By Patrick Southern

Today, in Beyond Systems, Inc. v. Kraft Foods, Inc., the Fourth Circuit held in a published decision that the established tort doctrine of volenti non fit injuria (“to a willing person it is not a wrong”) applies to internet service providers (an “ISP”) who set “spam traps” solely for the purpose of raising claims against those who send certain types of spam e-mails. The appellate court affirmed the decision of the District of Maryland in this civil case.

Defendants Argue The Claim Is Barred

Defendant Kraft Foods argued successfully at the District Court level that the claims of plaintiff Beyond Systems and third-party plaintiff Hypertouch were barred because the plaintiffs’ actions before the filing of the action constituted consent. The plaintiffs appealed this issue in the hopes of receiving a new trial, since the District of Maryland never so much as reached the question of damages in this tort action.

Plaintiffs Have a History of Claims Under Anti-Spam Statutes

Spam e-mail became an issue in the 1990s and 2000s, and 35 states responded by 2004 in passing legislation providing for a private right of action for ISPs for violations of provisions related to the sending of spam.

The plaintiff in this case, Beyond Systems, is a Maryland-based corporation which used certain tactics referred to as “spam traps.” In the code of various web sites, it hid e-mail addresses in a way that could not be seen by the typical end user, but instead were only visible to “spam crawlers” (programs which are used by spammers to look for e-mail addresses and subscribe them to e-mail lists). Beyond Systems did nothing to filter or block spam e-mails on the accounts in question, and actually increased its storage capacity to archive these e-mails and retain them for use in litigation.

The third-party plaintiff, Hypertouch, is a California-based corporation owned by the brother of the owner of Beyond Systems. It had engaged in similar tactics and sued Kraft Foods in 2005 over certain e-mails. The claim resulted in a settlement, which provided in part that Hypertouch agreed to cooperate with Kraft in identifying future e-mails that may violate California law. Such lawsuits were big business for both companies, accounting for 90 percent of Beyond Systems’ income in recent years.

In 2008, Beyond Systems sued Kraft and another company, Connexus, in the District of Maryland, bringing both Maryland and California state law claims. Many of the e-mails in question were the same ones that formed the basis for the Hypertouch suit in 2005. Partial summary judgment was granted on e-mails that had been part of the Hypertouch suit, e-mails in which Hypertouch did not notify Kraft of the violations in accordance with the settlement agreement, and (because of the applicable statute of limitations) e-mails which were sent more than one year before the suit.

The District Court bifurcated the trial into a “liability” proceeding and a “damages” proceeding. There were two phases to the liability proceeding: in the first, the court had to determine if Beyond Systems met the Maryland state law standard for being classified as an ISP; in the second, it then had to determine if it was a “bona fide” ISP. The jury found that Beyond Systems met the state law standard, but said because of its litigation activities and relationship to Hypertouch, it was not a “bona fide” ISP. It held that Beyond Systems had invited its own injury and was thus barred from recovery.

The Tactics Utilized by Plaintiffs Constituted Consent

While the cause of action in this case is derived from state statutes, it is rooted deeply in the tort law tradition. Thus, common law rules are applicable in such cases. The Fourth Circuit held, accordingly, that the common law principle that one cannot recover damages flowing from conduct he consents to barred Beyond Systems from any recovery in this case. The appellate court agreed with the trial court that the actions of Beyond Systems constituted consent.

 Claims Based on State Statutes Viewed Through The Lens of Tort Law

The Maryland and California laws at issue in this case exist only as a result of an exception to the federal law which precluded many such statutes, the CAN-SPAM Act (15 U.S.C. § 7701(a(11) et seq.). The federal law allowed certain state laws to continue in operation so long as they were aimed at prohibiting “falsity or deception” in such spam e-mails. Both the Maryland and California laws fall into that category, but since they are primarily concerned with falsity and deception, the Fourth Circuit indicated they fall “into the vein of tort.”

It is a general maxim of tort law that “no wrong is done to one who consents.” In other words, one who consents to conduct of another cannot recover in an action of tort for the conduct or for harm resulting from it. Maryland and California courts have recognized that “[t]hose who, with full knowledge, assent to the invasion of their interests may not complain.”

The Fourth Circuit held that in this case, there was “overwhelming” evidence that Beyond Systems consented to the harm it claims it suffered. It created fake e-mail addresses solely to gather spam, embedded those e-mail addresses in web sites in a way in which they could only be discovered by “spam crawler” programs, and even increased storage capacity to hold more spam e-mails.

But the distinction here is admittedly a thin one. In a footnote, the court made clear it is not barring all claims from a plaintiff ISP whose legitimate business is impacted by deceptive spam and gathers e-mails to have evidence for a suit. The case here turned on the nature of Beyond Systems as a company (its substantial revenue stream from claims related to spam e-mail), and the court said that this plaintiff “gratuitously created circumstances which would support a legal claim and acted with the chief aim of collecting a damage award.”

The Judgment of the District of Maryland Is Affirmed

The Fourth Circuit agreed with the District Court that Beyond Systems had consented to receive the spam e-mails in question in this case, and thus it was barred from any potential recovery.