Quick news from the E360 case

(via usenet)

The audio transcript of the damages hearing in the E360 case is available as an mp3 file: http://www.ca7.uscourts.gov/tmp/8K0VUL4K.mp3

The money quote at 19:20 into the recording:

I have never seen such an incompetent presentation of a damages case, it's not only incompetent, it's grotesque. You've got damages jumping around from 11 million to 130 million to 122 million to 33 million. In fact the damages are probably zero

Judge rejects Linhardt's request to be dismissed from Comcast lawsuit

When a judge's ruling starts with "I have before me a largely misguided motion...", you know it's a bad day for whoever filed it.

In January, E360 filed a lawsuit against Comcast in the hopes that they could force Comcast to accept E360's spam. E360 lost that suit.

In March, Comcast counter-sued E360 and its owner Dave Linhardt for spamming. This suit is still ongoing.

In April, E360 filed a motion to dismiss, asking among other things, that Linhardt be dismissed from the suit under the theory that he was only doing his job as officer of the corporation, and only the corporation should be held liable.

Today, Judge Zagel ruled against E360 on almost every single point. Most significantly, Linhardt will remain part of the lawsuit:

This leaves the final point, which seeks dismissal of the only natural person among the Counter-Defendants, Linhardt. What is offered to support his dismissal from the claims is the rule which protects corporate officers from personal liability for misdeeds of the corporation. However, this rule does not cover corporate officers who are alleged to direct and control the corporation. It is difficult to seek shelter in this rule when one is alleged to be the whole owner and controller of the all the corporations involved, as is the case here. And there are allegations of specific actions by Linhardt which would establish his liability, i.e., that he deliberately lied to Comcast when he orally stated that all intended e-mail recipients have opted in to receive the emails and that he ordered the abuse of process.

The only piece of the lawsuit the judge was willing to dismiss was Comcast's "unjust enrichment" claim which E360 asked to have dismissed and which Comcast didn't even bother to argue. The judge has dismissed this claim, but mentioned — practically invited — that Comcast was free to re-plead this count after discovery.

Also of interest is the Judge's reference to Linhardt's habit of repeatedly dropping and re-filing lawsuits. This is a judge who knows E360 for what they are and won't be letting them get away with any bullshit.

If only Susan Gunn and David Ritz had had judges with this much clue. But then, Comcast is very rich and Gunn and Ritz are not, and in the legal system, you get what you pay for.

(Speaking of which, I would like to take this opportunity to mention that David's legal battles are not over yet, and you can donate to his defense fund here.)

Linhardt drops the other shoe

Or the fourth shoe. Whatever. Who's counting?

Two weeks ago, I wrote about how E360 had dropped their third SLAPP lawsuit against Susan Gunn, Mark Ferguson, and Kelly Chien. E360's tactic seems to be to file unwinnable but expensive nuisance lawsuits against Gunn et al, and then drop the lawsuit at the last minute, allowing them the ability to file yet again later on. The theory being, I suppose, that you can hurt your victims more by dragging them into court repeatedly than by dragging them into court once and seeing it through to the end.

At the time, I speculated as to what Linhardt had planned for the next time.

I didn't have long to wait, as within days, Linhardt slapped Gunn with yet another subpeona. At Susan's request, I've not mentioned it until now, but her lawyer has given her the go-ahead and so you may now read it in her post on usenet.

I'll let you read it for yourselves, but in a nutshell, they demand that she cough up everthing she knows and every piece of documentation she has on the inner workings of Spamhaus.

The subpeona seems to be void on jurisdictional grounds, so it's unlikely that E360 will be getting anything from Susan.

E360 drops lawsuit against Feguson, Gunn, and Chien — again

This just in: alleged spammer E360, who has filed SLAPP lawsuits not once, not twice, but three times against various individuals it thinks are somehow connected to Spamhaus, or who simply called E360 a spammer, has voluntarily dropped their lawsuit yet again.

Quick history: David Linhardt, the owner of E360 first filed a lawsuit against Susan Gunn, Mark Ferguson, Kelly Chien, and other anti-spam activists in federal court. That suit ended when Linhardt didn't even show up in court (neither did the defendants, who had never been served.)

A month later, Linhardt re-filed the same lawsuit, but in state court this time. This forced the defendants to get lawyers and prepare for a lawsuit all over again. In September 2007, Linhardt once again dropped the lawsuit.

True to form, he filed yet a third lawsuit in January of this year, naming Susan Gunn, Mark Ferguson, and Kelly Chien. This lawsuit was interesting in that it coincided with E360's lawsuit against Comcast. Things became interesting, with suits, counter suits, and counter-counter-suits flying thick and furious. There are rumors of offers from Linhardt to settle out of court which were presumably rejected by the defendants.

In mid-April, Gunn filed a motion to dismiss for lack of jurisdiction. The court gave Linhardt until May 27 to file a response, which Linhardt did not do. Gunn then filed a motion to dismiss based on Linhardt's failure to respond to the first motion.

Finally, comes news that Linhardt has filed his own motion to dismiss. The filing also notes that he's managed to settle with Ferguson. Unfortunately, as with most out-of-court settlements, neither side is saying what the terms were. Knowing what I know of Ferguson, I'm betting that he's not the one who conceeded anything.

The interesting thing is that Linhardt filed to dismiss with prejudice, meaning he won't be allowed to file again.

Now I'm not a lawyer, but I'm puzzled as to why the plaintiff would file to dismiss with prejudice, thus shutting the door for good on his ability to file yet again. This is essentially a legally-binding pledge not to sue again. Is he hoping that by doing this, he'll convince the defendants not to file any counter-suits? Or perhaps this will make the court look more favorably at him in such a suit. Or perhaps this was a condition that was attached in some sort of settlement he made with Ferguson.

If not for the fact that he'd filed with prejudice, I would assume this was just another round of his previous tactic of repeated file-and-drop. He knows he can never actually win a SLAPP lawsuit against anti-spam activists, so his most damaging tactic was to file a suit, and then drop it before he can lose, thus allowing him to repeat the attack. But filing with prejudice? Either he really means to let it go, or it's a diversion of some sort — perhaps he's planning to file in Federal court again next time.

Bad day for E360 (but a good one for the rest of us)

I just got back from vacation to a passel of delightful news. First is word that E360, not to put too fine a point on it, got their ass handed to them in the E360 vs Comcast lawsuit.

A copy of the decision can be found at SpamSuite. It's seven pages long and very worth reading. It starts out:

Plaintiff e360Insight, LLC is a marketer. It refers to itself as an Internet marketing company. Some, perhaps even a majority of people in this country, would call it a spammer.

Now there's an opening paragraph that has Bad Day written all over it for E360.

Anyway, the entire opinion is well worth reading and is clearly the work of a judge who Gets It.

Bottom line: Comcast is immune from lawsuit under the Good Samaritan provision of the CDA, § 230(c). E360's claim that being CAN-SPAM compliant removes that immunity is rubbish. E360's Denial Of Service claims are rubbish. E360's Tortious Interference with Prospective Economic Advantage claim is likewise nonsense. E360's first ammendment rights have nothing to do with Comcast, a private enterprise.

Entire lawsuit is dismissed on the grounds that § 230(c) grants immunity to Comcast.

This is a very good outcome. It reinforces the precedent that § 230(c) immunity is absolute and applies to spam-blocking, and it establishes that CAN-SPAM compliance does not affect that immunity.

All that remains is to see what happens with Comcast's countersuit.

More coverage:

• J.D. Falk: If It Spams Like a Duck...
• John Levine: Comcast 1, E360 0
• Slashdot: Judge In e360 Vs. Comcast Rules e360 a Spammer

Comcast strikes back against E360

Some quick background: alleged spammer E360 has sued internet provider Comcast because of Comcast's refusal to deliver E360 spam to Comcast customers. See my March 4 entry for more information and Comcast's response.

This week, the other shoe dropped as Comcast has filed a countersuit against E360, David Linhardt, and many of its related companies (Maverick Direct Marketing, Bargain Depot, Northshore Hosting, etc.) for spamming, computer fraud, abuse of process and other violations. The full text of the lawsuit can be found at Spamsuite, and it's a doozy.

Some of the highlights:

• Comcast states in no uncertain terms that E360 et al are spammers.
• E360 fabricates opt-in records (¶29).
• In 2006, Linhardt called Comcast and "fraudulently represented to a Comcast employee that all of the intended recipients of e360's email messages have opted-in to receive such messages" (¶34).
• In 2007, Linhardt sent a letter claiming the same thing (Exhibit A).
• Comcast offered to help them with their email practices but E360 refused, asserting that they would learn how to circumvent Comcast's filtering system through discovery (¶35)
• After obtaining a court order preventing Spamhaus from listing them as spammers, E360 began marketing their "IP Protection Services" in which they would arrange for third-parties to be included in the court order for a fee (¶41-45, Exhibit B) [I've written about this elsewhere].
• Virtumundo, a spammer, has purchased E360's IP Protection Services (¶46-48, Exhibit C)
• E360 keeps filing, dropping, and re-filing lawsuits against spam-fighters. (¶49-50)
• E360 filed its lawsuit against Comcast knowing it was without merit (¶76)
• E360 filed the lawsuit in order to use the discovery process to learn how to circumvent Comcast's filtering system. (¶77)

Comcast asks that E360 be enjoined from sending spam, that E360 pay damages, that E360 return their illegal profits, and that E360 pay Comcast's legal costs.

What I find most interesting is Comcast's assertion in paragraph 76 that E360 filed this lawsuit in order to use the discovery process to learn how to circumvent Comcast's spam filters.

Ever since this lawsuit was filed by E360, I've been wondering what their motivation was, since they must have known they could never win. It seems that we now have at least part of the answer.

Comcast answer to E360

Spamsuite has published Comcast's response in the E360 vs Comcast lawsuit (in which E360 is suing Comcast for blocking E360's spam.) The document is a long, slow read, since the Comcast lawyers are being very careful to dot all their t's and cross all their i's. Either that, or they're being paid by the word. For the fun part, skip ahead to their Memorandum of law, below.

Allow me to summarize: most E360 allegations are facts about E360, for which Comcast says they don't have any first-hand information to form a belief and therefore deny.

E360 makes many allegations of harm they've suffered because of the spam blocking, and Comcast says they don't have any first-hand information to form a belief and therefore deny.

E360 quotes the law in several places, and Comcast admits that E360 is quoting the law. Except where E360 gets it wrong, in which case Comcast denies.

E360 claims they don't spam, and that they follow the rules. Comcast responds that because they get hundreds of thousands of emails to its subscribers, some of which are forged, and therefore they don't have any first-hand information to form a belief and therefore deny.

E360 claims that Comcast is deliberately and maliciously attacking them. Comcast denies this.

Paragraph 60 is interesting. E360 alleges that Comcast writes pink contracts. Comcast denies this.

Things get interesting in the "Affirmative Defenses" section of Comcast's response (starting at paragraph 63).

Naturally, Comcast starts right out with the section of the Communications Decency Act that immunizes isps that use technical means (e.g. filtering) to protect their subscribers from spam. They go on to state that CAN-SPAM and various state laws also immunize them.

They then point out that E360 has unclean hands based on their violations of CAN-SPAM, the Computer Fraud and Abuse act, and the Illinois Electronic Mail Act.


Next on the docket is Comcast's Memorandum in Support of their motion. This is where the fun begins. This is the document where Comcast calls a spammer a spammer.

The memorandum starts out Plaintiff is a spammer who refers to itself as a “internet marketing company,” and takes off from there.

Of special interest is Comcast's reminder to the court that even if spam doesn't actually violate the CAN-SPAM act, it's still spam and isps still have the right to block it.

E360 sells affiliate status to other spammers — CONFIRMED

Just announced publicly on the net-abuse newsgroups: Some time ago, someone phoned Kelly Hale at E360 pretending to be someone being blocked by Spamhaus and answering E360's ad for Spamhaus removal services. Hale explained in some detail how, for $7500 per block of IP addresses, E360 would force Spamhaus to stop listing the caller's addresses by claiming that the caller is an affiliate of E360.

Hale explained at some length as to how it would be done, leveraging off of their previous lawsuit against Spamhaus (which they won by default when Spamhaus failed to show up, claiming lack of jurisdiction). Hale also offered quantity discounts if the caller wanted to unlist more than a "C" block (256 addresses) of IP space.

An advertising brochure for E360's service offers three options: The first is called "IP Identity Management" and involves modifying the Arin (master registry of all IP blocks) database so make spammer IP addresses look like they belong to E360. This is the service we knew E360 was offering.

The second service they offer is IP Tunneling. In a nutshell, this allows spammer email servers to connect to the internet over a virtual private network to E360's servers in order to hide the spammer's true IP addresses and make them appear to come from E360.

The third option is for the senders to pay E360 to send the spam for them.

A copy of the audio recording can temporarily be found at yousendit.com, along with copies of E360's brochures advertising the services [1], [2]. (Yousendit.com has a download limit, so these links won't work for very long, but I expect mirrors will appear shortly and will update this post as that happens.)

Anyway, very little of this comes as a surprise; it was pretty obvious that E360 was gaming the legal decision as a money-making scheme, having already sold affiliate status to Virtumundo at least, but this audio recording and these brochures are an undeniable smoking gun.

The only real questions that remain are: was this what they had in mind all along when they sued Spamhaus or did they only think of it later? And: how will the judge react when he sees and hears this?

Direct magazine picks up the Linhardt story

Direct magazine has picked up the story: Linhardt Sues Anti-Spammers…Again. The article contains a fair amount of detail on the story and its history. There's also a link to Linhardt's explanation as to why he claimed to have Sender Score certification from Return Path, which Return Path has denied.

E360 files third SLAPP suit against Susan Gunn and others

Three days ago, I asked rhetorically where E360 gets the money to file all these harassing lawsuits. That question becomes more serious with the news that Linhardt has filed yet a third lawsuit against Susan Gunn along with Mark Ferguson and Kelly Chien.

Details of the lawsuit can be found at SpamSuite. In a nutshell, it's the same lawsuit as before, claiming defamation because the defendants called them spammers.

There's no way that E360 can win this case on the merits given the abundant evidence of their spamming, and even Ferguson's proof that E360 falsified opt-in records. This is clearly just another lawsuit intended to harass anti-spam activists.

One major question: How many times are the courts going to allow Linhardt to keep re-filing the same lawsuit before they put a stop to it.

Where is the money coming from?

This brings us to the question: Where does E360 get the money for all these lawsuits? The one against Comcast certainly will go nowhere unless E360 spends significant money pursuing it.

One theory I've heard is that, like the Mark Felstein lawsuit against Spamhaus in 2003, this lawsuit is quietly being backed by a coalition of spammers. In this case, the spammers are hoping for a legal precedent which will force Comcast, and by extension other ISPs, to accept spam without any blocking.

E360 back in court; suing Comcast this time

Where do they get the money for all this litigation?

According to Direct magazine, E360 is suing Comcast for blocking E360 spam.

E360 CEO Dave Linhardt insists that E360 does not spam, and that they've been Sender Score Certified by Return Path. Oddly enough, however, Return Path says that E360 has not been certified.

E360 is asking for more than $20M in damages. Perhaps this is their new business model? Send spam, then sue whoever blocks them.

Update: Spamsuite has the paperwork.

Their comments:

Of all of the pathetic lawsuits I've seen....

Well, this one's got it all.

Deferring a connection is tarpitting and is a denial of service attack. Not delivering mail is a denial of service attack. Using a spam filter is not legal (or maybe it's just that it's not kosher -- we'll have to find a rabbi to rule on that one). Not telling a sender how to evade filters is fraudulent. A sender's inability to design a system that can cope with sending more email while waiting for deferred messages to timeout and retry is a denial of service attack caused by the receiver. e360Insight has even tossed in a First Amendment claim and I was pretty sure that we moved past that by 1999. And finally, having a whitelist or a feedback loop that you don't let everyone have is a violation of fair trade rules.

It's stunning. It really is. I'm not entirely sure how you get to be this dense, but I suspect that it's a painstaking (and probably painful) process involving frontal lobotomies and maybe electroshock treatments.

My own comments: This isn't the first time a spammer has sued someone for blocking spam. About two years ago, a spammer called Longhorn Singles sued the University of Texas over spam blocking. They lost.

More legal woes for E360

According to the Pacer archives, E360 has become caught up in another lawsuit. This time, they're being sued by John W. Ferron, of Ferron & Associates. In short, Ferron is suing E360 and its owner Dave Linhardt under the Ohio Consumer Sales Practices Act.

Ferron alleges that E360/Linhardt sent multiple emails advertising discount luxury goods which are actually counterfeit products. Ferron is asking for $200 per fraudulent email (total around $120,000) plus legal fees

E360/Linhardt has moved to dismiss based on jurisdiction. I'm not familiar with Ohio's long-arm statutes, but if they're anything like North Dakota's — with which I have some familiarity — E360/Linhardt is facing an uphill battle on this one.


If there is interest, I will make copies of the court documents available here, assuming SpamSuite doesn't pick them up.

Update: Docs are now online at Spamsuite.

Interesting Motion To Strike document filed by E360

Not entirely sure what to make of it, but it's a fun read. In September, Mark Ferguson, a former defendant in a SLAPP lawsuit brought against him by E360 and then later dismissed, filed a "friend of the court" affidavit in the E360 SLAPP suit against Spamhaus.

Two days ago, E360 filed a motion to have Ferguson's affidavit struck from the record. Their reasons for this are fun to read.

E360Insight drops case against Feguson et al

On netnews, Mark Feguson announced that E360 had dropped their lawsuit against him and his fellow defendants.

SpamSuite concurs, and reports seeing this entry in the clerk's docket:

Activity Date: 8/30/2007   Participant: E360 INSIGHT
VOLUNTARY DISMISSAL W/LEAVE TO REFILE-ALLOWED
Judge:  QUINN, THOMAS P.

Loss and victory for Spamhaus in court

As reported at SpamSuite, the 7th Circuit has ruled on Spamhaus' appeal. In a nutshell, the default judgement against Spamhaus has been upheld, but the damage award and the injunction are overturned.

What this means is that because Spamhaus didn't bother to defend themselves (previously arguing that Illinois courts didn't have jurisdiction over them), they've lost the case by default. This can no longer be argued in court, nor can jurisdiction. This was to be expected; it would have taken extraordinary circumstances for the court to reverse the default judgement.

However, the judge has ruled that the $11M+ judgement against them was excessive, and so everybody goes back to court to argue damages. It's impossible at this time to predict what the damages will finally be.

In addition, the injunction against listing E360 as a spammer has been lifted. As long as Spamhaus can show new evidence of spamming (which is trivial to do), we can expect the E360 SBL entry to return.

Update: John Levine has a better and more detailed analysis.

Mark Ferguson's affidavit and other legal docs in the E360 case

Just a few items worth mentioning from the SpamSuite web site.

Most interesting, is Mark Ferguson's affidavit in support of Spamhaus' motion to dismiss on jurisdiction. Nothing unexpected here; it contains his assertions that he does not live in Illinois or do business there, and that E360Insight was definately sending him spam. Exhibit VII is the most interesting, as it contains a claim from E360 that they had the signup information for Ferguson. The problem is, the alleged signup information uses a bogus IP address, indicating that it was forged after the fact.

E360 apparently sells affiliate status to other spammers to force removal under injunction

(See the tag "E360" for more background on this story. In short, E360 Insight has obtained a court order forbidding anti-spam organization Spamhaus from listing E360 or any of its properties as a spammer.)

In April, I commented on E360's request that Spamhaus be forced to remove listings based entirely on E360's word that they owned the listed domain. Spamhaus noted that this would in effect allow E360 to sell affiliations to any spammer that wanted to be removed.

A week ago, I observed that E360 seemed to be advertising just such a service.

Well, as of today, Spamhaus has filed notice to the judge that E360 has done exactly that.

On June 15, 2007, counsel for e360 wrote counsel for Spamhaus and demanded that Spamhaus remove from its list of known spammers certain IP addresses owned by a company named Virtumundo. ... e360’s June 15 letter asserts that Virtumundo is a customer of and doing business with e360, and that e360 has contracted with Virtumundo for network management and eMessaging services...

The service agreement between E360 and Virtumundo makes it clear that neither company has any ownership interest in the other, and that E360 is merely acting as a service provider. One cannot help but suspect that the "service" E360 is actually offering is the removal of Spamhaus record SBL41635.

Full text of Spamhaus' notice to the court, and their exhibits, including a copy of the agreement between E360 and Virtumundo can be found at Spamsuite.

Update: Direct magazine (email marketers' trade magazine) has an article about this, entitled "Linhardt Turns Spamhaus Court Order into New Service".

E360 to all the other email marketers: give us your lists

OK, this is just getting weird. E360 claims they're launching a "Permission Verification Service" in which you send them a complete copy of your mailing list and they evaluate it to let you know if it's legit. Or it's an interesting way to add email addresses to their own lists. You decide.

Oh, and there's an "oh, poor us" paragraph comparing spam-fighting to McCarthyism.

E360 advertising Spamhaus removal services

In April, I wrote about an interesting aspect of the E360 vs Spamhaus court case. E360 has obtained a court injunction which requires that Spamhaus remove E360 and all of their aliases from the SBL. However, E360 does not want to provide Spamhaus with a list of such aliases so that Spamhaus can comply, and they don't want to provide any proof of ownership of those aliases which they've informed Spamhaus about. In short, they want a blank check to contact Spamhaus at any time and demand the removal of any listing.

I pointed out at the time that giving E360 what they're asking for would enable them to go into the de-listing business. That is, anybody who wanted off the SBL could make a deal with E360 and E360 would then send a letter to Spamhaus claiming ownership of the domain in question and demanding its removal from Spamhaus' list.

Well, it looks like something similar is coming to pass. If you search for spamhaus on Google, one of the ads that comes up is this ad from E360:

Problems With Spamhaus?
Read how e360 helps clients verify
permission & remove SBL listings.
www.e360insight.com

The page linked by the ad consists of an attack on Spamhaus, and ends with "Contact us to learn how to verify permission and remove Spamhaus SBL listings"

More on E360Insight vs Hacker X

Direct magazine, a news magazine for direct marketers has a little bit more on the story of the alleged cracker who broke into E360's systems and sent porn spam to nearly 300,000 people on one of E360's client's email lists. E360 CEO Dave Linhardt claims that they subsequently lost that customer's emailing business.

Linhardt also made sure to mention that two of the defendants in the SLAPP suit he filed against various anti-spammers live in the region where the cracker was operating, and that he believes the defendants have been helping Spamhaus, a defendant in another SLAPP suit he has filed.

Linhardt says that he's notified the FBI and other authorities of the break-in.

For an example of the cracker's work, see this wonderful Snopes article about the email alleging that folks with AIDS can fly Southwest airlines for free.

Other examples attacked with American Airlines and Wendy's Hamburgers.