e-Commerce Docket Sheet

A company did not violate federal electronic-privacy laws when it monitored e-mail traffic directed to servers formerly owned by a bankrupt entity and obtained by the company as part of an asset purchase. The court ruled that the monitoring did not constitute an 'interception' within the meaning of the Electronic Communications Privacy Act ('ECPA'). Ideal Aerosmith, Inc. v. Acutronic USA, Inc., No. 07-1029 (W.D. Pa. Dec. 13, 2007). The court granted the defendant company's motion to dismiss the plaintiff's ECPA claims, ruling that the defendant used no 'device' to 'intercept' the e-mails within the meaning of the ECPA, but was merely, as owner of the bankrupt company's system, a direct party to the communications. The court found that it was irrelevant to the ECPA claim that the company was not the intended recipient of the e-mails, including those directed to the plaintiff, a current competitor of the company that had briefly operated the bankrupt entity as a debtor-in-possession prior to the sale of the assets to the defendant company. The court also concluded that even if the monitoring of the e-mails constituted an 'interception,' the defendant is exempt from ECPA liability because it was the 'provider of wire or electronic service whose facilities are used in the transmission,' and has the right under the statute to monitor e-mails sent to former employees of the bankrupt entity. The court declined to dismiss the plaintiff's trade-secret, unfair-competition and civil-conspiracy claims based on the monitoring of e-mails containing the plaintiff competitor's trade secrets, however, ruling, among other things, that under Pennsylvania law, a cause of action may arise from mistaken acquisition of trade secrets.

To establish a knowing or willful violation under Section 227(b) of the Telephone Consumer Protection Act ('TCPA'), a prerequisite for an award of treble damages for the making of prerecorded voice-message telemarketing calls to an individual's residence, a plaintiff need not prove that the defendant knew that such conduct violated the law but only that the defendant knew the underlying facts of the conduct. Charvat v. Ryan, 2007 Ohio LEXIS 3353 (Ohio Dec. 27, 2007). The court reversed the appellate court's ruling denying the plaintiff's request for treble damages and remanded the case to the trial court. The court found that the knowledge requisite to a 'knowing' violation of the statute is factual knowledge, and proof of intent to violate the law is not necessary. The court concluded that to establish a 'knowing' violation, a plaintiff need prove only that the defendant knew that it acted or failed to act in a manner that violated the statute, and that once such a showing is made, the court may, but need not, award treble damages.

A representative association that accepts assignments of 'junk fax' claims under the Telephone Consumer Protection Act ('TCPA') lacks standing to assert the assignors' claims. U.S. Fax Law Center, Inc. v. T2 Technologies, Inc., 2007 Colo. App. LEXIS 2378 (Colo. Ct. App. Dec. 13, 2007). In upholding the dismissal of the plaintiff's consolidated suits for lack of standing, the court found that Congress expressly provided that federal courts apply substantive state law in determining which parties may bring TCPA claims in federal court. The court concluded that under Colorado law, TCPA claims for statutory damages are not assignable because they are 'penal in nature,' and generally, the right to recover a penalty is not assignable in the absence of express statutory authority to the contrary. The court determined that the monetary recovery sought by the plaintiffs was a penalty because it required no proof of actual damages, and it would constitute 'a recovery far in excess of any actual damages that plaintiff's assignor may have sustained.'

A clickwrap agreement on a foreign-bride service Web Site that contained a forum-selection clause mandating a Kentucky forum is not unconscionable and is enforceable against a Tennessee litigant, despite the fact that the agreement is a contract of adhesion. Woodruff v. Anastasia Int'l, Inc., 2007 Tenn. App. LEXIS 781 (Tenn. Ct. App. Dec. 19, 2007). The appellate court affirmed the lower court's dismissal of the plaintiff's complaint, holding that the forum selection clause in the online agreement was valid and enforceable. The court found that despite the agreement being a contract of adhesion, the plaintiff presented no evidence that the forum-selection clause was oppressive and that it is 'reasonable to expect that a corporation that has customers in many states may want to limit where it is subject to suit.'

A class-action waiver contained in an arbitration clause in a consumer-financial services contract is enforceable under Pennsylvania law, because it is neither procedurally nor substantively unconscionable. O'Shea v. Direct Financial Solutions, LLC, 2007 U.S. Dist. LEXIS 90079 (E.D. Pa. Dec. 6, 2007). The court granted the defendant's motion to compel arbitration, finding that the clause, while part of an adhesion contract, was not procedurally unconscionable, because it was not presented in confusing language or hidden within a document. The court held that it was of no legal consequence that the consumer is limited to arbitration
while the company retains its right to elect litigation of disputes, because
'lack of mutuality does not invalidate an arbitration agreement' under Pennsylvania law. The court also found that the class-action waiver was not substantively unconscionable because the estimated damages per consumer in the instant matter are substantially greater than other cases where small damage amounts within a potential class of consumers prevented Pennsylvania courts from enforcing such waivers.

A class-arbitration waiver contained in an arbitration clause in a consumer electronics-sales contract is enforceable under Texas law and does not contravene fundamental New Jersey public policy. Davis v. Dell, Inc., 2007 U.S. Dist. LEXIS 94767 (D. N.J. Dec. 28, 2007). The district court granted the defendant's motion to compel arbitration and stay the plaintiff's proposed class-action litigation, ultimately applying Texas law in finding that the class-action waiver was enforceable despite being part of a contract of adhesion. In deciding to uphold the Texas choice-of-law provision in the sales contract, the New Jersey district court determined that the class-action waiver was not against fundamental New Jersey public policy. The court concluded that the class-action waiver was not unconscionable because, among other things, the potential recovery amount was not so low that it precluded rational consumers from pursuing recovery; the fraud alleged is not the type that would go unnoticed by consumers; and enforcement of the class-arbitration waiver would not be 'so unconscionable that no decent, fair-minded person would view the results without being possessed of a profound sense of injustice.'

Electronic-banking records containing cardholder data are not subject to a claim of conversion under Mass- achusetts law. In Re TJX Companies Retail Security Breach Litig., No. 07-10162 (D. Mass. Dec. 18, 2007). The court denied the plaintiffs' motion to amend the complaint to include a claim for conversion based on a retailer's alleged failure to safeguard cardholder information that facilitated a data-security breach. The court rejected the plaintiffs' argument that conversion can be based on the misappropriation of electronic records, stating that Massachusetts law traditionally does not recognize a cause of action for the conversion of intangible records. The court declined to follow the recent New York decision in Thyroff v. Nationwide Mutual Ins., 8 N.Y.3d 283 (2007), which found that certain electronic records could be subject to a conversion claim, commenting that assuming it adopted Thyroff, the data in this case 'may very well fall outside the scope of conversion even as delineated by Thyroff.'

A Texas-based licensee that purchased software from a Minnesota company and communicated with the company via telephone and e-mail regarding technical-support issues is not subject to personal jurisdiction under Minnesota's long-arm statute. RMC Publications, Inc. v. Doulos PM Training, 2007 U.S. Dist. LEXIS 89144 (D. Minn. Dec. 4, 2007). The court granted the defendant's motion to transfer the case to a Texas district court. The court found that purchasing copies of and licenses to the plaintiff's software, and communicating long distance for the purpose of technical support, are insufficient contacts to support personal jurisdiction over the defendant in Minnesota. The court also rejected the plaintiff's argument that personal jurisdiction is proper under 'effects test' articulated by the Supreme Court, concluding that 'monetary damages suffered by a corporation in one state as a result of activities in a different state is not nearly so tied to the forum state and thus is not a basis for personal jurisdiction.'

Monitoring e-Mail To Bankrupt Entity Is OK under e-Privacy Laws

A company did not violate federal electronic-privacy laws when it monitored e-mail traffic directed to servers formerly owned by a bankrupt entity and obtained by the company as part of an asset purchase. The court ruled that the monitoring did not constitute an 'interception' within the meaning of the Electronic Communications Privacy Act ('ECPA'). Ideal Aerosmith, Inc. v. Acutronic USA, Inc., No. 07-1029 (W.D. Pa. Dec. 13, 2007). The court granted the defendant company's motion to dismiss the plaintiff's ECPA claims, ruling that the defendant used no 'device' to 'intercept' the e-mails within the meaning of the ECPA, but was merely, as owner of the bankrupt company's system, a direct party to the communications. The court found that it was irrelevant to the ECPA claim that the company was not the intended recipient of the e-mails, including those directed to the plaintiff, a current competitor of the company that had briefly operated the bankrupt entity as a debtor-in-possession prior to the sale of the assets to the defendant company. The court also concluded that even if the monitoring of the e-mails constituted an 'interception,' the defendant is exempt from ECPA liability because it was the 'provider of wire or electronic service whose facilities are used in the transmission,' and has the right under the statute to monitor e-mails sent to former employees of the bankrupt entity. The court declined to dismiss the plaintiff's trade-secret, unfair-competition and civil-conspiracy claims based on the monitoring of e-mails containing the plaintiff competitor's trade secrets, however, ruling, among other things, that under Pennsylvania law, a cause of action may arise from mistaken acquisition of trade secrets.

To establish a knowing or willful violation under Section 227(b) of the Telephone Consumer Protection Act ('TCPA'), a prerequisite for an award of treble damages for the making of prerecorded voice-message telemarketing calls to an individual's residence, a plaintiff need not prove that the defendant knew that such conduct violated the law but only that the defendant knew the underlying facts of the conduct. Charvat v. Ryan, 2007 Ohio LEXIS 3353 (Ohio Dec. 27, 2007). The court reversed the appellate court's ruling denying the plaintiff's request for treble damages and remanded the case to the trial court. The court found that the knowledge requisite to a 'knowing' violation of the statute is factual knowledge, and proof of intent to violate the law is not necessary. The court concluded that to establish a 'knowing' violation, a plaintiff need prove only that the defendant knew that it acted or failed to act in a manner that violated the statute, and that once such a showing is made, the court may, but need not, award treble damages.

A representative association that accepts assignments of 'junk fax' claims under the Telephone Consumer Protection Act ('TCPA') lacks standing to assert the assignors' claims. U.S. Fax Law Center, Inc. v. T2 Technologies, Inc., 2007 Colo. App. LEXIS 2378 (Colo. Ct. App. Dec. 13, 2007). In upholding the dismissal of the plaintiff's consolidated suits for lack of standing, the court found that Congress expressly provided that federal courts apply substantive state law in determining which parties may bring TCPA claims in federal court. The court concluded that under Colorado law, TCPA claims for statutory damages are not assignable because they are 'penal in nature,' and generally, the right to recover a penalty is not assignable in the absence of express statutory authority to the contrary. The court determined that the monetary recovery sought by the plaintiffs was a penalty because it required no proof of actual damages, and it would constitute 'a recovery far in excess of any actual damages that plaintiff's assignor may have sustained.'

A clickwrap agreement on a foreign-bride service Web Site that contained a forum-selection clause mandating a Kentucky forum is not unconscionable and is enforceable against a Tennessee litigant, despite the fact that the agreement is a contract of adhesion. Woodruff v. Anastasia Int'l, Inc., 2007 Tenn. App. LEXIS 781 (Tenn. Ct. App. Dec. 19, 2007). The appellate court affirmed the lower court's dismissal of the plaintiff's complaint, holding that the forum selection clause in the online agreement was valid and enforceable. The court found that despite the agreement being a contract of adhesion, the plaintiff presented no evidence that the forum-selection clause was oppressive and that it is 'reasonable to expect that a corporation that has customers in many states may want to limit where it is subject to suit.'

A class-action waiver contained in an arbitration clause in a consumer-financial services contract is enforceable under Pennsylvania law, because it is neither procedurally nor substantively unconscionable. O'Shea v. Direct Financial Solutions, LLC, 2007 U.S. Dist. LEXIS 90079 (E.D. Pa. Dec. 6, 2007). The court granted the defendant's motion to compel arbitration, finding that the clause, while part of an adhesion contract, was not procedurally unconscionable, because it was not presented in confusing language or hidden within a document. The court held that it was of no legal consequence that the consumer is limited to arbitration
while the company retains its right to elect litigation of disputes, because
'lack of mutuality does not invalidate an arbitration agreement' under Pennsylvania law. The court also found that the class-action waiver was not substantively unconscionable because the estimated damages per consumer in the instant matter are substantially greater than other cases where small damage amounts within a potential class of consumers prevented Pennsylvania courts from enforcing such waivers.

A class-arbitration waiver contained in an arbitration clause in a consumer electronics-sales contract is enforceable under Texas law and does not contravene fundamental New Jersey public policy. Davis v. Dell, Inc., 2007 U.S. Dist. LEXIS 94767 (D. N.J. Dec. 28, 2007). The district court granted the defendant's motion to compel arbitration and stay the plaintiff's proposed class-action litigation, ultimately applying Texas law in finding that the class-action waiver was enforceable despite being part of a contract of adhesion. In deciding to uphold the Texas choice-of-law provision in the sales contract, the New Jersey district court determined that the class-action waiver was not against fundamental New Jersey public policy. The court concluded that the class-action waiver was not unconscionable because, among other things, the potential recovery amount was not so low that it precluded rational consumers from pursuing recovery; the fraud alleged is not the type that would go unnoticed by consumers; and enforcement of the class-arbitration waiver would not be 'so unconscionable that no decent, fair-minded person would view the results without being possessed of a profound sense of injustice.'

Electronic-banking records containing cardholder data are not subject to a claim of conversion under Mass- achusetts law. In Re TJX Companies Retail Security Breach Litig., No. 07-10162 (D. Mass. Dec. 18, 2007). The court denied the plaintiffs' motion to amend the complaint to include a claim for conversion based on a retailer's alleged failure to safeguard cardholder information that facilitated a data-security breach. The court rejected the plaintiffs' argument that conversion can be based on the misappropriation of electronic records, stating that Massachusetts law traditionally does not recognize a cause of action for the conversion of intangible records. The court declined to follow the recent New York decision in Thyroff v. Nationwide Mutual Ins. , 8 N.Y.3d 283 (2007), which found that certain electronic records could be subject to a conversion claim, commenting that assuming it adopted Thyroff , the data in this case 'may very well fall outside the scope of conversion even as delineated by Thyroff.'

A Texas-based licensee that purchased software from a Minnesota company and communicated with the company via telephone and e-mail regarding technical-support issues is not subject to personal jurisdiction under Minnesota's long-arm statute. RMC Publications, Inc. v. Doulos PM Training, 2007 U.S. Dist. LEXIS 89144 (D. Minn. Dec. 4, 2007). The court granted the defendant's motion to transfer the case to a Texas district court. The court found that purchasing copies of and licenses to the plaintiff's software, and communicating long distance for the purpose of technical support, are insufficient contacts to support personal jurisdiction over the defendant in Minnesota. The court also rejected the plaintiff's argument that personal jurisdiction is proper under 'effects test' articulated by the Supreme Court, concluding that 'monetary damages suffered by a corporation in one state as a result of activities in a different state is not nearly so tied to the forum state and thus is not a basis for personal jurisdiction.'