IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
E360INSIGHT, LLC,
an Illinois Limited Liability Company, and
DAVID LINHARDT, an individual
Plaintiffs,
v.
THE SPAMHAUS PROJECT,
a company limited by guarantee and
organized under the laws of England, aka
THE SPAMHAUS PROJECT LTD,
Defendant.
PLAINTIFF’S MOTION FOR DEFAULT
JUDGMENT AND ORDER FOR PERMANENT INJUNCTION
Plaintiffs, e360Insight, LLC and David Linhardt (collectively Plaintiffs), by and through their attorneys, Synergy Law Group, LLC, respectfully requests that this court enter a judgment and issue a permanent injunction against Defendant The Spamhaus Project, aka The Spamhaus Project Ltd., (Defendant), resulting from Defendant’s default on August 23, 2006. In support of this motion, Plaintiffs state:
1. On July 20, 2006 the Honorable Phillip Bronstein, Judge of the Circuit Court of Cook County, issued a Temporary Restraining Order against Defendant. Judge Bronstein also ordered that discovery be expedited, and Plaintiffs served written discovery on Defendant on this same day.
2. On July 21, 2006 Defendant filed an Answer in the Circuit Court and also removed the matter to this Court pursuant to 28 U.S.C. § 1441.
3. On July 24, 2006 Defendant removed the then existing references to Plaintiffs e360Insight LLC and David Linhardt from its website.
4. On August 17, 2006 counsel for Defendant, Evan Brown, of Hinshaw & Culbertson, LLP, informed Plaintiffs’ counsel that: 1) He and his firm were withdrawing from representing Defendant because Defendant was releasing the Hinshaw & Culbertson firm and, to his knowledge, Defendant did not intend to obtain new counsel; 2) Defendant was seeking to withdraw its Answer to the Amended Complaint filed in the Circuit Court before Defendant removed this matter to this Court; and 3) Defendant would not be providing responses to the discovery propounded by Plaintiffs.
5. On August 17, 18 and 19, 2006 Defendant placed new references to Plaintiffs, specifically “E360 Insight”; E360Insight: Ravinia Hosting Company LLC”; “E360 Insight / e360data.com”; “e360Insight:bargaindepot.net / bargainshoppecorp.com”; “Discount Accessories aka e360data.com”; “Northgate Internet Services aka e360data.com”; and “E360 Insight / e360data.com: home base” on the Spamhaus website in contravention of the Circuit Court’s TRO by Defendant’s listing of e360 on the following Spamhaus webpages:
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL26394
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45581
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45582
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45583
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45584
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45585
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45586
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45587
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45648
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45649
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45651
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45652
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45685.
6. On August 23, 2006 this matter was before the Court for status and for presentment of Plaintiffs’ Motions for Rules to Show Cause pertaining to Defendant’s violation of the Temporary Restraining Order, and Defendant’s failure to respond to Court Ordered discovery. Counsel for both parties appeared at this hearing.
7. At this hearing Defendant’s oral motion for leave to withdraw its answer to the complaint was granted. Defendant’s motion [docket entry Document 13] to withdraw the appearance of Evan Brown and Andrew Cripe as counsel for Defendant was also granted. Plaintiffs’ oral motion for entry of default against Defendant was also granted. Finally, the Court converted the then current Temporary Restraining Order to a Preliminary Injunction. (See docket entry Document 19.)
8. Plaintiff respectfully requests that judgment pursuant to Federal Rule of Civil Procedure 55 be entered against Defendant in the amount of $26,715,000.00 in damages and $40,695.55 in court costs and fees. The damages amount is supported by the facts contained in the accompanying affidavit of David Linhardt and also includes Plaintiffs’ request for punitive damages, which Plaintiffs respectfully submit should be an amount sufficient to punish Defendant for its past intentional and malicious conduct and deter Defendant from engaging in the same conduct in the future, $15,000,000.00. The fees and costs are supported by the facts contained in the accompanying affidavit of Bartly J. Loethen, counsel for plaintiffs.
9. Plaintiffs also respectfully request that the Court enter a Permanent Injunction requiring the following:
a. Defendant Spamhaus shall not ever take any action to cause email sent by Plaintiff e360 Insight, Plaintiff David Linhardt, or any affiliates, subsidiaries, or related companies owned or controlled by e360 Insight or Linhardt (collectively the “Plaintiff Parties”) to be blocked, delayed, altered, or interrupted in any way (including, without limitation, by listing Plaintiff Parties on Defendant’s website on the ROKSO list, within an SBL listing on Defendant’s website, using blacklisting technology in concert or conjunction with others, or taking any other action to cause any such interference) unless Spamhaus can demonstrate by clear and convincing evidence that Plaintiff Parties have violated CAN-SPAM or other relevant provisions of US law. Such clear and convincing evidence may only be shown after providing Plaintiff Parties an opportunity to review any alleged offending email, including a review of the email header and content (in its entirety), and providing Plaintiff Parties an opportunity to show the offending email was not sent in violation of US law to the satisfaction of a reasonable person. If such clear and convincing evidence is shown, then (and only then) may Spamhaus list the IP address (and only the IP address) from which the offending email was sent on its website. Spamhaus shall not list entire networks or ranges of IP addresses owned or operated by Plaintiffs simply because they are registered in the Plaintiff’s name or physical address without meeting the clear and convincing standard for the ip address in question.
b. Defendant Spamhaus shall also, within 5 business days of the date hereof, post on its website at both the main home page and at the ROKSO jump page, a message of 1 inch by 1 inch, the text of which is to be reasonably approved by Plaintiffs, and which, generally, indicates Plaintiffs were erroneously listed on the website as spammers, and that Plaintiffs are not spammers. Defendant Spamhaus shall leave such message on its site for a period of six months.
c. Defendant Spamhaus shall not contact (and shall not cause others to so contact) any customers or suppliers of the Plaintiff Parties in efforts to cause said customers or suppliers to cease doing business with Plaintiff Parties, nor shall Spamhaus contact (or cause others to so contact) customers or suppliers of Plaintiff Parties and allege or assert that Plaintiff Parties are “Internet Spammers” or other like term.
Respectfully submitted,
E360Insight, LLC. and David Linhardt
By: /s/ Joseph L. Kish
One of Their Attorneys
Bartly J. Loethen
Joseph L. Kish
Kristen M. Lehner
Synergy Law Group, LLC
730 West Randolph, 6th Floor
Chicago, Illinois 60661
Telephone: (312) 454-0015
Facsimile: (312) 454-0261
=================================
CERTIFICATE OF SERVICE
I hereby certify that on August 30, 2006 I electronically filed the foregoing document with the Clerk of the United States District Court for the Northern Division of Illinois using the CM/ECF system which will send notification of such filing to the following:
Evan D. Brown [ebrown@hinshawlaw.com]
Andrew B. Cripe [acripe@hinshawlaw.com]
Joseph L. Kish [jkish@synergylawgroup.com]
Kristen M. Lehner [klehner@synergylawgroup.com]
And I hereby certify that I have sent by Federal Express via International Priority the document to the following non CM/ECF participants: The Spamhaus Project, aka The Spamhaus Project Ltd. .
And I hereby certify that I have caused to be hand delivered the document to the following non CM/ECF participants: The Spamhaus Project, aka The Spamhaus Project Ltd.
________/s/ Kristen M. Lehner__________
Kristen M. Lehner
This is David Linhardt's affidavit in support of e360insight LLC's Motion for Default Judgment.
===============================
STATE OF ILLINOIS
COUNTY OF COOK
AFFIDAVIT OF DAVID LINHARDT I, David Linhardt, under oath states as follows:
1. I am the President of e360Insight, LLC (e360). I am 36 years old and competent to testify. I have personal knowledge of the matters stated in this affidavit and can and will truthfully testify as to those matters.
2. e360 is an email based marketing company whose business practices have, at all times, complied with federal and state requirements and standards pertaining to the sending of commercial email, including the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, 15 U.S.C. § 7701 (CAN-SPAM).
3. e360 uses Internet Service Providers (ISPs) to facilitate its marketing efforts on behalf of its business partners. At all times relevant to this case, e360 has complied with all Accepted Use Policies and Terms Of Service agreements stated by the ISPs.
4. e360 does not engage in "spamming". The internet marketing in which e360 engages employs a variety of permission processes that e360 controls, and that its marketing partners use, to obtain permission and consent from, and provide notice to, the consumers that receive the email messages.
5. Before December 2003, e360 had never been removed from any ISP for violating its Authorized Use Policy, Terms of Service, or any other policies and procedures.
6. Spamhaus acts as a blacklisting agent for ISPs, who purchase Spamhaus' blocking technology in order to police their Accepted Use Policies and Terms of Use Agreements for compliance. ISPs do this so they can assure their customers that they will not be inundated by unwanted email solicitations and messages.
7. One of the automated lists that Spamhaus generates is the ROKSO list.
8. Spamhaus notes on its website: "ROKSO is a "3 strikes" register. We don't list inadvertent spammers or newbie marketing departments spamming 'by mistake'. To get to 3 strikes (i.e.: 3 terminations for spam offences such as emailing spam, hosting spammers, selling spamware) requires a very determined spam outfit. Being thrown off an ISP takes a lot of doing, nobody is thrown off an ISP without having been given ample warnings and chances to stop violating the ISPs Terms of Service. Being thrown off ISPs *twice * for the spam offences means the spmnmer is determined, knows the consequences, and has actually signed up to a new ISP with the specific intention of breaking the ISPs Terms of Service. Being thrown off *three* ISPs for spam offences means the spmnmer is a committed hard-line spam operation which regards ISPs as simply throwaway resources." Id.
9. On its website, Spamhaus promotes the efficacy of the ROSKO list by noting that it includes only serious offenders: "ROKSO is a register of known hard-line professional spam operations (bulk emailers and "spam gangs') that have been thrown off Internet Service Providers 3 times or more for spamming or spam-related offenses. As the ROKSO database collates information and evidence on each gang, it's an invaluable tool for ISP Abuse Desks to vet prospective customers. For the legal departments of ISPs who are looking for the information linking the spam they get to the spammers sending it. Global Law Enforcement Agencies also use the data to help track down and bring to justice spammers who are violating any number of laws when spamming." See http://www.spamhaus.org/faq/answers.lasso?section=ROKSO%20FAQ. Thus, by placing e360 and Linhardt on the ROKSO, even erroneously, Spamhaus can justify its heavy-handed tactics to third parties by telling them that they are dealing with a "hard-line" professional spam operation. As Spamhaus notes: "No ISP with any sense will allow ROKSO spammers on their network." See http://www.spamhaus.org/rokso/about.html.
10. In December 2003, Spamhaus listed me and e360 on the ROKSO list.
11. Neither I nor e360 had ever been terminated from, or "thrown off of' any ISPs for violating any Acceptable Use Policy, Terms Of Service, or any other policy or procedure prior to the ROKSO listing.
12. I immediately brought Spamhaus' error to its attention. I made numerous additional attempts to have my and e360's names removed from the ROKSO list by communicating the problem directly to Spamhaus. Spamhaus refused and continued to keep me and e360 on the ROKSO list.
13. In addition to placing me and e360 on the ROKSO list, and refusing to remove me and e360 from it, Spamhaus continued to directly cause damage to e360 and me by coercing and intimidating e360's business partners by conveying that continued involvement with e360 and me by such parties would have dire consequences for the partner's ability to continue engaging in e-commerce on the internet.
14. Spamhaus facilitates these threats by labeling the partner a spammer solely due to its association with e360 and me. Spamhaus then indiscriminately blocks all of the partner's e-mail from being sent regardless of its content. This action effectively puts partner out of business and prevents their customers from receiving important and legitimate email from the partner. Only when an e360 partner would terminate its agreement(s) with e360 and me would Spamhaus release the block.
15. Based on the circumstances stated above, e360 and I obtained a Temporary Restraining Order on July 20, 2006.
16. Defendant removed the then occurring references to e360 and me from the Spamhaus website on July 24, 2006.
17. Defendant subsequently removed the litigation to the Northern District of Illinois and answered the complaint.
18. On August 17, 18 and 19, 2006 Defendant placed new references to Plaintiffs, specifically "E360 Insight"; ` E360Insight: Ravinia Hosting Company LLC"; "E360Insight/e360data.com"; "e360lnsight:bargaindepot.net/bargainshoppecorp.com' ; "Discount Accessories aka e360data.com"; "Northgate Internet Services aka e360data.com"; and "E360 Insight/e360data.com: home base" on the Spamhaus website. These references are located on the Spamhaus website at the following internet addresses:
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL26394
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45581
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45582
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45583
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45584
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45585
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45586
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45587
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45648
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45649
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45651
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45652
http://www.spamhaus.org/sbl/sbl.lasso?query=SBL45685
(True and correct copies of these pages are attached to this affidavit as Exhibit C.)
19. Discount Accessories, a sister company of e360 and a company owned by me was also listed as new Spamhaus blacklist references, which listings include references to me personally.
20. Ravinia Hosting Company, LLC a sister company of e360 and a company owned by me was also listed as new Spamhaus blacklist references, which listings include references to me personally.
21. Bargaindepot.net/Bargainshoppecorp.com, a division of e360 was also listed as new Spamhaus blacklist references, which listings include references to me personally.
22. The webpages referenced in paragraph 23 are all false because they connote that e360 and I are engaged in activity that is illegal, violates ISP's Acceptable Use Policy, Terms Of Service, and other policies or procedures. e360, Discount Accessories, and I do not engage in any such activity.
23. The webpages referenced in paragraph 18 connote that e360 and I are "Spammers", which we are not.
24. The webpages referenced in paragraph 18 are also false in the following specific ways:
SBL45581, SBL45582, SBL45583, SBL 45584, SBL45648 and SBL45649 are all used to send messages to those "opting-in" to receive messages from a partner of e360 or one of the other listed entities. All of these listings comply with CAN-SPAM, none are unsolicited, and none of these listings have ever been associated with Brian Haberstroh or Atriks.
25. The webpages referenced in paragraph 18 are also false in the following specific ways:
The ISP sending domains listed in SBL 45585, SBL 45586, and SBL 45587 were never used or controlled by me and were instead registered in error to Discount Accessories by the ISP. There is no possible way these Internet addresses were blocked due to e360 (or another listed entity owned by me) sending email messages, as I have never had the ability to send email from such Internet addresses.
26. The webpages referenced in paragraph 18 are also false in the following specific ways:
SBL45651 is a listing that only has names which are "double confirmed," such that the user has elected, by clicking a link for a second time to provide an additional affirmative consent, to receive the message. Thus, these listings conform to not only CAN-SPAM as well as all ISP Acceptable Use Policy, Terms Of Service and other policies and procedures, they conform to Spamhaus' own guidelines for what are acceptable email transmissions that are exempt form listing on the Spamhaus website. None of these listings have ever been associated with Brian Haberstroh or Atriks.
27. The webpages referenced in paragraph 18 are also false in the following specific ways:
SBL45652 is for an IP address that e360 has not owned or controlled since at least July 24, 2006. Thus the listing referenced could not have arisen as is indicated in the listing of August 18, 2006, as is alleged by Defendant.
28. The webpages referenced in paragraph 18 are also false in the following specific ways:
SBL45685 references the static IP address for my personal cable modem located at my house. It is not used for transmitting any messages pertaining to e360 business except internally and no bulk email has ever been sent from this address. Thus, this listings conforms to not only CAN SPAM as well as all ISP Acceptable Use Policy, Terms Of Service and other policies and procedures, it conforms to Spamhaus' own guidelines for what are acceptable email transmissions that are exempt form listing on the Spamhaus website. This IP address has never been associated with Brian Haberstroh or Atriks.
29. The webpages referenced in paragraph 18 are also false in the following specific ways:
SBL26394 conforms to CAN-SPAM as well as all ISP Acceptable Use policy, Terms Of Service and other policies and procedures.
30. The false listings and negative connotations arising therein have caused our sending of commercial email messages to cease. Thus we are unable to realize revenue from our business. Further, such listings are jeopardizing our data lines, our relationship with our ISPs, and our ability to earn revenue from legitimate business activity.
31. e360 and I have suffered disastrous consequences as a direct result of being placed on the Spamhaus lists and being subjected to Spamhaus' tactics. e360 generates revenue based on the volume of emails it sends to people on its client lists who have opted-in (that is, requested or agreed to receive the emails). e360 cannot generate this revenue when Spamhaus blocks e360 from sending the messages.
32. e360 and I also have had active and pending contracts cancelled as a result of Spamhaus' conduct. Contracts that have been cancelled include SmartBargains, Vendare Media, and OptinBig. I have calculated the loss of revenue from having these active and pending contracts cancelled as a result of Spamhaus' conduct to be $2,465,000.00.
33. e360 and I also have lost numerous opportunities to obtain future work as a result of Spamhaus' conduct. Lost business opportunities include Net Blue, Cogent, Habeas, Yipes. I have determined that the lost value of the business as a result of the inability to monetize the revenue potential from the company and in the lost enterprise value to be at least $9,250,000.
34. The calculation of lost enterprise value results from the following consideration:
businesses operating proprietary opt-in email marketing lists are valued at twice the annual revenue of the business. Similarly, most email marketing companies with opt-in lists are valued at somewhere between $0.25 and $0.50 per active unique opt-in email address. For most of our competition, these valuations are roughly equivalent. Due to our trouble in sending from our list due to the Spamhaus listings, our revenue is roughly $1,000,000 per year, thus the valuation based upon revenue is $2,000,000; despite the fact that we have 45 million unique opt-in email addresses, which would equate to a valuation in a range of $11,250,000 to $22,500,000, thus a reduced valuation due to the inability to monetize our opt-in list of at least $9,250,000.
35. Over and above financial losses stated above, e360 and my reputation in the business community has suffered significantly and continues to suffer, all as a direct consequence of Spamhaus' wrongful acts. In my professional experience, there is nothing more damaging to an Internet marketing business than to be labeled a "spammer". I believe my and e360's reputation in the Internet marketing industry has been damaged in an amount equal to at least $9,250,000, as is detailed above.
36. The fact that e360 and Linhardt remain on the ROKSO list, and remain on the SBL list, make it increasingly difficult and, in some cases, impossible to purchase bandwidth from ISPs, without which e360 simply ceases to be able to operate.
37. I further believe that e360 and I should be awarded punitive damages as well, in the amount of $15,000,000.00 given Defendant's intentional conduct, disregard for my and e360's rights and the laws of the United States. Defendant knew as early as December of 2003 that they had wrongfully listed e360 and me. Rather than taking any corrective measures, Defendant not only continued posting the incorrect listings of e360 and me, it posted additional listings of e360 and me, none of which were posted in compliance with Defendant's own guidelines, United States laws or any foreign law.
38. After the filing of the litigation in this matter and after the entry of the temporary restraining order against Spamhaus, Defendant removed the improper listings temporarily, but rather than provide discovery materials and comply with the rule of United States law, Spamhaus chose to enter new listings, all of which (as detailed above) are false in complete disregard for the orders of United States courts.
39. Defendant called e360 and me "spammers" even though Defendant knew that e360 and I complied with all recognized laws as well as the policies and procedures of the ISPs that e360 and I were involved with and were never accused of violating any Acceptable Use Policy, Terms Of Service, or any other policy or procedure prior to the wrongful ROKSO listing.
40. In addition to the damages sought above, I seek a permanent injunction in order to stop Defendant's wrongful, intentional and malicious conduct from continuing in the future. Defendant has previously disregarded the Temporary Restraining Order so I fear that it might do so in the future.
41. If Defendant does not obey the orders for injunctive relief, the only way to force them to cease the offending action would be to cause a registry of Internet domain names to require the domain name of Defendant (www.spamhaus.org) to be turned over to a third party to ensure compliance with the court's order.
Futher Affiant Sayeth Naught.
________________________________
David Linhardt
Signed and Sworn to before me on
this 30th day of August 2006
________________________________
Notary Public
My commission expires on 2/16/09.
OFFICIAL SEAL
KATHLEEN M SMITH
NOTARY PUBLIC - STATE OF ILLINOIS
MY COMMISSION EXPIRES: 2/16/09
STATE OF ILLINOIS
COUNTY OF COOK
AFFIDAVIT OF BARTLY J. LOETHEN
I, Bartly J. Loethen, under oath states as follows:
1. I am a partner with the law firm of Synergy Law Group, L.L.C. which serves as counsel to Plaintiffs e3601nsight, LLC and David Linhardt in this case.
2. Attached to this affidavit are true and correct copies of the invoices reflecting the work performed by Synergy Law Group, L.L.C. through the month of July, 2006 pertaining to obtaining a Temporary Restraining Order and Preliminary Injunction, and obtaining and enforcing the judgment against Defendant The Spamhaus Project, aka The Spamhaus Project Ltd.
3. In addition to the bills I and the attorneys referenced below have performed work on this matter in the month of August, 2006, for which bills have not yet been generated. Based on my review of written time sheets, I estimate that Plaintiffs will incur $11,602.50 in attorneys fees and costs for the month of August.
4. My standard billing rate is $275.00 per hour. I devoted 9.3 hours to the matters pertaining to obtaining a Temporary Restraining Order and Preliminary Injunction, and obtaining and enforcing the judgment against Defendant The Spamhaus Project, aka The Spamhaus Project Ltd.
5. I was assisted in this case by Joseph L. Kish, a Litigation Partner at Synergy Law Group, L.L.C. Mr. Kish's standard billing rate is $275.00. He devoted 69.9 hours to the matters pertaining to obtaining a Temporary Restraining Order and Preliminary Injunction, and obtaining and enforcing the judgment against Defendant The Spamhaus Project, aka The Spamhaus Project Ltd.
6. I was also assisted in this case by an Associate Attorney at Synergy Law Group, L.L.C. Kristen Lehner. Ms. Lehner's standard billing rate is $175.00 per hour. She devoted 21.2 hours to the matters pertaining to obtaining a Temporary Restraining Order and Preliminary Injunction, and obtaining and enforcing the judgment against Defendant The Spamhaus Project, aka The Spamhaus Project Ltd.
7. I was also assisted in this case by a Research Clerk at Synergy Law Group, L.L.C. Claire Weinstein. Ms. Weinstein's standard billing rate is $85.00 per hour. She devoted 8.7 hours to the matters pertaining to obtaining a Temporary Restraining Order and Preliminary Injunction, and obtaining and enforcing the judgment against Defendant The Spamhaus Project, aka The Spamhaus Project Ltd.
8. I was also assisted in this case by a Paralegal at Synergy Law Group, L.L.C. Curtis Hill. Ms. Hill's standard billing rate is $75.00 per hour. He devoted 11.9 hours to the matters pertaining to obtaining a Temporary Restraining Order and Preliminary Injunction, and obtaining and enforcing the judgment against Defendant The Spamhaus Project, aka The Spamhaus Project Ltd.
9. In addition, the invoices reflect that reasonable necessary costs incurred by Synergy Law Group LLC on behalf of Plaintiffs e360lnsight, LLC and David Linhardt total $1971.05. These costs include filing and process service fees, transportation for court appearances and mailings to the United Kingdom, where Defendant The Spamhaus Project, aka The Spamhaus Project Ltd. is located.
10. The total attorneys fees, costs and expenses incurred by Synergy Law Group, L.L.C. related to the matters pertaining to obtaining a Temporary Restraining Order and Preliminary Injunction, and obtaining and enforcing the judgment against Defendant The Spamhaus Project, aka The Spamhaus Project Ltd. in this case equals $40,695.55.
Further Affiant Sayeth Naught.
Bartly J. Loethen
Signed and Sworn to before me on
30th day of August 2006
(Seal)
My commission expires 2/16/09
OFFICIAL SEAL
KATHLEEN M SMITH
NOTARY PUBLIC - STATE OF ILLINOIS
MY COMMISSION EXPIRES:2/16/09
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
E360INSIGHT, LLC,
an Illinois Limited Liability Company, and
DAVID LINHARDT, an individual
Plaintiffs,
v.
THE SPAMHAUS PROJECT,
a company limited by guarantee and
organized under the laws of England, aka
THE SPAMHAUS PROJECT LTD,
Defendant.
PROPOSED ORDER
This matter coming before the Court upon Plaintiffs’ motion for judgment on the default of Defendant, all Parties given due notice, and the Court being fully advised in the premises; THIS COURT FINDS THAT:
As a result of the default of Defendant, and upon showing of harm to Plaintiffs, Plaintiffs are entitled to relief sought in their complaint for monetary and equitable relief and for costs incident to the case, specifically
1. Defendant has wrongfully placed Plaintiffs on its blacklist of companies who have sent “spam” email.
2. Defendant has tortiously interfered with Plaintiffs contracts with its suppliers and customers.
3. Defendant has tortiously interfered with Plaintiffs prospective economic advantage by blocking email Plaintiffs have a right to send.
4. Defendant has defamed Plaintiffs by publishing false statements about Plaintiffs on its website.
5. Plaintiff is entitled to punitive damages as a result of the reckless and intentional actions of Defendant.
IT IS ORDERED:
For all of the foregoing reasons, the Court grants Plaintiffs e360Insight, LLC and David Linhardt’s Motion For Default Judgment And Order For Permanent Injunction as follows:
A. Defendant Spamhaus shall not ever take any action to cause email sent by Plaintiff e360 Insight, Plaintiff David Linhardt, or any affiliates, subsidiaries, or related companies owned or controlled by e360 Insight or Linhardt (collectively the “Plaintiff Parties”) to be blocked, delayed, altered, or interrupted in any way (including, without limitation, by listing Plaintiff Parties on Defendant’s website on the ROKSO list, within an SBL listing on Defendant’s website, using blacklisting technology in concert or conjunction with others, or taking any other action to cause any such interference) unless Spamhaus can demonstrate by clear and convincing evidence that Plaintiff Parties have violated CAN-SPAM or other relevant provisions of US law. Such clear and convincing evidence may only be shown after providing Plaintiff Parties an opportunity to review any alleged offending email, including a review of the email header and content (in its entirety), and providing Plaintiff Parties an opportunity to show the offending email was not sent in violation of US law to the satisfaction of a reasonable person. If such clear and convincing evidence is shown, then (and only then) may Spamhaus list the Internet Provider (IP) address, and only the IP address, from which the offending email was sent on its website. Spamhaus shall not list entire networks or ranges of IP addresses owned or operated by Plaintiffs simply because they are registered in the Plaintiff’s name or physical address without meeting the clear and convincing standard for the IP address in question.
B. Defendant Spamhaus shall also, within 5 business days of the date hereof, post on its website at both the main home page and at the ROKSO jump page, a message of 1 inch by 1 inch, the text of which is to be reasonably approved by Plaintiffs, and which, generally, indicates Plaintiffs were erroneously listed on the website as spammers, and that Plaintiffs are not spammers. Defendant Spamhaus shall leave such message on its site for a period of six months.
C. Defendant Spamhaus shall not contact (and shall not cause others to so contact) any customers or suppliers of the Plaintiff Parties in efforts to cause said customers or suppliers to cease doing business with Plaintiff Parties, nor shall Spamhaus contact (or cause others to so contact) customers or suppliers of Plaintiff Parties and allege or assert that Plaintiff Parties are “Internet Spammers” or other like term.
D. Defendant is ordered to pay Plaintiffs Two Million Four Hundred Sixty Five Thousand Dollars ($2,465,000) for lost business as a result of the tortious interference with Plaintiffs’ contracts.
E. Defendant is ordered to pay Plaintiffs and additional Nine Million Two Hundred Fifty Thousand Dollars ($9,250,000) for lost revenue resulting from the interference with Plaintiffs’ prospective economic advantage due to Defendant’s blocking revenue producing email messages to consumers seeking those messages, and for Defendant’s defamation of Plaintiffs.
F. Defendant is ordered to pay Plaintiffs Fifteen Million Dollars ($15,000,000) as punitive damages as a result of Defendant’s intentional and reckless actions toward Plaintiffs.
G. Defendant is ordered to pay Plaintiffs Forty Thousand Six Hundred Ninety Five Dollars and Fifty Five Cents ($40,695.55) for legal fees and other costs incident to this action.
ENTERED: September ___, 2006
_____________________________________
CHARLES P. KOCORAS
UNITED STATES DISTRICT JUDGE
UNITED STATES DISTRICT COURT
FOR THE Northern District of Illinois − CM/ECF LIVE, Ver 2.5
Eastern Division
e360 Insight, LLC, et al.
Plaintiff,
v. Case No.: 1:06−cv−03958
Honorable Charles P. Kocoras
Spamhaus Project, The
Defendant.
NOTIFICATION OF DOCKET ENTRY
This docket entry was made by the Clerk on Tuesday, September 12, 2006:
MINUTE entry before Judge Charles P. Kocoras :Motion hearing held on 9/12/2006. Plaintiff's motion [20] for default judgment and order for permanent injunction is taken under advisement. Mailed notice(sct, )
ATTENTION: This notice is being sent pursuant to Rule 77(d) of the Federal Rules of Civil Procedure or Rule 49(c) of the Federal Rules of Criminal Procedure. It was generated by CM/ECF, the automated docketing system used to maintain the civil and criminal dockets of this District. If a minute order or other document is enclosed, please refer to it for additional information.
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United States District Court
Northern District of Illinois
Eastern Division
e360 Insight, LLC et al JUDGMENT IN A CIVIL CASE
v. Case Number: 06 C 3958
The Spamhaus Project
IT IS HEREBY ORDERED AND ADJUDGED that default judgment is entered in favor of the plaintiffs and against defendant for compensatory damages totaling $11,715,000.00, and $1,971.05 in litigation costs.
The Court enters a permanent injunction as follows:
1. Spamhaus shall not take any action to cause email sent by Plaintiffs or their affiliates, subsidiaries, or related companies owned or controlled by Plaintiffs to be blocked, delayed, altered, or interrupted in any way (including, without limitation, by listing Plaintiffs on Spamhaus’s ROKSO list, within an SBL listing on Spamhaus’s website, using blacklisting technology in concert or conjunction with others, or taking any other action to cause any such interference) unless Spamhaus can demonstrate by clear and convincing evidence that Plaintiffs have violated relevant United States law. Such clear and convincing evidence may only be shown after proving Plaintiffs with an opportunity to review any alleged offending email, including a review of the email header and content (in its entirety), and providing Plaintiffs with an opportunity to show the offending email was not sent in violation of United States law to the satisfaction of a reasonable person. If such clear and convincing evidence is shown, then and only then may Spamhaus list the Internet Protocol (IP) address, and only the IP address, from which the offending email was sent on its website.
2. Spamhaus shall not list entire networks or ranges of IP addresses owned or operated by Plaintiffs simply because they are registered in the Plaintiffs’ names or physical addresses without meeting the clear and convincing standard for the IP address in question.
3. Spamhaus shall post, within five business days of the date of this order, on its website at both the main home page and at the ROKSO jump page, a message of 1 inch by 1 inch, the text of which is to be reasonably approved by Plaintiffs, and which, generally, indicates that Plaintiffs were erroneously listed on the website as spammers and that Plaintiffs are not spammers.
Defendant Spamhaus shall leave such message on its site for a period of six months.
4. Spamhaus shall not contact or cause others to contact any customers or suppliers of the Plaintiffs in efforts to cause said customers or suppliers to cease doing business with Plaintiffs.
5. Spamhaus shall not contact or cause others to contact any customers or suppliers of Plaintiffs and allege or assert that Plaintiffs are spammers or other like term.
Michael W. Dobbins, Clerk of Court
Date: September 13, 2006 ________________________________
/s/ Stephen C. Tokoph, Deputy Clerk
This is the Notice of Appeal to the 7th Circuit Court of Appeals in e360insight, LLC. v. The Spamhaus Project, Ltd..
General Docket
US Court of Appeals for the Seventh Circuit
Court of Appeals Docket #: 06-3779 Filed: 10/16/06
Nsuit: 3380 Oth Per Property Damage-FedQue
e360 Insight, et al v. The Spamhaus Project
Appeal from: United States District Court
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Lower court information:
District: 0752-1 : 06 C 3958
Ordering Judge: Charles P. Kocoras, Judge
Court Reporter: Joene Hanhardt, Court Reporter
Date Filed: 7/21/06
Date order/judgment: 9/13/06
Date NOA filed: 10/13/06
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Fee status: paid
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Prior cases:
None
Current cases:
Lead Member Start End
Consolidated:
06- 3779 06- 4169 11/30/06
Docket as of May 17, 2007 11:01 pm Page 1
06-3779 e360 Insight, et al v. The Spamhaus Project
E360 INSIGHT, an Illinois Bartly J. Loethen
Limited Liability Company 314/454-0015
Plaintiff - Appellee Sixth Floor
[COR LD NTC ret]
SYNERGY LAW GROUP
730 W. Randolph Street
Chicago, IL 60661
DAVID LINHARDT Bartly J. Loethen
Plaintiff - Appellee (See above)
[COR LD NTC ret]
v.
THE SPAMHAUS PROJECT, a Matthew M. Neumeier
Company Limited by Guarantee FAX 312/264-0361
and Organized Under the Laws 312/846-5640
of England also known as THE Suite 3400
SPAMHAUS PROJECT, LIMITED [COR LD NTC ret]
Defendant - Appellant HOWREY, SIMON, ARNOLD & WHITE
321 N. Clark Street
Chicago, IL 60611-4714
USA
Docket as of May 17, 2007 11:01 pm Page 2
06-3779 e360 Insight, et al v. The Spamhaus Project
e360 INSIGHT, an Illinois Limited
Liability Company and DAVID LINHARDT,
Plaintiffs - Appellees
v.
THE SPAMHAUS PROJECT, a Company Limited by Guarantee and
Organized Under the Laws of England also known as THE
SPAMHAUS PROJECT, LIMITED,
Defendant - Appellant
Docket as of May 17, 2007 11:01 pm Page 3
06-3779 e360 Insight, et al v. The Spamhaus Project
10/16/06 Private civil case docketed. [06-3779] [2036150-1]
Transcript information sheet due 10/26/06. Appellant's
brief due 11/27/06 for The Spamhaus Project. Docketing
Statement due 10/20/06. (amyd) [06-3779]
10/16/06 [06-3779] ROA from No. Dist. of Il., E. Div. due 11/3/06.
(amyd) [06-3779]
10/17/06 Filed Seventh Circuit Transcript Information Sheet by
Matthew M. Neumeier for Appellant The Spamhaus Project.
[06-3779] [2036150-1] (kell) [06-3779]
10/20/06 Filed Appellant The Spamhaus Project docketing statement.
[06-3779] [2037931-1] (josh) [06-3779]
10/23/06 Filed Seventh Circuit Transcript Information Sheet by
Carrie A. Fino for Appellant The Spamhaus Project.
[06-3779] [2036150-1] (juli) [06-3779]
10/23/06 ORDER: IT IS ORDERED that defendant-appellant file a
supplemental statement of jurisdiction listing the
citizenship of all members of plaintiff e360 Insight, LLC.
The statement is due on or before October 30, 2006.
[2036150-1] DW [06-3779] (See order for further details)
Statement due 10/30/06 for The Spamhaus Project. (juli)
[06-3779]
10/31/06 Disclosure Statements filed by Matthew M. Neumeier (lead
counsel), Carrie A. Fino, Stephen M. Geissler and Craig C.
Martin for Appellant The Spamhaus Project. [06-3779]
[2036150-1] (juli) [06-3779]
11/2/06 ORDER: The court, on its own motion, orders attorney
Matthew M. Neumeier to show cause for his failure to
respond to the court s order of October 23, 2006. Attorney
Neumeier shall file his response on or before November 9,
2006. Counsel is advised that failure to respond may result
in monetary or disciplinary sanctions. [2036150-1] DW
[06-3779] Response to showcause due 11/9/06 for Matthew M.
Neumeier. (juli) [06-3779]
11/3/06 ORDER: Pursuant to Circuit Rule 33, briefing will proceed
as follows: [2036150-1] SCO [06-3779] Appellant's brief due
12/22/06 for The Spamhaus Project. Appellee's brief due
1/22/07 for David Linhardt, for e360 Insight. Appellant's
reply brief due 2/5/07 for The Spamhaus Project. (juli)
[06-3779]
11/6/06 Filed response to order to showcause by Matthew M. Neumeier
for Appellant The Spamhaus Project. [06-3779] [2043342-1]
(hudk) [06-3779]
11/6/06 Filed Appellant The Spamhaus Project supplemental statement
of jurisdiction. [06-3779] [2036150-1] (amyd)
Docket as of May 17, 2007 11:01 pm Page 4
06-3779 e360 Insight, et al v. The Spamhaus Project
[06-3779]
11/9/06 ORDER re: RESPONSE TO SHOW CAUSE ORDER DATED NOVEMBER 2,
2006 filed by defendant-appellant on November 6, 2006, IT
IS ORDERED that the Rule to Show Cause is DISCHARGED.
[2043342-1] DW [06-3779] (juli) [06-3779]
11/15/06 Original record on appeal filed. Contents of record: 1 vol.
pleadings. [06-3779] [2045920-1] (bria) [06-3779]
11/28/06 Supplemental record on appeal filed. Contents of record: 4
vol. transcripts. [06-3779] [2049139-1] (dave)
[06-3779]
12/4/06 Filed motion by Appellant The Spamhaus Project in 06-3779,
Appellant The Spamhaus Project in 06-4169 to consolidate
cases. [2051670-1] [06-3779, 06-4169] (juli)
[06-3779 06-4169]
12/5/06 ORDER: The court orders these appeals CONSOLIDATED for
purposes of briefing and disposition. The briefing schedule
is as follows: [2051160-1] DW [06-3779, 06-4169]
Appellant's brief due 1/9/07 for The Spamhaus Project in
06-3779, for The Spamhaus Project in 06-4169. Appellee's
brief due 2/8/07 for David Linhardt in 06-3779, for e360
Insight in 06-3779, for David Linhardt in 06-4169, for e360
Insight in 06-4169. Appellant's reply brief due 2/22/07 for
The Spamhaus Project in 06-3779, for The Spamhaus Project
in 06-4169. (juli) [06-3779 06-4169]
12/5/06 ORDER: IT IS ORDERED that appellant file a supplemental
statement of jurisdiction indicating the state in which
Maverick Direct Marketing Solutions, Inc. has its principal
place of business. The statement is due on or before
December 12, 2006. (See order for further detail.) DW
[06-4169] [2036150-1] Appellant's statement or declaration
shall be filed on or before 12/12/06 for The Spamhaus
Project. (juli) [06-4169]
12/6/06 ORDER issued DENYING motion to consolidate cases as moot.
These appeals were consolidated on December 5, 2006.
[2051670-1] DW [06-3779, 06-4169] (juli) [06-3779 06-4169]
12/12/06 ORDER: Pursuant to Circuit Rule 33, the briefing schedule
is modified as follows: [2051160-1] SCO [06-3779, 06-4169]
Appellant's brief due 1/23/07 for The Spamhaus Project in
06-3779, for The Spamhaus Project in 06-4169. Appellee's
brief due 2/22/07 for David Linhardt in 06-3779, for e360
Insight in 06-3779, for David Linhardt in 06-4169, for e360
Insight in 06-4169. Appellant's reply brief due 3/8/07 for
The Spamhaus Project in 06-3779, for The Spamhaus Project
in 06-4169. (juli) [06-3779 06-4169]
Docket as of May 17, 2007 11:01 pm Page 5
06-3779 e360 Insight, et al v. The Spamhaus Project
12/12/06 Filed Seventh Circuit Transcript Information Sheet by
Matthew M. Neumeier for Appellant The Spamhaus Project in
06-4169. [06-4169] [2036150-1] (juli) [06-4169]
12/12/06 Supplemental Statement of Jurisdiction filed by Appellant
The Spamhaus Project in 06-4169. [06-4169] [2055197-1]
(juli) [06-4169]
12/13/06 Disclosure Statement filed by Bartly J. Loethen (as lead
counsel) and Joseph L. Kish for Appellee David Linhardt,
Appellee e360 Insight in 06-3779. [06-3779] [2051160-1]
(juli) [06-3779]
12/13/06 Disclosure Statement filed by Stephen M. Geissler for
Appellant The Spamhaus Project in 06-4169. [06-4169]
[2036150-1] (juli) [06-4169]
1/8/07 ORDER: Pursuant to Circuit Rule 33, briefing will proceed
as follows: [2051160-1] SCO [06-3779, 06-4169] Appellant's
brief due 2/21/07 for The Spamhaus Project in 06-3779, for
The Spamhaus Project in 06-4169. Appellee's brief due
3/23/07 for David Linhardt in 06-3779, for e360 Insight in
06-3779, for David Linhardt in 06-4169, for e360 Insight in
06-4169. Appellant's reply brief due 4/6/07 for The
Spamhaus Project in 06-3779, for The Spamhaus Project in
06-4169. (fern) [06-3779 06-4169]
2/21/07 Filed 15c appellant's brief by The Spamhaus Project in
06-3779, The Spamhaus Project in 06-4169. Disk filed.
[06-3779, 06-4169] [0-0] (josh) [06-3779 06-4169]
2/21/07 Filed 10c appendix by Appellant The Spamhaus Project in
06-3779, Appellant The Spamhaus Project in 06-4169.
[06-3779, 06-4169] [2077110-1] (josh) [06-3779 06-4169]
2/28/07 Filed motion by Apexix AG; Beyond Security, Inc.'
Brandenburg Internet Working; Bright Wings, Inc.;
Changeip.com; Coalition against Unsolicited Commerical
Email (CAUCE) - US; Datran Media Corp.; EMAILLABS; Michael
Geist; Habeas, Inc.; Internet Law Group. PLLC; INNOVYX,
Inc.; Internet Tools, Inc.; Institute for SPAM and Internet
Public Policy (ISIPP); Chris Lewis; John Levine; Mailshell
Inc.; MV Communications, Inc.; Return Path, Inc.; Secure
Computing Corp.; Snertsoft; Spin S.R.L.; SURBL; Talbix,
Inc.; Unspam Technologies, Inc.; Paul Vixie; Webmail.us,
Inc.; Whizardries, Inc.; and Derek Wyatt; for leave to file
their amicus brief in support of defendant-appellant
Reverseal. [2079754-1] 15c amicus curiae tendered. [0-0]
[06-3779, 06-4169] (kell) [06-3779 06-4169]
Docket as of May 17, 2007 11:01 pm Page 6
06-3779 e360 Insight, et al v. The Spamhaus Project
3/5/07 ORDER re: Motion to file amicus curiae brief in support of
appellant and reversal. GMM [06-3779, 06-4169] Matthew B.
Prince, counsel for the potential amici curiae, file a
supplemental statement on or before March 8, 2007 hat
explains whether the John Marshall Law School has
authorized him to use its name in connection with this
litigation. (hard) [06-3779 06-4169]
3/8/07 Filed Notice-Only in 06-3779, Notice-Only in 06-4169
statement of counsel for the amici curiae in support of
defendant-appellant in response to March 5th order.
[06-3779, 06-4169] [2051160-1] (kell) [06-3779 06-4169]
3/9/07 Filed motion by Appellee e360 Insight in 06-3779, Appellee
David Linhardt in 06-3779, Appellee e360 Insight in
06-4169, Appellee David Linhardt in 06-4169 to strike
amicus curiae brief. [2082846-1] [06-3779, 06-4169] (hard)
[06-3779 06-4169]
3/12/07 ORDER issued GRANTING motion to file amicus brief.
[2079754-1] The clerk of this court shall file INSTANTER the
tendered copies of the amicus curiae brief and distribute a
copy of this order and the brief to the members of the
assigned merits panel. The motion to strike the brief of the
amicus curiae is DENIED. [2082846-1] The clerk of this court
is directed to file instanter the tendered copies of the
amicus curiae brief. [2051160-1] GMM [06-3779, 06-4169]
(hard) [06-3779 06-4169]
3/12/07 THIS CAUSE CONSISTS OF MORE THAN 5 PARTIES FOR EITHER SIDE.
The following are those parties to this cause as reflected
on the District Court docket, yet are not reflected on the
Appellate docket/caption for administrative purposes:
AMICUS CURIAE: BRANDENBURG INTERNET WORKING; BRIGHT WINGS,
INC.; CHANGEIP.CO; COALITION AGAINST UNSOLICITED COMMERCIAL
EMAIL (CAUCE)- US; DATRAN MEDIA CORP.; EMAILLABS; MICHAEL
GEIST; HABEAS, INC.; INTERNET LAW GROUP, PLLC INNOVYX, INC.;
INTERNET TOOLS, INC.; THE INSTITUTE FOR SPAM AND INTERNET
PUBLIC POLICY (ISIPP); CHRIS LEWIS; JOHN LEVINE; MAILSHELL
INC.; MV COMMUNICATIONS, INC.; RETURN PATH, INC.; SECURE
COMPUTING CORP.; SNERTSOFT; SPIN, S.R.L.; SURBL; TALKBIZ,
INC.; UNSPAM TECHNOLOGIES, INC.; PAUL VIXIE; WEBMAIL. US,
INC.; WHIZARDRIES, INC.; AND DEREK WYATT, MP. [06-3779,
06-4169] [2051160-1] (hard) [06-3779 06-4169]
3/12/07 Filed 15c amicus brief by Amicus Curiae Apexis AG in
06-3779, Amicus Curiae Beyond Security Inc in 06-3779, per
order. Disk filed. [06-3779, 06-4169] [0-0] (odea)
[06-3779 06-4169]
3/23/07 Filed 15c appellee's brief by e360 Insight in 06-3779,
David Linhardt in 06-3779, e360 Insight in 06-4169, David
Linhardt in 06-4169. Disk filed. [06-3779, 06-4169] [0-0]
(andb) [06-3779 06-4169]
Docket as of May 17, 2007 11:01 pm Page 7
06-3779 e360 Insight, et al v. The Spamhaus Project
3/23/07 Filed 10c appendix vols. I & II by Appellee e360 Insight in
06-3779, Appellee David Linhardt in 06-3779, Appellee e360
Insight 06-4169, Appellee David Linhardt in 06-4169.
[06-3779, 06-4169] [2087161-1] (andb) [06-3779 06-4169]
4/6/07 Filed 15c appellant's reply brief by The Spamhaus Project
in 06-3779, The Spamhaus Project in 06-4169. Disk filed.
[06-3779, 06-4169] [0-0] (odea) [06-3779 06-4169]
4/25/07 ORDER: Argument set for Wednesday, June 6, 2007 at 9:30
a.m. Each side limited to 20 minutes. [06-3779, 06-4169]
[2097101-1] (josh) [06-3779 06-4169]
5/7/07 Filed motion by Appellant The Spamhaus Project in 06-3779,
Appellant The Spamhaus Project in 06-4169 to reschedule
oral argument. [2101154-1] [06-3779, 06-4169] (josh)
[06-3779 06-4169]
5/7/07 Disclosure Statement filed by Matthew M. Neumeier for
Appellant The Spamhaus Project in 06-3779, Matthew M.
Neumeier for Appellant The Spamhaus Project in 06-4169.
[06-3779, 06-4169] [2051160-1] (hard) [06-3779 06-4169]
5/9/07 ORDER issued DENYING motion to reschedule oral argument.
[2101154-1] CF [06-3779, 06-4169] (andb) [06-3779 06-4169]
5/16/07 Disclosure Statement filed by Matthew B. Prince for Amicus
Curiae Beyond Security Inc, Amicus Curiae Apexis AG in
06-3779, Matthew B. Prince for Notice-Only in 06-4169.
[06-3779, 06-4169] [2051160-1] (kell) [06-3779 06-4169]
Docket as of May 17, 2007 11:01 pm Page 8
This is Spamhaus' Docketing Statement.
This is the Transcript Information Sheet associated with the appeal.
This is the transmittal of the long record to the 7th Circuit.
Nos. 06-3779 and 06-4169
_______________________________________________
IN THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
_______________________________________________
THE SPAMHAUS PROJECT, a company limited by guarantee and organized under the laws of England, a/k/a THE SPAMHAUS PROJECT, LTD.,
Defendant-Appellant,
vs.
e360 INSIGHT, LLC, an Illinois Limited Liability Company, and DAVID LINHARDT, an individual,
Plaintiff-Appellees.
_______________________________________________
Appeal from the United States District Court
for the Northern District of Illinois,
District Court No. 06 C 3958
The Honorable Charles P. Kocoras, District Judge
________________________________________________
BRIEF OF DEFENDANT-APPELLANT
THE SPAMHAUS PROJECT
________________________________________________
Matthew M. Neumeier
Craig C. Martin
Carrie A. Fino
JENNER & BLOCK LLP
330 North Wabash Ave.
Chicago, IL 60611
(312) 222-9350
February 21, 2007
CIRCUIT RULE 26.1 DISCLOSURE STATEMENT
Appellate Court No: 06-3779
Short Caption: e360 Insight, LLC et al. v. The Spamhaus Project
To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party or amicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing the following information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.
The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement must be filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occurs first. Attorneys are required to file an amended statement to reflect any material changes in the required information. The text of the statement must also be included in front of the table of contents of the party’s main brief. Counsel is required to complete the entire statement and to use N/A for any information that is not applicable if this form is used.
(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide the corporate disclosure information required by Fed. R. App. P. 26.1 by completing item #3):
The Spamhaus Project
(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedings in the district court or before an administrative agency) or are expected to appear for the party in this court:
Jenner & Block LLP - Chicago, IL (expected to appear); Wellborn & Wallaco, LLC - Atlanta, GA (appeared in the past); Hinshaw & Culbertson, LLP - Chicago, IL (appeared in the past).
(3) If the party or amicus is a corporation:
i) Identify all its parent corporations, if any; and
None
ii) List any publicly held company that owns 10% or more of the party’s or amicus’ stock:
None
Attorney’s Signature: s/Matthew M. Neumeier Date: 10-26-06
Attorney’s Printed Name: Matthew M. Neumeier
Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes X No _____
Address: Jenner & Block LLP
330 N. Wabash Ave., Chicago, IL 60611
Phone Number: (312) 923-2749 Fax Number: (312) 840-7749
E-Mail Address: mneumeier@jenner.com
CIRCUIT RULE 26.1 DISCLOSURE STATEMENT
Appellate Court No: 06-3779
Short Caption: e360 Insight, LLC et al. v. The Spamhaus Project
To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party or amicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing the following information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.
The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement must be filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occurs first. Attorneys are required to file an amended statement to reflect any material changes in the required information. The text of the statement must also be included in front of the table of contents of the party’s main brief. Counsel is required to complete the entire statement and to use N/A for any information that is not applicable if this form is used.
(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide the corporate disclosure information required by Fed. R. App. P. 26.1 by completing item #3):
The Spamhaus Project
(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedings in the district court or before an administrative agency) or are expected to appear for the party in this court:
Jenner & Block LLP - Chicago, IL (expected to appear); Wellborn & Wallaco, LLC - Atlanta, GA (appeared in the past); Hinshaw & Culbertson, LLP - Chicago, IL (appeared in the past).
(3) If the party or amicus is a corporation:
i) Identify all its parent corporations, if any; and
None
ii) List any publicly held company that owns 10% or more of the party’s or amicus’ stock:
None
Attorney’s Signature: s/Craig C. Martin Date: 10-26-06
Attorney’s Printed Name: Craig C. Martin
Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes _____ No X
Address: Jenner & Block LLP
330 N. Wabash Ave., Chicago, IL 60611
Phone Number: (312) 923-2776 Fax Number: (312) 840-7776
E-Mail Address: cmartin@jenner.com
CIRCUIT RULE 26.1 DISCLOSURE STATEMENT
Appellate Court No: 06-3779
Short Caption: e360 Insight, LLC et al. v. The Spamhaus Project
To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party or amicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing the following information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.
The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement must be filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occurs first. Attorneys are required to file an amended statement to reflect any material changes in the required information. The text of the statement must also be included in front of the table of contents of the party’s main brief. Counsel is required to complete the entire statement and to use N/A for any information that is not applicable if this form is used.
(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide the corporate disclosure information required by Fed. R. App. P. 26.1 by completing item #3):
The Spamhaus Project
(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedings in the district court or before an administrative agency) or are expected to appear for the party in this court:
Jenner & Block LLP - Chicago, IL (expected to appear); Wellborn & Wallaco, LLC - Atlanta, GA (appeared in the past); Hinshaw & Culbertson, LLP - Chicago, IL (appeared in the past).
(3) If the party or amicus is a corporation:
i) Identify all its parent corporations, if any; and
None
ii) List any publicly held company that owns 10% or more of the party’s or amicus’ stock:
None
Attorney’s Signature: s/Carrie A. Fino Date: 10-24-06
Attorney’s Printed Name: Carrie A. Fino
Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes No X
Address: Jenner & Block LLP
330 N. Wabash Ave., Chicago, IL 60611
Phone Number: (312) 840-7290 Fax Number: (312) 840-7390
E-Mail Address: cfino@jenner.com
CIRCUIT RULE 26.1 DISCLOSURE STATEMENT
Appellate Court No: 06-3779
Short Caption: e360 Insight, LLC et al. v. The Spamhaus Project
To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party or amicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing the following information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.
The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement must be filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occurs first. Attorneys are required to file an amended statement to reflect any material changes in the required information. The text of the statement must also be included in front of the table of contents of the party’s main brief. Counsel is required to complete the entire statement and to use N/A for any information that is not applicable if this form is used.
(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide the corporate disclosure information required by Fed. R. App. P. 26.1 by completing item #3):
The Spamhaus Project
(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedings in the district court or before an administrative agency) or are expected to appear for the party in this court:
Jenner & Block LLP - Chicago, IL (expected to appear); Wellborn & Wallaco, LLC - Atlanta, GA (appeared in the past); Hinshaw & Culbertson, LLP - Chicago, IL (appeared in the past).
(3) If the party or amicus is a corporation:
i) Identify all its parent corporations, if any; and
None
ii) List any publicly held company that owns 10% or more of the party’s or amicus’ stock:
None
Attorney’s Signature: s/Stephen M. Geissler Date: 10-24-06
Attorney’s Printed Name: Stephen M. Geissler
Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes No X
Address: Jenner & Block LLP
330 N. Wabash Ave., Chicago, IL 60611
Phone Number: (312) 923-2620 Fax Number: (312) 923-2720
E-Mail Address: sgeissler@jenner.com
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TABLE OF CONTENTS
CIRCUIT RULE 26.1 DISCLOSURE STATEMENTS
TABLE OF CONTENTS.....................................................................................i
TABLE OF AUTHORITIES...............................................................................iv
JURISDICTIONAL STATEMENT.......................................................................1
ISSUES PRESENTED......................................................................................2
STATEMENT OF THE CASE............................................................................3
STATEMENT OF FACTS..................................................................................5
SUMMARY OF ARGUMENT.............................................................................9
STANDARD OF REVIEW...............................................................................10
ARGUMENT..................................................................................................10
I. The Entry of Default Judgment Must Be Reversed Because the District Court Failed to Find that Service of Process was Properly Effected on Spamhaus and that Failure Violates International and United States Law...........................................................................................................11
A. Prior to entering the default judgment, the district court violated international and United States law by failing to consider whether service of process was properly effected on Spamhaus.....................11
1. The District Court Failed to Consider Spamhaus’ Threshold Argument That Service Was Not Proper......................................11
2. Under International and United States Law, the District Court’s Entry of Default, Prior to Making Findings on Service of Process, Was Improper.................................................................14
i. Under the Hague Convention, the Entry of Default Judgment Was Improper.......................................................14
ii. The District Court Improperly Entered Default Judgment without First Determining Whether the Motion for Default Judgment was Properly Served............................15
B. The Default Judgment is Void and Must Be Vacated Because the District Court Lacks Personal Jurisdiction Over Spamhaus...........17
ii
1. The Entry of Default Judgment is Void and Must be Vacated Because the District Court Entered Default Judgment Without Inquiring into or Determining Whether it had Personal Jurisdiction over Spamhaus.........................................17
2. The Jurisdictional Statements in e360’s Complaint are Insufficient to Confer Personal Jurisdiction over Spamhaus and the Default Judgment is Therefore Void and Should be Vacated...................................................................................................20
C. The District Court’s Entry of Default Judgment Must Be Vacated Because the Claims are Insufficient to State a Claim for which Relief can be Granted, a Hearing on Damages was not Held, and the Damages were Awarded Without Sufficient Evidentiary Support..............................................................................................................................26
1. e360’s Allegations Are Insufficient To State A Claim For Relief........................................................................................................27
2. The District Court Abused Its Discretion When It Entered Default Judgment Against Spamhaus Without Holding A Hearing On the Damages Amount................................................28
3. The District Court Abused Its Discretion By Entering a Damages Judgment Against Spamhaus Without Sufficient Evidentiary Support...........................................................................31
4. The District Court Abused Its Discretion By Failing To Enter Findings Of Fact In Support Of The Damages Amount Awarded In The Default Judgment...............................................32
D. Reversing the District Court’s Default Judgment Conforms With the Seventh Circuit’s Preference for Cases to be Tried on the Merits, and Would Allow Spamhaus the Opportunity to Present Its Meritorious Defenses.....................................................................................33
II. The District Court’s Injunction Must be Vacated Because the District Court Failed to Apply the Traditional Test Required for Injunctive Relief, Neglected its Duties under Federal Rule of Civil Procedure 65, and Issued an Injunction that Violates the First Amendment.................................35
A. The District Court erred in not applying the traditional four-part test prior to granting injunctive relief......................................................37
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B. The District Court erred because the injunctive relief issued does not comport with the requirements under Federal Rule of Civil Procedure 65.....................................................................................................39
C. The Permanent Injunction Issued by the District Court Violates the First Amendment and Must be Reversed................................................42
1. The Injunction Constitutes an Impermissible Prior Restraint and is Facially Invalid........................................................................43
2. The Injunction Amounts to Impermissible Compelled Speech...................................................................................................................44
3. The Injunction is Impermissibly Broad.......................................46
III. The District Court Erred in Denying Spamhaus’ Motion to Vacate Default Judgment under Federal Rule of Civil Procedure 60(b).........................48
A. The District Court Abused its Discretion by Refusing to Vacate the Default Judgment and Ruling Without Allowing Spamhaus an Opportunity to Present Evidence to Support its Rule 60(b)(4) Motion that the Default Judgment was Void for Lack of Personal Jurisdiction.......................................................................................................48
CONCLUSION...............................................................................................52
CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS AND TYPE-STYLE REQUIREMENTS.......54
CIRCUIT RULE 30(d) CERTIFICATION...........................................................55
CERTIFICATE OF COMPLIANCE WITH CIRCUIT RULE 31(e).........................56
CERTIFICATE OF SERVICE..........................................................................57
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TABLE OF AUTHORITIES
CASES
Adam v. Saenger, 303 U.S. 59 (1938)...................................................49
Albiero v. City of Kankakee, 246 F.3d 927 (7th Cir. 2001).....................30
Alexander v. United States, 509 U.S. 544 (1993)...................................43
Anilina Fabrique de Colorants v. Aakash Chemicals & Dyestuffs, Inc., 856 F.2d 873 (7th Cir. 1988)...................................................17
Atiyeh v. Capps, 449 U.S. 1312 (1981).................................................40
Audio Enterprise, Inc. v. B & W Loudspeakers, 957 F.2d 406 (7th Cir.1992).................................................................................16
Bally Exp. Corp. v. Balicar, Ltd., 804 F.2d 398 (7th Cir. 1986)..............17
Board of Trustees v. Elite Erectors, Inc., 64 F.Supp.2d 839 (S.D. Ind. 1999)........................................................................48, 49
Berthold Types Ltd. v. European Mikrograf Corp., 102 F.Supp.2d 928 (N.D. Ill. 2000)..........................................................................21
Black v. Lane, 22 F.3d 1395 (7th Cir. 1994)...................................23, 27
Bombliss v. Cornelson, 355 Ill.App.3d 1107, 824 N.E.2d 1175 [291 Ill. Dec. 925] (2005).........................................................................21
Burda Media, Inc. v. Viertel, 417 F.3d 292 (2d Cir. 2005)......................14
Burger King v. Rudzewicz, 471 U.S. 462 (1985)....................................25
Carroll v. President and Com'rs of Princess Anne, 393 U.S. 175 (1968).............................................................................................46
Chicago Board of Ed. v. Substance, Inc., 354 F.3d 624 (7th Cir. 2003)................................................................................40
Chicago & North Western Trans. Co. v. Railway Labor Exec. Associate, 908 F.2d 144 (7th Cir. 1990)..........................................40
Chung v. Tarom, S.A., 990 F.Supp. 581 (N.D. Ill. 1998).........................14
v
Club Assistance Program, Inc. v. Zukerman, 594 F.Supp. 341 (N.D. Ill. 1984)................................................................................23
Cripps v. Life Insurance Co. of N. America, 980 F.2d 1261 (9th Cir. 1992)................................................................................27
Dearborn National Casualty Co. v. Consumers Petroleum Co., 164 F.2d 332 (7th Cir. 1947)..................................................................32
Dennis Garberg & Associates, Inc. v. Pack-Tech International Corp., 115 F.3d 767 (10th Cir. 1997).........................................................19
Doe v. Xudong, No. 04-C-4097, 2005 U.S.Dist. LEXIS 33377 , (N.D. Ill. Dec. 15, 2005).............................................................18, 19
Dormeyer Co. v. M.J.Sales & Distributing Co., 461 F.2d 40 (7th Cir. 1972)................................................................................33
Dresser Industrial, Inc., Waukesha Engine Division v. Gradall Co., 965 F.2d 1442 (7th Cir. 1992).........................................................30
Dundee Cement Co. v. Howard Pipe & Concrete Products, Inc., 722 F.2d 1319 (7th Cir. 1983).....................................................26, 28, 33
Durasys, Inc. v. Leyba, 992 F.2d 1465 (7th Cir. 1993)..........................33
EEOC v. Severn Trent Serv., Inc., 358 F.3d 438 (7th Cir. 2004).............39
Ebay Inc. v. Mercexchange, LLC, 126 S.Ct. 1837 (2006)..................37, 38
Eden v. Klaas, 165 Neb. 323 (Neb. 1957).............................................29
Entertainment Software Associate v. Blagojevich, 404 F.Supp.2d 1051 (N.D. Ill. 2005)..................................................................44, 45
First National Bank of Louisville v. Bezema, 569 F.Supp. 818 (S.D. Ind. 1983)..............................................................................18
Flaks v. Koegel, 504 F.2d 702 (2d Cir. 1974)........................................31
Francis v. Flinn, 118 U.S. 385 (1886).............................................46, 47
Gaudiya Vaishnava Social v. San Francisco, 952 F.2d 1059 (9th Cir. 1991)................................................................................42
vi
Geddes v. United Finance Group, 559 F.2d 557 (9th Cir. 1977).............37
Greater New Orleans Broad. Associate, Inc. v. United States, 527 U.S. 173 (1999)...............................................................................45
Greyhound Exhibitgroup, Inc., v. E.L.U.L. Realty Corp., 973 F.2d 155 (2d Cir. 1992)...........................................................................31
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984).............................................................................................21
Homer v. Jones-Bey, 415 F.3d 748 (7th Cir. 2005)................................10
Hurley v. Irish-American Gay, Lesbian & Bisexual Group, 515 U.S. 557 (1995)......................................................................................45
Indianapolis Colts v. Metropolitan Baltimore Football Club Ltd. Partnership, 34 F.3d 410 (7th Cir. 1994).........................................25
Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (1982)...........................................................49
Integrated Bus. Information Services, Ltd. v. Dunn & Bradstreet Corp., 714 F.Supp. 296 (N.D. Ill. 1989)............................................23
Johnson v. Nordstrom, Inc., 260 F.3d 727 (7th Cir. 2001).....................29
Kampmier v. Emeritus Corp., 472 F.3d 930 (7th Cir. 2007)...................41
Klump v. Duffus, 71 F.3d 1368 (7th Cir. 1995).....................................17
LaSalle National Bank v. Vitro, S.A., 85 F.Supp.2d 857 (N.D. Ill. 2000)................................................................................21
Lifeway Foods, Inc. v. Fresh Made, Inc., 940 F.Supp. 1316 (N.D. Ill. 1996)................................................................................25
McGee v. International Life Insurance Co., 355 U.S. 220 (1957).............25
Merrill Lynch Mortg. Corp. v. Narayan, 908 F.2d 246 (7th Cir. 1990).....31
Michael J. Neuman & Associates, Ltd. v. Florabelle Flowers, Inc., 15 F.3d 721 (7th Cir. 1994)..................................................................24
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Minnesota Mining & Manufacturing Co. v. Pribyl, 259 F.3d 587 (7th Cir. 2001)................................................................................37
Morrell v. Mock, 270 F.3d 1090 (7th Cir. 2001).....................................49
Neb. Press Association v. Stuart, 427 U.S. 539 (1976)...........................47
Organization for a Better Austin v. Keefe, 402 U.S. 415 (1971)..............43
Oshana v. Coca-Cola Co., 472 F.3d 506 (7th Cir. 2006)........................41
Pennekamp v. Florida, 328 U.S. 331 (1946)..........................................47
Plaintiffs A, B, C, D, E, F v. Zemin, No. 02-C07530, 2003 U.S.Dist. LEXIS 17673 (N.D. Ill. Oct. 15, 2003)........................................18, 19
Pretzel & Stouffer v. Imperial Adjusters, Inc., 28 F.3d 42 (7th Cir. 1994)................................................................................17
Publ'ns International, Ltd. v. Burke/Triolo, Inc., 121 F.Supp.2d 1178 (N.D. Ill. 2000)........................................................................21
Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773 (7th Cir. 2003).........................................................................21
RAR Inc. v. Turner Diesel, Ltd., 107 F.3d 1272 (7th Cir. 1997)..............17
Riemer v. KSL Recreation Corp., 348 Ill.App.3d 26, 807 N.E.2d 1004 [283 Ill. Dec. 163] (2004)........................................................24
Robinson Engineering Co. Pension Plan & Trust v. George, 223 F.3d 445 (7th Cir. 2000).........................................................................10
SEC v. Everest Management Corp., 87 F.R.D. 100 (S.D.N.Y. 1980)........16
Schmidt v. Lessard, 414 U.S. 473 (1974)..............................................40
Sequoia Books, Inc. v. Ingemunson, 901 F.2d 630 (7th Cir. 1990)...10, 42
Shelton v. Tucker, 364 U.S. 479 (1960).................................................46
Stafford v. Mesnik, 63 F.3d 1445 (7th Cir. 1995)............................10, 33
Swaim v. Moltan Co., 73 F.3d 711 (7th Cir. 1996).................................20
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System Pipe & Supply, Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322 (5th Cir. 2001).........................................................................19
Thompson v. Whitman, 85 U.S. (18 Wall.) 457 (1874)............................49
Travelers Casualty & Surety Co. v. Interclaim (Berm.) Ltd., 304 F.Supp.2d 1018 (N.D. Ill. 2004).......................................................21
Tuli v. Republic of Iraq, 172 F.3d 707 (9th Cir. 1999)............................19
Turner Broad. System v. FCC, 512 U.S. 622 (1994)...............................45
Ty, Inc. v. Jones Group, Inc., 237 F.3d 891 (7th Cir. 2001)....................38
United States v. County of Cook, 167 F.3d 381 (7th Cir. 1999)..............49
United States v. De Frantz, 708 F.2d 310 (7th Cir. 1983)......................28
United States v. Di Mucci, 879 F.2d 1488 (1989).............................28, 37
United States v. Kaun, 827 F.2d 1144 (7th Cir. 1987)...........................43
United States v. Wilson, 154 F.3d 658 (7th Cir. 1998).....................10, 42
In re Uranium Antitrust Litigation, 473 F.Supp. 382 (N.D. Ill. 1979).......32
Va. State Board of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748 (1976)........................................................................45
Wallace v. Herron, 778 F.2d 391 (7th Cir. 1985)...................................25
Webber v. Eye Corp., 721 F.2d 1067 (7th Cir. 1983).............................33
White v. Cleveland Foundry Co., 24 Ohio C.C. (n.s.) 180 (1902)............19
White v. Ratcliffe, 285 Ill.App.3d 758, 674 N.E.2d 906 [211 Ill. Dec. 113] (1996).....................................................................................14
Wooley v. Maynard, 430 U.S. 705 (1977)..............................................45
Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997).........................................................................21, 22
Zuelzke Tool & Engineering Co. v. Anderson Die Castings, Inc., 925 F.2d 226 (7th Cir. 1991)..................................................................15
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STATUTES
28 U.S.C. § 1291...................................................................................2
Communications Decency Act ("CDA") of 1996, 47 U.S.C. § 230, et seq..............................................................................................34
Controlling the Assault of Non-Solicited Pornography and Marketings (CAN-SPAM) Act of 2003, 15 U.S.C. §§ 7701-7713...34, 35
Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”), Nov. 15, 1965, 20 U.S.T. 361, 658 U.N.T.S. 163.............................................................................14, 15
RULES
Fed. R. Civ. P. 4(c)(2)(c)(ii)....................................................................16
Fed. R. Civ. P. 4(f)(1) ...........................................................................14
Fed. R. Civ. P. 4(h)...............................................................................14
Fed R. Civ. P. 5....................................................................................16
Fed. R. Civ. P. 52...........................................................................32, 33
Fed. R. Civ. P. 55(b)..................................................................15, 16, 17
Fed. R. Civ. P. 56.................................................................................29
Fed. R. Civ. P. 60(b)...................................................................8, 10, 51
Fed. R. Civ. P. 65..................................................................4, 10, 39, 40
MISCELLANEOUS
5 C.J.S. Appeal & Error § 718 (1993)...................................................27
M. Nimmer, Nimmer on Freedom of Speech §4.03 (1984).......................43
JURISDICTIONAL STATEMENT
This appeal arises from a Complaint filed by Plaintiffs-Appellees, David Linhardt and e360 Insight, LLC (“e360”) on June 21, 2006 in the Circuit Court of Cook County, Illinois County Department, Chancery Division, against Defendant-Appellant, The Spamhaus Project (“Spamhaus”) (App. 5-20), and removed to the United States District Court for the Northern District of Illinois, Eastern Division, on July 21, 2006. (A. 1-4.) The Complaint alleged four state law claims against Spamhaus. (A. 12-20.) The parties are of diverse citizenship and the Complaint sought compensatory and punitive damages exceeding $10 million, as well as injunctive relief. (A. 1-2.) Spamhaus is a company organized under the laws of the United Kingdom, with its principal place of business in London, United Kingdom, and is not now nor ever has been a citizen of Illinois. (Id.)
David Linhardt is a citizen of the State of Illinois. (A. 2.) e360 is an Illinois Limited Liability Company located in Wheeling, Illinois. (A. 6.) Its members listed with the Illinois Secretary of State’s Office include Maverick Direct Marketing Solutions, Inc., an Illinois Corporation with its principal place of business in Wheeling, Illinois; and David Linhardt, the President of Maverick Direct Marketing Solutions, Inc. in Highland Park, Illinois. Both e360 and Maverick Direct Marketing Solutions, Inc. list Darren M. Green in Chicago, Illinois, as their registered agent.
On July 21, 2006, Spamhaus filed a Notice of Removal (A. 1-4) and its Answer, expressly reserving its personal jurisdiction and service of process-related defenses. (A. 24-33.) The case was removed to the United States District
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Court for the Northern District of Illinois before the Honorable Charles P. Kocoras. (A. 1.)
On September 13, 2006, the district court entered an Order for default judgment against Spamhaus. (A. 140-43.) On October 13, 2006, new counsel for Spamhaus filed an Appearance and a Notice of Appeal from the entry of default judgment. (A. 144.)
On October 26, 2006, Spamhaus filed a Motion to Vacate Default Judgment and For Leave to File a Memorandum in Support under Federal Rule of Civil Procedure 60(b). (A. 150-154.) On October 31, 2006, the district court denied the Motion to Vacate without granting leave to file a memorandum in support. (A. 158.) On November 28, 2006, Spamhaus filed a Notice of Appeal from the denial of the Motion to Vacate. (A. 194.)
This Court has jurisdiction under 28 U.S.C. § 1291.
ISSUES PRESENTED
1. Whether the district court erred by entering a default judgment against Spamhaus, a United Kingdom-based non-profit organization with no contacts in the State of Illinois, (a) despite the lack of any evidence in the record that service was properly effected under the Hague Convention; (b) without considering whether it has personal jurisdiction over the defendant; and (c) when the well-pleaded allegations of the complaint, taken as true, failed to state a claim upon which relief may be granted, and the court awarded damages without a hearing and sufficient evidentiary support?
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2. Whether the district court violated the Constitution in entering an injunction constituting a prior restraint on Spamhaus’ First Amendment rights, when the injunction was entered without application of the traditional four-part test for injunctive relief, and without consideration of the requirements of Federal Rule of Civil Procedure 65?
3. Whether the district court erred by denying Spamhaus’ Motion to Vacate the Default Judgment without allowing it an adequate opportunity to brief its motion to vacate the default judgment and present extrinsic evidence regarding defective service of process and lack of personal jurisdiction?
STATEMENT OF THE CASE
e360 filed suit against Spamhaus on June 21, 2006 in the Circuit Court of Cook County, alleging state law claims for tortious interference with contract, tortious interference with prospective economic advantage, defamation per se, and defamation per quod. (A. 12-20.) On July 21, 2006, Spamhaus removed the case to the United States District Court for the Northern District of Illinois, Eastern Division (A. 1-4) and answered the complaint, expressly reserving its personal jurisdiction and service of process-related defenses. (A. 24-33.)
On August 23, 2006, the district court granted Spamhaus’ Motion to Withdraw the Appearances of Counsel (A. 117) and oral Motion for Leave to Withdraw its Answer to the Complaint. (Id.) At the same time, the court granted e360’s oral Motion for Entry of Default (Id.) and converted a Temporary Restraining Order entered on July 20, 2006 by the Circuit Court of Cook
4
County into a Preliminary Injunction, without conducting a hearing or reviewing the Temporary Restraining Order. (Id.; see A. 159-66.)
On September 13, 2006, the district court entered an order for default judgment against Spamhaus, without considering whether service of process was proper under the Hague convention or whether the court had personal jurisdiction over Spamhaus. (A. 140-43; see A. 167-69.) Spamhaus timely filed its Notice of Appeal on October 13, 2006, which was docketed by the United States Court of Appeals for the Seventh Circuit as Case No. 06-3779. (A. 144.) On October 17, 2006, this Court entered an initial briefing schedule for this appeal, which was revised on November 3, 2006, pursuant to Circuit Rule 33.
On October 26, 2006, Spamhaus filed a Motion to Vacate Default Judgment and For Leave to File a Memorandum in Support under Federal Rule of Civil Procedure 60(b), arguing that based on the information then available to its newly-retained counsel the district court erred in entering the default judgment because it did not consider (a) whether service of process was proper, (b) whether it had personal jurisdiction over Spamhaus, and because (c) the injunctive relief entered did not comply with Fed. R. Civ. P. 65 and violated the First Amendment. (A. 150-54.) Spamhaus requested an opportunity to brief the motion because, although the transcripts of the prior proceedings had been ordered, they had not yet been provided. (A. 154.) Despite that request, the court denied the Motion to Vacate on October 31, 2006, without granting Spamhaus leave to file a memorandum in support. (A. 158; see A. 174-84.)
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Spamhaus timely filed its second Notice of Appeal from the denial of the Motion to Vacate on November 28, 2006 (A. 194), which was docketed by this Court as Case No. 06-4169. On December 5, 2006, this Court consolidated Case Nos. 06-3779 and 06-4169.
STATEMENT OF FACTS
Spamhaus is a United Kingdom non-profit limited liability company located in London, United Kingdom, and operating through its website located at http://www.spamhaus.org. (A. 6.) Spamhaus is not a citizen of Illinois, and conducts its business solely within the United Kingdom. (A. 191.) Spamhaus has no employees in Illinois; pays no salaries or taxes in Illinois; has no real property, offices, warehouses, distributors, agents, employees, mailboxes, bank accounts, or business operations in Illinois; does not target advertising at Illinois; does not maintain a registered agent for service of process in Illinois; and does not now nor has it ever provided goods or services to persons in Illinois, derived revenue from goods provided or services rendered in Illinois, nor been a party to any contract with any person or entity located in Illinois or requiring performance in Illinois. (A. 191-92.)
Spamhaus operates as an internet watch dog group, tracking purveyors of unsolicited e-mail solicitations and messages (“spam”) in order to aid interested internet service providers (“ISPs”) in protecting their users from unwanted spam e-mails. (A. 8.) As part of its operations, Spamhaus generates the Register of Known Spam Operations (“ROKSO”) list, identifying individuals or entities that have been terminated from ISPs three or more times for engaging
6
in spam offenses. (Id.) In December 2003, Spamhaus listed e360 and Linhardt on the ROKSO list for “being assigned to, under the control of, or providing service to a known professional spam operation run by Brian Haberstroh / Atriks.” (A. 34.) e360 responded by filing a Complaint on June 21, 2006, for Injunctive Relief and Damages against Spamhaus in the Circuit Court of Cook County. (A. 5-20.) An Amended Complaint was filed on June 23, 2006. (Id.)
On July 21, 2006, Spamhaus filed a Notice of Removal in the United States District Court for the Northern District of Illinois, asserting that citizenship is diverse and damages in excess of $10 million was sought. (A. 1-2.) That same day, Spamhaus filed its Answer, expressly reserving its jurisdiction-related defenses, denying any wrongful acts, and asserting fourteen affirmative defenses, including lack of personal jurisdiction and improper service of process. (A. 24-33.)
At a hearing on August 23, 2006, the district court noted “[w]e need some better presentation as to the citizenship of the parties, particularly since the plaintiff is a limited liability company whose citizenship is not akin to a corporate citizenship.” (A. 160.) Subsequently, Spamhaus’ counsel asked to withdraw its appearance and the answer. (A. 161.) The district court allowed the withdrawal of the appearance and the answer, but stated that because “it was a dead-bang certainty that default is going to be entered without any resistance to the lawsuit — I am going to enter a default order today.” (A. 164.) The district court entered the default order, advising counsel for e360 that if Spamhaus failed to defend the case any further, they were to “submit a copy of
7
[a default judgment] motion — or motions — or serve the other side in the normal way…then, I will call it up,” and Spamhaus would lose the case by means of a default judgment. (A. 165.)
On September 12, 2006, the hearing on the motion for default judgment was conducted in the district court, with only e360 present. (A. 167-69.) In this proceeding, e360 claimed that the motion for default judgment had been “served…in four different ways: Once on their old counsel; once by e-mail; once by Fed Ex; and, once by in-person service in the United Kingdom.” (A. 168.) The district court questioned whether there was any issue regarding federal jurisdiction. (Id.) e360 responded only that there was no issue because Spamhaus sought to remove it. (Id.) The district court granted the default judgment without conducting a hearing on damages (A. 167-69), and the next day issued its default judgment order granting e360 a default judgment and charging Spamhaus with $11,715,000 in compensatory damages and $1,971.05 in litigation costs, as well as issuing an injunction ordering Spamhaus to “not take any action to cause email sent by [e360] or their affiliates, subsidiaries, or related companies…to be blocked, delayed, altered, or interrupted in any way…unless Spamhaus can demonstrate by clear and convincing evidence that Plaintiffs have violated relevant United States law.” (A. 140-43.) There was no evidence or affidavit in the record before the district court regarding the service of process, and the district court failed to address the propriety of the service.
8
On October 13, 2006, Spamhaus’ current counsel was retained and filed both a Notice of Appeal of the Default Judgment to the Seventh Circuit Court of Appeals (A. 144) and appearances by its attorneys with the district court. (Atty. Appearances, Oct. 13, 2006, Docket Nos. 32-34.) On October 26, 2006, in response to e360’s Citation to Discover Assets, Spamhaus filed (1) a Motion to Quash Plaintiff’s Citation to Discover Assets (A. 148-49); (2) a Motion to Stay Enforcement of the Judgment Pending Appeal (A. 155-57); and (3) a Rule 60(b) Motion to Vacate the District Court’s Default Judgment and For Leave to File a Memorandum in Support. (A. 150-54.) Because counsel for Spamhaus had not yet received any transcripts of earlier proceedings in the district court upon which they could base their arguments, the Rule 60(b) Motion to Vacate requested that a briefing schedule be set to allow Spamhaus an opportunity to file a Memorandum in Support of its Motion. (A. 154.)
The district court addressed those motions on October 31, 2006, where counsel for Spamhaus repeatedly stressed its contention that the district court’s default judgment was void and should be vacated under Fed. R. Civ. P. 60(b)(4) for lack of proper service and lack of personal jurisdiction over Spamhaus. (A. 174-84.) Spamhaus also asserted that it had not yet received transcripts and needed a briefing schedule to fully present its arguments; that the damages award in the case was granted without a required hearing; and that the scope of the injunction was improper. (Id.) The district court disagreed, holding that “yes, we do have to have jurisdiction over subject matter, as well as the person or presence of a defendant in the first instance.” (A. 181-82.)
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Furthermore, the court held that Spamhaus’ failure to participate in litigation and present its jurisdictional arguments prevented those issues from being “crystallized by way of counter-affidavits or some other such thing,” and thus “[t]here was not anything about this case that at least suggested itself to me that I lacked personal jurisdiction, either over the person of the defendant or the subject matter of the case.” (Id.) The court denied all of Spamhaus’ motions. (A. 158.)
On November 28, 2006, Spamhaus filed a Notice of Appeal from the district court’s denial of Spamhaus’ Rule 60(b) Motion to Vacate the Default Judgment. (A. 194.)
SUMMARY OF ARGUMENT
The district court’s entry of default judgment and permanent injunction must be reversed because they contain fatal errors. First, the district court failed to determine whether service of process was proper prior to entering default judgment, which violates the Hague Convention. Second, prior to entering the default judgment, the district court failed to determine whether it had personal jurisdiction over Spamhaus, even though Spamhaus had properly raised this argument in earlier proceedings. Third, the default judgment was improperly entered because the well-pleaded allegations of the complaint fail to state a claim upon which relief may be granted, and the damages were awarded without either a hearing or sufficient evidentiary support.
The permanent injunction entered by the district court also must be vacated because the court failed to apply the traditional test for injunctive relief and
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disregarded Fed. R. Civ. P. 65. Furthermore, the permanent injunction as entered violates the First Amendment because it is a prior restraint, impermissibly compels speech, and is overbroad.
Finally, the district court also erred when it denied Spamhaus’ Rule 60(b) motion without allowing Spamhaus an opportunity to brief the motion. At the time the court denied the Rule 60(b) motion, Spamhaus’ new counsel had been retained for less than three weeks, and, although counsel had ordered the transcripts in the case, they had not yet been received. Counsel needed an opportunity to review the prior court proceedings in order to properly and ethically develop its Rule 60(b) arguments.
STANDARD OF REVIEW
An appellate court reviews a district court's entry of a default judgment and a district court's decision on a Rule 60(b) motion to vacate a default judgment for an abuse of discretion. Homer v. Jones-Bey, 415 F.3d 748, 753 (7th Cir. 2005); Robinson Eng’g Co. Pension Plan & Trust v. George, 223 F.3d 445, 448 (7th Cir. 2000). Constitutional issues, however, are reviewed de novo. United States v. Wilson, 154 F.3d 658, 662 (7th Cir. 1998); Sequoia Books, Inc. v. Ingemunson, 901 F.2d 630, 633 (7th Cir. 1990).
ARGUMENT
“While this circuit no longer disfavors default judgments…a default judgment should not be considered a ready response to all litigant misbehavior.” Stafford v. Mesnik, 63 F.3d 1445, 1450 (7th Cir. 1995) (internal citations omitted). When a district court imposes a default judgment, that
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judgment must be legal and valid, having been arrived at by observation of proper procedural requirements. In this case: (1) the district court's failure to ensure the validity of service of process; (2) the court's lack of personal jurisdiction over Spamhaus; (3) the non-existence of legal claims upon which relief can be granted; and (4) the unconstitutionality of the injunctive relief entered, all constitute grounds to reverse the default judgment.
I. The Entry of Default Judgment Must Be Reversed Because the District Court Failed to Find that Service of Process was Properly Effected on Spamhaus and that Failure Violates International and United States Law.
A. Prior to entering the default judgment, the district court violated international and United States law by failing to consider whether service of process was properly effected on Spamhaus.
On September 13, 2006, the district court entered a default judgment against Spamhaus. (A. 140-43.) This decisions must be reversed and this matter must be remanded. First, in its decision, the district court did not give due consideration to Spamhaus’ threshold argument that e360 failed to comply with applicable rules for service of process. Second, under either a binding international agreement or Illinois law, the district court’s decisions were based on an inadequate factual record and service was improper.
1. The District Court Failed to Consider Spamhaus’ Threshold Argument That Service Was Not Proper.
Although Spamhaus clearly informed the district court that it had not been properly served (A. 2, 31), the court failed to consider whether service was proper prior to entering the default judgment and permanent injunction. (A. 140-43; see A. 167-69.) The facts relevant to this issue are simple and
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illustrate the need for reversal and remand. First, when the case was removed to federal court, Spamhaus immediately raised the issue of lack of service of process in its removal petition. (A. 2.) (“service has not been perfected against Spamhaus”). Second, nothing in the documents attached to the removal petition indicated whether Spamhaus was served or, if it was served, the method of service used, let alone whether any attempt of service was proper. Third, nothing that e360 subsequently submitted to the district court ever explained, or even addressed, the issue of service of process. Therefore, the entire record on which the district court based its entry of default judgment lacked any facts regarding the method used to serve Spamhaus or whether service was proper. At the same time, the district court was on notice of potential service issues because the Complaint plainly acknowledged that Spamhaus was a foreign corporation based in the United Kingdom, without any physical presence in the United States. (A. 6.)
The transcripts from the district court proceedings demonstrate the absence of facts indicating proper service. The court failed to even address the issue when hearing the motion for default judgment. (A. 167-69.) Even though Spamhaus raised improper service in its removal petition (A. 2), the district court simply stated, “I am going to grant your [e360’s] motion on the basis that there is no opposition to it, and it appears none is in the offing.” (A. 169.) The court also failed to acknowledge or address Spamhaus’ objections to service of process in any of its written orders. (A. 117, 140-43, 146-47, 158.)
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The transcript from the hearing on Spamhaus’ Motion to Vacate Default Judgment shows the district court’s complete disregard for the requirement that a court must determine that service was proper prior to entering default judgment. (A. 174-84.) During that hearing, Spamhaus again informed the court that service was not proper by noting, “I have not seen any finding that there was proper service, as required by the Hague Convention. And the finding of service is a requirement for default judgment.” (A. 179.) e360 provided no argument to show that the summons and complaint were served or that service was proper. (A. 174-84.) Moreover, the court responded only by stating that findings of jurisdiction and “whatever else you think I neglected to do” are “often ma[de] . . . relying on affidavits which. . . . [is] the routine way that we consider what . . . . judgments to enter in default cases.” (A. 182.) However, the district court did not have any such affidavits in the record before it. Only five affidavits were in the record before the district court. (A. 124-34; Linhardt Aff., Document 17-2, 5:1-12:35, Aug. 21, 2006; Linhardt Aff., Document 26-2, 7-10, Sept. 26, 2006; Hutcheson Aff., Document 26-2, 12:1-13:8, Sept. 28, 2006.) None of those affidavits addressed whether service of process was effected on Spamhaus, and if it was, what method was used. The affidavits also did not respond to Spamhaus’ objection that it was not properly served.
Spamhaus repeatedly claimed that service was improper in this case. However, the district court simply ignored those assertions without looking into the record. A review of the record establishes that the district court had no information regarding whether service had been attempted, what method may
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have been used, whether Spamhaus received the service, or whether any service was proper. The court failed to address Spamhaus’ objections regarding improper service of process and failed to determine whether service was proper prior to entering default judgment in this case.
2. Under International and United States Law, the District Court’s Entry of Default, Prior to Making Findings on Service of Process, Was Improper.
i. Under the Hague Convention, the Entry of Default Judgment Was Improper.
Because Spamhaus is a United Kingdom company, the issue of service is governed by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”), Nov. 15, 1965, 20 U.S.T. 361, 658 U.N.T.S. 163. See Fed. R. Civ. P. 4(f)(1) & 4(h); see also Chung v. Tarom, S.A., 990 F. Supp. 581, 584 n.2 (N.D. Ill. 1998). Because the district court had no evidence regarding service on Spamhaus, a remand is necessary to determine whether service was proper under the Hague Convention.
Article 15 of the Hague Convention provides:
where a writ of summons or an equivalent document had to be transmitted abroad for the purpose of service, under the provisions of the present Convention, and the defendant has not appeared, judgment shall not be given until it is established that:
(a) the document was served by a method prescribed by the internal law of the State addressed for the service of documents in domestic actions upon persons who are within its territory, or
(b) the document was actually delivered to the defendant or to his residence by another method provided for by this Convention . . .
Hague Convention, supra, art. 15.
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Article 15 has been recognized as part of United States law by both state and federal courts. Burda Media, Inc. v. Viertel, 417 F.3d 292, 299-300 (2d Cir. 2005); White v. Ratcliffe, 285 Ill. App. 3d 758, 765-66, 674 N.E.2d 906, 911-12, 211 Ill. Dec. 113 (1996). Prior to entering default, a court must determine “(1) that service was proper under the internal law of the country where the defendant is to be served; (2) that the document was actually delivered to the defendant; and (3) that service was effected in sufficient time for the defendant to defend.” Id. at 768, 674 N.E.2d at 914.
Although Spamhaus specifically informed the district court that, under the Hague Convention, it must make a finding regarding service of process prior to the entry of default judgment, the court failed to address that argument. (A. 179.) By ignoring Spamhaus’ objections to service of process, see discussion supra Part I.A.1, and failing to determine whether the summons and complaint were actually served by a method prescribed by the United Kingdom, the court failed to comply with Article 15 of the Hague Convention. (A. 174-84.) Therefore, the entry of default judgment was improper as a matter of law and must be reversed and remanded.
ii. The District Court Improperly Entered Default Judgment without First Determining Whether the Motion for Default Judgment was Properly Served.
A defaulting party who has appeared in an action must be served with written notice of an application for default judgment at least three days prior to the hearing on that application. Fed. R. Civ. P. 55(b)(2). A party has appeared “where that party has actually made some presentation or submission to the
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district court in the pending action.” Zuelzke Tool & Eng’g Co. v. Anderson Die Castings, Inc., 925 F.2d 226, 230 (7th Cir. 1991) (emphasis omitted). In this case, while preserving its objection to personal jurisdiction and service of process, Spamhaus removed the action to the federal court, filed an answer, and originally appeared. (A. 1-2, 24-33.) Accordingly, it was entitled to proper service of e360’s application for default judgment. Fed. R. Civ. P. 55(b)(2).
Spamhaus never received proper service of e360’s Motion for Default Judgment. (A. 118-123.) In the Certificate of Service attached to the Motion for Default Judgment, e360 asserts that it effectuated service on Spamhaus in three different ways: via email to Spamhaus’ former attorneys, via Federal Express, and via in-hand delivery on Spamhaus. (A. 123.) However, all three of those methods are insufficient under Rule 5. Fed R. Civ. P. 5(b).
First, at the time this motion was filed, Spamhaus was no longer represented by counsel. (A. 117, 118-123.) Thus, email notification sent to Spamhaus’ former counsel was an ineffective means of service. Fed R. Civ. P. 5(b)(1); see also SEC v. Everest Mgmt. Corp., 87 F.R.D. 100, 102 n.1 (S.D.N.Y. 1980) (“If a party is no longer represented by an attorney . . . service must be made on the party [it]self”). Second, this Court has never held delivery by Federal Express to be an adequate form of service “by mail.” Audio Enter., Inc. v. B & W Loudspeakers, 957 F.2d 406, 409 (7th Cir.1992) (holding that Federal Express is not first class mail and thus failed to satisfy Fed. R. Civ. P. 4(c)(2)(C)(ii)). Lastly, although e360 claims it served Spamhaus by in-hand delivery, there is no evidence in the record demonstrating how this service was
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purportedly perfected. (A. 123.) In fact, no authorized representative of Spamhaus has ever been properly served with in-hand delivery of any document by plaintiffs.
Thus, e360 failed to properly serve Spamhaus with the three-day notice of its Motion for Default Judgment as required under Fed. R. Civ. P. 55(b)(2), and that failure is grounds for reversal of a default judgment when attacked on direct appeal. Anilina Fabrique de Colorants v. Aakash Chems. & Dyestuffs, Inc., 856 F.2d 873, 877 (7th Cir. 1988).
B. The Default Judgment is Void and Must Be Vacated Because the District Court Lacks Personal Jurisdiction Over Spamhaus.
While an appellate court will reverse a district court’s default judgment only upon finding an abuse of discretion, Pretzel & Stouffer v. Imperial Adjusters, Inc., 28 F.3d 42, 45 (7th Cir. 1994), this Court has held that a district court abuses its discretion by entering a default judgment without personal jurisdiction. Bally Exp. Corp. v. Balicar, Ltd., 804 F.2d 398, 400 (7th Cir. 1986). Because the district court lacked personal jurisdiction over Spamhaus, this Court must reverse the district court’s default judgment.
1. The Entry of Default Judgment is Void and Must be Vacated Because the District Court Entered Default Judgment Without Inquiring into or Determining Whether it had Personal Jurisdiction over Spamhaus.
Whether a court has personal jurisdiction over a party is a question of law, Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995), and the legal conclusion that personal jurisdiction exists over a defendant is reviewed by an appellate court de novo. RAR Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir.
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1997). In this case, the record is bereft of any inquiry or findings, much less a conclusion, by the district court that it actually had personal jurisdiction over Spamhaus. During the hearing on August 23, 2006, the court noted that “[w]e need some better presentation as to the citizenship of the parties, particularly since the plaintiff is a limited liability company whose citizenship is not akin to a corporate citizenship. You have to go find out where the parties are positioned.” (A. 160.) However, after mentioning the possibility of a subject matter jurisdiction problem based on the presence of a foreign-based entity, the district court never again inquired into whether personal jurisdiction was proper.
District courts within the Seventh Circuit have held that a court has an affirmative duty to determine personal jurisdiction sua sponte before imposing default judgment against an absent, foreign-based defendant. See e.g., First Nat’l Bank of Louisville v. Bezema, 569 F. Supp. 818, 819 (S.D. Ind. 1983); Plaintiffs A, B, C, D, E, F v. Zemin, No. 02-C07530, 2003 U.S. Dist. LEXIS 17673, at *4 (N.D. Ill. Oct. 15, 2003); Doe v. Xudong, No. 04-C-4097, 2005 U.S. Dist. LEXIS 33377, at *4-5 (N.D. Ill. Dec. 15, 2005). In Bezema, the court addressed a motion for default judgment against a non-resident defendant who had failed to answer or otherwise respond to the complaint, and held that “the rule that a court may not sua sponte dismiss for lack of personal jurisdiction does not apply where a defendant has not entered an appearance by filing a motion.” 569 F. Supp. at 819. Recently, two other district courts in this Circuit have noted that “it is well established that a Court may (and perhaps must)
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consider the issue of personal jurisdiction sua sponte when addressing the imposition of a default judgment.” Zemin, 2003 U.S. Dist. LEXIS 17673, at *4; Xudong, 2005 U.S. Dist. LEXIS 33377, at *4-5. Other federal circuits have also held that a district court has an affirmative duty to inquire sua sponte into personal jurisdiction before entering a default judgment against a defendant who has failed to answer or appear in the case. See Sys. Pipe & Supply, Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322, 324 (5th Cir. 2001); Tuli v. Republic of Iraq, 172 F.3d 707, 712 (9th Cir. 1999); Dennis Garberg & Associates, Inc. v. Pack-Tech International Corp., 115 F.3d 767, 771 (10th Cir. 1997).
This case demonstrates why the Seventh Circuit should recognize that due process places an affirmative duty upon district courts to inquire into personal jurisdiction before entering a default judgment. Spamhaus is “a United Kingdom non-profit limited liability company…located in London, England.” (A. 6.) Given Spamhaus’ non-resident status, the internet-related subject matter of the suit (which raises complicated personal jurisdiction questions in its own right), and Spamhaus’ failure to answer the Complaint,1 the district court should have been aware that personal jurisdiction was an issue in this case that needed to be resolved sua sponte before imposing default judgment. The court recognized that the citizenship of the parties was an issue before
1 Although Spamhaus had filed an Answer to e360’s Complaint, the district court later granted Spamhaus’ counsel’s Motion to Withdraw the Answer. No objection was raised by e360’s counsel to this request. Once Spamhaus’ Answer was withdrawn, Spamhaus was in the position as if it had never filed such an answer. See White v. Cleveland Foundry Co., 24 Ohio C.C. (n.s.) 180, 183 (1902) (“permission having been given to the defendant to withdraw his answer, the case stood as if no answer had been filed”).
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Spamhaus was permitted to withdraw its answer and appearance, thus leading to its default. (A. 160.) Despite this recognition that personal jurisdiction was an issue, the district court entered default judgment without making any inquiry or determination regarding its personal jurisdiction over Spamhaus. (A. 140-43; see A. 167-169.)
If the district court had undertaken its own inquiry, it would have found it had no personal jurisdiction over Spamhaus and dismissed the case, as discussed infra at Section I.B.2. Instead, the district court entered the default judgment without performing this affirmative duty, and for this error the default judgment should be reversed.
2. The Jurisdictional Statements in e360’s Complaint are Insufficient to Confer Personal Jurisdiction over Spamhaus and the Default Judgment is Therefore Void and Should be Vacated.
The district court’s failure to inquire into personal jurisdiction sua sponte has left Spamhaus in the position of asking this Court to “review[ ] no exercise of discretion for an abuse of discretion.” Swaim v. Moltan Co., 73 F.3d 711, 717 (7th Cir. 1996). This Court is thus forced to “decide questions of fact that were never considered by the district court” without the benefit of any factual findings on personal jurisdiction by the district court. Id. at 719.
Compounding this error is the uncontroverted evidence that Spamhaus has no offices, employees, or property in Illinois, and conducts no regular business in Illinois. (A. 191-92.) As the Supreme Court has held, general personal jurisdiction exists when a defendant has “continuous and systematic general
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business contacts” with the forum state, Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984), and these “contacts must be so extensive as to make it ‘fundamentally fair to require [defendant] to answer in any [Illinois] court in any litigation arising out of any transaction or occurrence taking place anywhere in the world.’” Travelers Cas. & Sur. Co. v. Interclaim (Berm.) Ltd., 304 F. Supp. 2d 1018, 1024 (N.D. Ill. 2004) (quoting Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 787 (7th Cir. 2003) (emphasis in original)). Had the district court inquired into its personal jurisdiction over Spamhaus, the absence of any contact between Spamhaus and Illinois would have prompted the district court to find that it lacked personal jurisdiction over Spamhaus.
Furthermore, an inquiry into its personal jurisdiction over Spamhaus would have revealed to the district court that Spamhaus exists solely as an “information-only” website with minimal interactivity and no commercial purpose. As one Illinois court has noted, “[t]he type of Internet activity that is sufficient to establish personal jurisdiction remains an emerging area of jurisprudence.” Bombliss v. Cornelson, 355 Ill. App. 3d 1107, 1114, 824 N.E.2d 1175, 1180, 291 Ill. Dec. 925 (2005).
On this issue, courts in the Seventh Circuit have adopted the “sliding scale” analysis of Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997). See e.g., LaSalle Nat’l Bank v. Vitro, S.A., 85 F. Supp. 2d 857, 861 (N.D. Ill. 2000); Publ’ns Int’l, Ltd. v. Burke/Triolo, Inc., 121 F. Supp. 2d 1178, 1182 (N.D. Ill. 2000); Berthold Types Ltd. v. European Mikrograf Corp.,
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102 F. Supp. 2d 928, 932 (N.D. Ill. 2000). In Zippo, the district court described the “sliding scale” as follows