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Zoobuh Inc. v. Savicom Inc.

United States District Court, D. Utah

April 3, 2019

ZOOBUH, INC., a Utah corporation, Plaintiff,
v.
SAVICOM, INC., dba MINDSHARE DESIGN, a California Entity [TERMINATED]; DG INTERNATIONAL, a foreign entity; DG INTERNATIONAL LIMITED, LLC, a Delaware entity; Sylvia van Baekel, an individual, Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING MOTION FOR DEFAULT JUDGMENT

          JILL N. PARRISH, DISTRICT JUDGE

         This matter is before the court on the Motion for Default Judgment (ECF No. 76) against defendant DG International Limited, LLC (“DGI LLC”) filed by Plaintiff ZooBuh, Inc. (“ZooBuh”) pursuant to Fed.R.Civ.P. 55(b)(2). ZooBuh seeks statutory damages and treble damages against DGI LLC for its alleged violations of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), 15 U.S.C. § 7701 et seq, in the amount of $3, 003, 600.00. The court grants ZooBuh's motion.

         BACKGROUND

         ZooBuh is a Utah corporation with its principal place of business in Utah County, Utah. ZooBuh provides email services to its customers, and it owns all of the servers, routers, and switches on its network. Every ZooBuh email account is registered, hosted, and serviced through ZooBuh's hardware.

         DGI LLC is a Delaware limited liability company with its principal place of business in New Castle, Delaware. DGI LLC is an email marketing company. It entered into a contract with Defendant DG International Limited (“DGI Limited”), a foreign entity, to send emails to persons on DG International's customer lists. The customer list at issue in this case contained email addresses for persons who had supposedly registered for the dating website xdating.com. DGI LLC used the platform of Savicom, Inc., dba Mindshare Design (“Mindshare”)[1] to send email advertisements to the email addresses associated with the xdating.com customer list.[2]

         Zoobuh alleges that it and its customers have received thousands of email advertisements for xdating.com. All of these emails arrived on Zoobuh's email servers, which are located in Utah. The emails contain links to a registration page for xdating.com. Many of the emails contain misleading information: they purport to identify people registered on xdating.com, but in reality the people identified in the emails do not exist and are not users of xdating.com. Rather, the emails are sent from “virtual cupids”: fake users created by DGI LLC and/or DG International who communicate with users in the same way actual users would. As xdating.com's terms and conditions explain:

THIS SITE USES FANTASY PROFILES CALLED “ONLINE FLIRT®” In order to enhance your amusement experience, to stimulate you and others to use our Services more extensively, and to generally sprinkle some sparkle and excitement into the Services of XDATING.COM, we may post fictitious profiles, generate or respond to communications by means of automated programs or scripts that simulate or attempt to stimulate your intercommunication with another real human being (though none really exists and any dialog is generated by programming) . . . .

         Many of the emails at issue are tailored to the recipient's location, in this case, Utah. Some of the emails state, “Hey there [username], these are few [sic] members we've selected for you near Salt Lake City.” The emails identify supposed members of xdating.com living in Salt Lake City, Ogden, Sandy, West Jordan, Cedar Valley, West Valley City, Provo, Midvale, Spanish Form, Orem, and Murray-all cities in Utah. But the members identified whose usernames range from “bigbootylicious” to “sassyhottie37, ” appear to be virtual cupids only. Many images are reused with different usernames and ages.

         According to ZooBuh, neither it nor its customers elected to receive email advertisements for xdating.com. Rather, ZooBuh believes that its customers are being opted-in to receive emails from xdating.com when, in actuality, the customers are attempting to unsubscribe from xdating.com's email list. Specifically, ZooBuh has an auto-unsubscribe feature that does not distinguish between unsubscribe links and marketing links. As such, the auto-unsubscribe “follows all links.” This, according to ZooBuh, has inadvertently resulted in ZooBuh customers being added to the xdating.com customer list.

         ZooBuh alleges that all of the emails at issue violate at least one or more provisions of CAN-SPAM. ZooBuh alleges that it has suffered harms to its business, including financial harm, lost time, and server crashes. ZooBuh regularly receives customer complaints concerning spam email, and some customers have stopped using ZooBuh because of the spam emails.

         DGI LLC was served on November 1, 2017. See ECF No. 11. Although DGI LLC initially appeared in this case, when its motion to dismiss was denied, its attorneys withdrew from the case. The court gave DGI LLC until July 23, 2018 to appear and file its answer. DGI LLC failed to file an Answer and the time to respond expired. On August 15, 2018, the clerk of court entered a default certificate as to DGI LLC.

         ZooBuh now seeks the entry of default judgment against DGI LLC for 24, 024 violations of 15 U.S.C. § 7704(a)(1).

         ANALYSIS

         ZooBuh moves the court pursuant to Fed.R.Civ.P. 55(b)(2) to enter a default judgment against DGI LLC for its violations 15 U.S.C. § 7704(a)(1). ZooBuh has obtained a default certificate as required by DUCivR 55-1(a). The court has subject matter jurisdiction over the case under 15 U.S.C. § 1331 (federal question doctrine) and 15 U.S.C. § 7706(g)(1) (authorizing original jurisdiction), and personal jurisdiction over DGI LLC.[3] The court now addresses whether ZooBuh has standing to bring a claim for relief under 15 U.S.C. § 7704(a)(1) and then addresses whether ZooBuh has successfully established that it is entitled to the relief it seeks against DGI LLC.[4]

         A. Claim for Relief under 15 U.S.C. § 7704(a)(1)

         1. Standing

         To bring private action to enforce the CAN-SPAM Act, ZooBuh must have statutory standing. See Gordon v. Virtumundo, Inc., 575 F.3d 1040, 1049 (9th Cir. 2009).[5] Under 15 U.S.C. § 7706(g)(1), “[a] provider of Internet access service adversely affected by a violation of section 7704(a)(1) . . . of this title, may bring a civil action in any district court of the United States with jurisdiction over the defendant.” The question of standing involves two questions: “(1) whether the plaintiff is an ‘Internet access service' provider . . . and (2) whether the plaintiff was ‘adversely affected by' statutory violations.” Gordon, 575 F.3d at 1049; see also XMission, L.C. v. Trimble, No. 2:17-CV-00013, 2018 WL 5045236, at *2 (D. Utah Aug. 24, 2018), report and recommendation adopted, No. 2:17-CV-13, 2018 WL 5044237 (D. Utah Oct. 17, 2018).

         The CAN-SPAM Act defines “Internet access service” as “a service that enables users to access content, information, electronic mail, or other services offered over the Internet, and may also include access to proprietary content, information, and other services as part of a package of services offered to consumers. Such term does not include telecommunications services.” See 15 U.S.C. § 7702(11) (cross-referencing 47 U.S.C. § 231(e)(4)). ZooBuh alleges that it is a “service provider of email, blog, and chat services.” ZooBuh also “owns all the servers, routers, and switches on its network through which it hosts and ...


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