CAN-SPAM Liability for Your e-mail partners.

The U.S. District Court for the District of Arizona recently rejected a request for summary judgment by a marketer who claimed that the CAN-SPAM Act does not impose liability on companies for the actions of their marketing partners. The court held that it based on the text of the Act, and the legislative history of the CAN-SPAM Act imposing stricter regulations imposed on entities engaged in the dissemination of pornography, marketers might be liable for their e-mail partners who violate the Act.

The key issue in the court's analysis is the theory of agency. This theory imposes liability on a person who uses an agent to act on their behalf - the principal. In this case, the court felt that the facts might be sufficient to impose liability on the principal. Later litigation will determine whether the facts meet this standard.

For hosts, the key issue is that the FTC continues to expand its enforcement of the CAN-SPAM Act. In this case, there was evidence that the principal received many SPAM complaints about the activities of its agent, and not only continued to employ the agent, but turned a blind eye to the complaints. Based on the FTC's recent activity, it is becoming very clear that the FTC is beginning to seek to impose liability up the marketing chain. It is no longer enough to contractually require partners to comply with the law. The FTC is sending a message that entities who know, or should know, that their partners are engaged in activities that may violate a law, will be held liable under the same law.