Gordon v. Impulse Marketing Group, Inc.

• Decision Date: 11 July 2005
• Docket Number: No. CV-04-5125-FVS.,CV-04-5125-FVS.
• Citation: 375 F.Supp.2d 1040
• Court: U.S. District Court — District of Washington
• Parties: James S. GORDON, Jr., an individual residing in Benton County, Washington, Plaintiff, v. IMPULSE MARKETING GROUP, INC., a Nevada Corporation, Defendant.

375 F.Supp.2d 1040

James S. GORDON, Jr., an individual residing in Benton County, Washington, Plaintiff, v. IMPULSE MARKETING GROUP, INC., a Nevada Corporation, Defendant.

No. CV-04-5125-FVS.

United States District Court, E.D. Washington.

July 11, 2005.

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Douglas E. McKinley, Jr., Douglas McKinley Law Office, Richland, WA, for Plaintiff.

David O. Klein, Peter J. Glantz, Sean A. Moynihan, Klein Zelman Rothermel & Dichter LLP, New York, NY, Floyd Edwin Ivey, Liebler Ivey & Connor PS, Kennewick, WA, for Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS

VAN SICKLE, Chief Judge.

THIS MATTER came before the Court pursuant to Defendant's motion to dismiss, Ct. Rec. 2. Plaintiff is represented by Douglas McKinley. Defendant is represented by Floyd Ivey, Sean Moynihan, and Peter Glantz.

BACKGROUND

Plaintiff, James Gordon, is a Washington resident and the registered user of the internet domain name "Gordonworks.com". Defendant, Impulse Marketing Group, Inc., a Nevada corporation, is an electronic marketing company that transacts business with Washington by sending commercial electronic mail messages (email) to Washington state residents. Plaintiff's Complaint alleges Defendant violated Washington's Commercial Electronic Mail Act, RCW § 19.190 et seq., and Washington's Consumer Protection Act, RCW § 19.86 et seq., by initiating and/or conspiring with others to initiate unsolicited commercial emails to various addresses at Plaintiff's domain, "Gordonworks.com".

Related Action

In December 2001, Plaintiff filed a complaint against Commonwealth Marketing Group, Inc. ("CMG") in Benton County Superior Court. That action (the "Related Action") was subsequently removed to the United States District Court for the Eastern District of Washington and dismissed with prejudice on October 20, 2004. See CV-04-5003-AAD.

On or about December 10, 2001, Defendant and CMG entered into a Website Development and Marketing Services Agreement ("Agreement"). Pursuant to the terms of that Agreement, Defendant contracted with CMG to market and advertise CMG's USA Gold Card program over the Internet ("the Program"). The Program allowed individuals to apply for a USA Gold Card online and use the Card to shop online. Pursuant to the terms of the Agreement, Defendant, under specific circumstances, agreed to indemnify and hold CMG harmless from and against any liability, claim, deficiency, loss, damage, penalty, or injury suffered or incurred by CMG under certain circumstances. When Plaintiff sued CMG in the Related Action, Defendant retained a lawyer to examine whether it had a duty to indemnify CMG in that action, but ultimately, Defendant did not defend, indemnify and/or hold CMG harmless in the Related Action.

DISCUSSION

Defendant moves to dismiss Plaintiff's Complaint under Federal Rule of Civil Procedure 12(b)(6) on grounds that (1) Plaintiff's claims are preempted by the federal law; (2) Plaintiff's Complaint fails to plead a violation of the Washington statutes under which this action is brought; (3) Plaintiff's Complaint fails to plead allegations of fraud with particularity as required by Federal Rule of Civil Procedure Rule 9(b); and (4) Plaintiff's claims are barred by the doctrine of res judicata.

I. Standard of Review

A complaint should not be dismissed for failure to state a claim upon which relief may be granted under Federal Rule of Civil Procedure 12(b)(6) unless it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); Johnson v. Knowles, 113 F.3d 1114, 1117 (9th Cir.1997). When the legal sufficiency of a complaint's allegations are tested with a motion under Rule 12(b)(6), "[r]eview is limited to the complaint." Cervantes v. City of San Diego, 5 F.3d 1273, 1274 (9th Cir.1993). All factual allegations set forth in the complaint are taken as true and construed in the light most favorable to the plaintiff. Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir.1996). The Court must give the plaintiff the benefit of every inference that reasonably may be drawn from well-pleaded facts. Tyler v. Cisneros, 136 F.3d 603, 607 (9th Cir.1998).

As a general rule, the Court "may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion". Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.2001). Rule 12(b)(6) expressly provides that "when matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Fed.R.Civ.P. 12(b)(6) (emphasis added). There are, however, two exceptions to the requirement that consideration of extrinsic evidence converts a Rule 12(b)(6) motion to a motion for summary judgment. Lee, 250 F.3d at 688.

First, the Court "may consider material which is properly submitted as part of the complaint on a motion to dismiss without converting the motion to dismiss into a motion for summary judgment." Id. If the documents are not physically attached to the complaint, they may be considered if the documents' authenticity is not contested and the plaintiff's complaint necessarily relies on them. Id. at 689 (citations omitted).

Second, pursuant to Federal Rule of Evidence 201, the Court may take judicial notice of "matters of public record" without converting a motion to dismiss into a motion for summary judgment. MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir.1986). However, the Court may not take judicial notice of a fact that is "subject to reasonable dispute." Fed.R.Evid. 201(b). Here, the Court takes judicial notice of the Related Action and will review the complaint and amended complaints in that action. These documents are found in Exhibits A — D attached to the Declaration of Phil Huston.

II. Preemptive Effect of CAN-SPAM

Defendant contends Plaintiff's claims under Washington's Commercial Electronic Mail Statute, RCW § 19.190 et seq., and Washington's Consumer Protection Act, RCW § 1986 et seq., are preempted by the recently enacted federal law known as the Controlling the Assault of Non-Solicited Pornography and Marketings Act of 2003 ("CAN-SPAM Act"), 15 U.S.C. § 7701 et seq. There are three circumstances in which state law is preempted by federal law: (1) express preemption, where Congress explicitly defines the extent to which its enactments preempt state law; (2) field preemption, where state law attempts to regulate conduct in a field that Congress intended the federal law exclusively to occupy; and (3) conflict preemption, where it is impossible to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purpose and objectives of Congress. Indus. Truck Assoc., Inc. v. Henry, 125 F.3d 1305, 1309 (9th Cir.1997) (citing English v. General Elec. Co., 496 U.S. 72, 78-80, 110 S.Ct. 2270, 2274-75 110 L.Ed.2d 65 (1990)). Here, Defendant argues the CAN-SPAM Act expressly preempts any state effort to regulate commercial emails.

The CAN-SPAM Act imposes limitations and penalties on the transmission of unsolicited commercial email, commonly known as spam, via the internet. More specifically, it prohibits spammers from sending deceptive or misleading information and using deceptive subject headings, requires them to include return addresses in their email messages, and prohibits them from sending emails to a recipient after that recipient has indicated he or she does not wish to receive email messages from the spammer. See 15 U.S.C. § 7704(a). Similarly, Washington's Commercial Electronic Mail Act prohibits misrepresentation in the subject line or transmission path of any unsolicited commercial email message sent from a computer located in Washington, or sent to an email address that the sender knows or has reason to know is held by a Washington resident. RCW § 19.190.020. Defendant contends the CAN-SPAM Act preempts the Washington Commercial Electronic Mail Act because that statute also regulates unsolicited commercial email. Defendant bases its argument on the text of the CAN-SPAM Act, which states, in relevant part, that it

supersedes any statute, regulation, or rule of a State ... that expressly regulates the use of electronic mail to send commercial messages, except to the extent that any such statute, regulation, or rule prohibits falsity or deception in any portion of a commercial electronic mail message or information attached thereto.

15 U.S.C. § 7707(b)(1) (emphasis added).

To some degree, the CAN-SPAM Act expressly preempts anti-spam legislation where a statute "expressly regulates the use of electronic mail to send commercial messages." However, the CAN-SPAM Act does not preempt state spam laws to the extent they "prohibit[] falsity or deception in any portion of a commercial electronic mail message or information attached thereto." 15 U.S.C. 7707(b)(1).

Washington's Commercial Electronic Mail Act provides in pertinent part:

(1) No person, corporation, partnership, or association may initiate the transmission of a commercial electronic mail message from a computer located in Washington or to an electronic mail address that the sender knows, or has reason to know, is held by a Washington resident that:

(a) Uses a third party's internet domain name without permission of the third party, or otherwise misrepresents any information in identifying the point of origin or the transmission path of a commercial electronic mail message; or

(b) Contains false or misleading information in the subject line.

(2) For purposes of this section, a person ... knows that the intended recipient of a commercial electronic mail message is a Washington resident if...