e360's $11 Million Win Against Spamhaus... Now Reduced To Just $3 (Not $3 Million, But Just $3)

from the what-percentage-of-$135-million-is-that? dept

For about five years now, we've been following the bizarre case of email marketer e360 vs. Spamhaus. As you may know, e360 sued Spamhaus for defamation (and a few other things) for listing e360 as a spammer. You may have heard about e360 winning over $11 million dollars. You may have also heard about it asking for $135 million. And then there was a greatly reduced award of $27,000. Except now, the court has reduced the award down to $3. Yes, three whole dollars. It would appear that a court was not particularly impressed with e360. Let's review the history.

The whole lawsuit was silly, because Spamhaus' spam list is an opinion, not a factual statement. However, being a UK organization, Spamhaus (after initially engaging) decided to simply ignore the US judicial process, which resulted in the court granting a default judgment for over $11 million to e360. e360 then tried to force Spamhaus to shut down on the basis of that ruling, but the effort was rejected.

Around this time, Spamhaus decided to get back involved, asking for the default judgment to be set aside. The appeals court refused to do that, but did send the ruling back to the district court to figure out a way to more accurately determine damages. That resulted in the following, as summarized by Venkat Balasubramani at the link above:
Back at the district court, e360 was left with the task of proving up its damages, but it suffered a slew of discovery foibles. e360's principal failed to appear for his deposition as scheduled and failed to respond to Spamhaus's interrogatory requests. Spamhaus moved to dismiss on the basis of e360's discovery failures, and the trial court gave e360 another opportunity to address the discovery issues. e360 supplemented its previous responses but added a slew of new witnesses. It also increased its damages estimate from $11.7 million to a "whopping $135 million." It also sought to reopen discovery. The trial court said no dice and struck the new witnesses listed by e360 and struck e360's requested damage award to the extent it exceeded the initial $11.7 million request.
The court then reduced the award from $11 million down to $27,002. That didn't go over well with either party, and both appealed. Things definitely looked bad for e360 from the beginning of the appeal, with the respected Judge Posner positively berating e360's damages claims:
"I have never seen such an incompetent presentation of a damages case," Posner said. "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."
That certainly provided a hint of what was to come. The award was reduced from the $27,002, down to a mere $3. Honestly, $3 seems even more mocking than if the court had taken it down to $0. The ruling details e360's incompetence in handling this lawsuit, especially the damages claims, which appear to have been made up entirely by the guy who runs e360 using a formula he himself created. It then rejects even the $27,000, saying that even damages of that amount do not appear to be supported by the evidence, and so concludes that the only reasonable award is a "nominal" award of $1 for each of the three charges, making the grand total $3. The judge even points out that e360's own conduct in the case resulted in "snatch[ing] defeat from the jaws of certain victory."
By failing to comply with its basic discovery obligations, a party can snatch defeat from the jaws of certain victory. After our earlier remand, all e360 needed to do was provide a reasonable estimate of the harm it suffered from Spamhausís conduct. Rather than do so, however, e360 engaged in a pattern of delay that ultimately cost it the testimony of all but one witness with any personal knowledge of its damages. That lone witness lost all credibility when he painted a wildly unrealistic picture of e360ís losses. Having squandered its opportunity to present its case, e360 must content itself with nominal damages on each of its claims, and nothing more. We VACATE the judgment of the district court and REMAND this matter with instructions to enter judgment for the plaintiffs in the amount of three dollars.
Priceless. Or, well, three bucks.


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