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Court Awards MySpace 230 Million Dollar Verdict

By Stephanie Robinson

The judge in MySpace Inc. v. Wallace, et al, CV-07-1929-ABC-AGR (C.D. Cal. May 12, 2008) entered a default judgment against Sanford Wallace and Walter Rines for violations of the CAN-SPAM Act and ordered the defendants to pay MySpace over $230 million in statutory damages. The CAN-SPAM Act regulates the transmission of commercial email and various activities related to commercial email, such as prohibiting the use of false, misleading, or deceptive information, prohibiting the use of automated ?bots? to create multiple email accounts, and requiring certain contact information in commercial electronic mail messages. MySpace, a social networking site, allows individuals to create unique user profiles containing personal and private information and to share their profile information with others. The networking site allows users to send each other messages within the MySpace network and to post comments on each other?s profile pages. MySpace alleged that Wallace and Rines created over 11,000 false profiles by circumventing MySpace?s security measures designed to prevent such actions. MySpace further asserted that Wallace and Rines sent nearly 400,000 commercial messages and posted 890,000 comments from 320,000 profiles defendants ?hijacked? by luring users to a website designed to look like a MySpace page. The phony MySpace page then solicited MySpace users? account credentials which defendants Wallace and Rines used to hijack user profiles and send messages. The court found that Wallace and Rines violated the CAN-SPAM Act and assessed damages as follows: - $157,390,200 against Wallace and $233,777,500 against Rines, for violations of the CAN-SPAM Act ($157,390,200 in joint and several liability and an additional $63,387,300 against Rines). - Statutory damages in the amount of $1,500,000 against both defendants for violations of California?s anti-phishing statute, Cal. Bus. & Prof. Code § 22948.2. - Attorneys? fees in the amount of $4,709,140.00, as calculated pursuant to the formula prescribed by Local Rule 55-3 ($5,600 plus 2% of the amount over $100,000); plus costs of suit.

Full post as published by Business and Technology Law on May 29, 2008 (boomark / email).