCLE's ISP NEIT, while also registered in Maryland, has its servers in Denver, Colorado. Moreover, the e-mail messages in question were sent by a company First Choice outsourced this task to that is based in Virginia and called Master Mailings LLC.

"The Defendants had no contact with the State of Maryland because their e-mails were sent from New York, routed through Virginia and Colorado and finally were received in Washington, D.C.," the judge wrote, adding that "the Plaintiffs are asking the court to apply Maryland law to a situation which never occurred in Maryland."

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