Maryland Court Hears Appeal of Ruling Shooting Down Spam Limits

The Baltimore Sun (Baltimore, MD)
October 13, 2005

Byline: Tricia Bishop

Oct. 13--A case that could affect Maryland's ability to curtail fraudulent e-mail advertisements was argued yesterday before the Maryland Court of Special Appeals, which now must decide whether to affirm a lower court ruling that the state's restriction on so-called "spam" is unconstitutional and unenforceable across state lines.

An attorney for Eric Menhart, a recent graduate of the George Washington University Law School who was among the first to file suit under state law against an alleged spam marketing firm, argued before the court yesterday that the borderless nature of the Internet required laws to reach into other areas.

But an attorney for Joseph Frevola, a former New York Internet marketer who was sued by Menhart, told the judges his client was innocent and wouldn't be bound by the Maryland law even if he weren't.

The outcome is potentially important in shaping Internet law. E-mail often travels through several servers in various locations before reaching its destination, which -- with laptops and wireless Internet service -- can change daily. That makes it difficult to discern who has jurisdiction over illegal spam messages, which make up about three-quarters of all e-mail sent.

The Federal Trade Commission gets thousands of complaints about spam, and Internet service providers say the flood of deceptive e-mail pitches for everything from herbal remedies to money-laundering scams clog their systems and annoy their customers. But many e-mail marketers contend their solicitations are legitimate, like advertisements delivered in the U.S. mail, and are wrongly lumped together as "spam."

Menhart created a Maryland company called MaryCLE LLC to sue spammers under the 2002 Maryland Commercial Electronic Mail Act. The law allows residents to sue for $500 in civil damages for every misleading or fraudulent e-mail they receive that meets certain requirements. It also allows Internet service providers to sue for $1,000 per message.

But when Menhart and an Internet service provider partner took Frevola to Montgomery County Circuit Court last year requesting $168,750 in damages for 83 alleged piece of "spam," Judge Durke G. Thompson threw out the case. He ruled the Maryland statute was "unconstitutional" because it sought to regulate commerce outside state borders. Thompson also ruled that the Maryland court had no jurisdiction over the New York defendant.

"It's an interesting case," said Court of Appeals Judge Sally D. Adkins as she heard arguments yesterday with judges Mary Ellen Barbera and James P. Salmon.

"How does that differ from placing an ad on national television?" Adkins asked, saying both were intrusive, but e-mail more quickly dismissed.

Maryland Attorney General J. Joseph Curran filed a brief in the case, arguing that Judge Thompson's decision should be overturned because it is "based on flawed analysis that conflicts with the intent of the General Assembly."

More than three dozen states have enacted laws to halt such computer mail solicitations, or at least impose rules on them, though few of the laws have been enforced or have had to stand up to court scrutiny. Those that have -- in Washington and California -- were initially found unconstitutional, though higher courts overturned those rulings on appeal.

Menhart and his Rockville attorney, Michael S. Rothman, hope the same happens in Maryland.

"To me, the important thing is just to normalize electronic [communication] and fundamentally assert that somebody has the right to police it," Rothman said.

Also in the courtroom in Annapolis yesterday were attorney Stephen H. Ring of Gaithersburg and his client, Paul A. Wagner, who owns a small Internet service provider in Wheaton called Beyond Systems Inc. Wagner and Ring have filed 21 lawsuits -- many of them in Montgomery County Circuit Court -- against so-called spammers. The Menhart appeal could affect their cases, Wagner said.

"Basically, we're here to come up with the right recipe" to win on appeal, said Wagner, who filed the lawsuits in hopes of slowing the 70,000 pieces of spam his servers process daily.

"If the Maryland statute is found to be unconstitutional, then the spammers will be given basically a green light," Ring said.

Andrew Dansicker, who represented Frevola yesterday, worried that the anti-spam laws were being taken advantage of, leading to a "cottage industry" of individuals looking to make a buck by suing so-called bad guys. And though Frevola said he was a legitimate Internet marketer, he also said he's been forced to abandon his company, First Choice Internet.

The lawsuit and fear of others like it "basically put me out of business," he said.