7th circuit court ruling in e360 v. Spamhaus
Mickey has some commentary and the full ruling up on Spamsuite. In short the appeals court affirmed the default judgment, vacated the judgment on damages and remanded the case back to the lower court to determine appropriate damages.
There are a couple bits of the ruling that stand out to me and that I think are worthy of comment.
Spamhaus made a very bad tactical decision by initially answering and then withdrawing that answer. The appeals court ruled that action signaled that Spamhaus waived their right to argue jurisdiction and that they submitted to the jurisdiction of the court. Based on this, the appeals court upheld the default judgment against Spamhaus. Not necessarily the outcome any of us wanted, but that doesn’t set any precedent for future cases unless defendants answer and then withdraw the answer. Specifically on page 12 of the ruling the court says:
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.
Score one for e360. The judgment against Spamhaus stands. Disappointing for them I’m sure, and frustrating that it was bad legal advice and judgment that resulted in them submitting to a foreign court’s jurisdiction.
The appeals court determined that the lower court erred by accepting e360’s statements on damages and that more investigation should have been done by the lower court before the 11.7 million dollar award. Thus the appeals court charged the lower court to revisit the question of damages.
I would call this a win for Spamhaus, particularly given the decision says, “Generally, this court will not reverse a damages award in a default judgment unless it is clearly excessive.” Clearly the court thinks the damages were excessive. I expect there is going to be significant legal wrangling around the real damages. Discovery should be an interesting process, clarifying business processes of both e360 and Spamhaus.
Perhaps the most important ruling, for other DNSBLs, is found in this quote:
This affirms that Spamhaus can list spammers and spam sources even if the mail complies with CAN SPAM. As long as listings follow the published guidelines of a DNSBL, then the DNSBL can list mailers who comply with CAN SPAM. Even better the court sees no basis for the lower court modifying Spamhaus’ listing criteria. Definitely a win for Spamhaus.
Overall I think the ruling is generally what we could have expected. I’m quite pleased that the court affirmed that Spamhaus may legally list senders that comply with CAN SPAM. I am also eager to see what happens during discovery for damages.