IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
EXACTIS.COM, INC., ) Case No. ______________ a Delaware corporation ) ) Motion and Memorandum Plaintiff, ) in Support of Temporary ) Restraining Order and v. ) Preliminary Injunction ) ) MAIL ABUSE PREVENTION SYSTEM, LLC, ) a California limited liability company, ) and PAUL VIXIE, individually and ) in his capacity as Chairman of ) Mail Abuse Prevention System, LLC, Defendants. ________________________________________________)
I. Preliminary Statement
Plaintiff Exactis.com, Inc. (“Exactis”) asks this Court to grant a temporary restraining order and preliminary injunction under Federal Rule of Civil Procedure 65 and the Colorado Organized Crime Control Act to prevent Defendant Mail Abuse Prevention System, LLC (“MAPS”) from blocking the access of Exactis and Exactis’ clients to their consumers. By listing Exactis on its Realtime Blackhole List (“Blackhole List”) MAPS’ actions will severely damage Exactis’ business and thereby injure all Exactis clients.
This dispute is not one about unsolicited bulk email, or “spam.” Exactis is not in the business of sending spam, nor does it condone the practice of sending spam. The central question in this action is whether MAPS may block the transmission of Exactis’ emails, which MAPS knows would destroy Exactis. MAPS’ threatened instrument is the Realtime Blackhole List (“Blackhole List”), a constantly updated database of blocked internet addresses that MAPS assembles, distributes, and maintains. If MAPS is permitted to maintain Exactis’ listing on the Blackhole List, Exactis’ business will be severely damaged. Over 40% of the email Exactis transmits is and will be blocked. This blacklist will cause continued and irreparable harm to the business, good-will, and reputation of Exactis, the employees, shareholders, and clients of Exactis, those who advertise with Exactis’ clients, and fundamentally, the Internet consumer who has requested, and sometimes paid for, Exactis’ email distributions. Because of this substantial and irreparable harm to Exactis and to the public, the comparatively insignificant effect any injunctive relief would have on MAPS, and because Exactis is likely to succeed on the merits, this Court should enter a temporary restraining order, ordering MAPS to remove Exactis from the Blackhole List and enjoining MAPS from blacklisting Exactis or in any way publicizing Exactis’ name, clients, website, or internet protocol addresses on the Blackhole List.
II. Statement of Facts
A. The Players in the E-commerce Web
1. Exactis.com, Inc.
Exactis, with 240 employees in its Denver, Colorado office, is the leading provider of permission-based precision email marketing and communications distribution services. On behalf of its almost 130 customers, Exactis transmits approximately 500 million emails each month. Exactis’ business, as a permission-based email distribution service is one in which consumers “opt-in” or affirmatively indicate to information providers (such as publishing houses, banks, or on- line information companies) that they wish to receive information on the topic (hereinafter “Information Businesses”). Consumers manifest their interest in receiving this information via email distribution by filling out forms, returning postcards, or, in some cases, indicating their interest electronically. The Information Businesses then contract with Exactis to use Exactis’ computer servers and equipment and telecommunications capacity (“senders”) to transmit the information to the requesting consumers. Neither Exactis, nor its clients, send unsolicited bulk email, or spam. See Affidavit of Cindy Brown (“Brown Aff.”).
As an email distribution service, or “email service bureau,” Exactis provides a valuable service for the Information Businesses. Due to the high volume of email, the size of the publications, and the frequency and timing of mailing, among other things, it is often commercially impractical for the Information Businesses to purchase, maintain, and operate the equipment and facilities necessary to conduct these mailings. Some Information Businesses also lack the telecommunications and computer expertise necessary to electronically distribute their publications and communications effectively. For example, Information Businesses that distribute their newspaper and newsletter content electronically must deliver timely information to their worldwide electronic subscribers, just as they do when delivering newspapers to traditional subscribers. To fill this need, email service bureaus such as Exactis provide the “pipeline” through which requested email flows, facilitating the contractual and economic relations between the requesting consumer and Information Business. Information Businesses generally compensate Exactis, like most email service bureaus, based on the number of emails that Exactis delivers to customers. Brown Aff.
However, Exactis’ involvement in the email distribution process is limited. Information Businesses - that is, Exactis’ clients, and not Exactis - request and obtain consumers’ permission and email addresses. Exactis’ clients, and not Exactis, add these email addresses to lists of Information Businesses’ customers. Exactis’ clients, and not Exactis, then compose the substance of the distributed emails. Finally, it is Exactis’ client, and not Exactis, who determine which consumers should receive what information based upon the requests and permission provided by those consumers. Brown Aff.
Providing this permission-based email pipeline, Exactis has achieved reasonable success in the marketplace, sending about 25% of the total volume of emails sent through email service bureaus. Brown Aff.
2. Exactis’ Clients-Information Businesses.
Exactis has contracts with approximately 128 Information Business clients to provide this email “pipeline.” These clients include Fortune 500 companies, major national and international newspapers, banks, and financial institutions, all of which communicate with their customers through email. In addition to daily headlines from national and international newspapers, these Information Businesses send consumers’ financial account information, transaction confirmations, national and international financial news, stock market updates, and baseball scores using Exactis’ email distribution services.
Exactis’ current and past clients include an array of companies that communicate with their customers with email: USA Today, MSNBC.com, Sony/Infobeat, Law.com, ClientLogic and Backwire.com. For example, Exactis provides an email service to ClientLogic by which Exactis transmits ClientLogic’s electronic transaction confirmations to customers. Exactis acts as the conduit through which ClientLogic’s email traffic flowed. Exactis also acts as the conduit for newspapers and newsletters like USA Today, Sony/Infobeat, Backwire.com, and Law.com. After consumers sign up for newsletters on the Law.com website, Law.com sends requesting consumers a daily digest of important legal news stories via email. Brown Aff. Email of this nature clearly is not spam.
As the pipeline for Information Businesses’ electronic communications to the consumer, Exactis provides a critical link in the relationship between Information Businesses and the consumers as well as Information Businesses and advertisers. The Information Businesses have agreements with their consumer customers to receive information. In some cases, consumers sign up to receive promotional materials. In other cases, consumers rely on the information that Information Businesses provide via electronic mail to confirm purchases, to stay abreast of industry events, and even to make financial and legal decisions. Consumers sometimes pay Information Businesses to receive email subscriptions. Brown Aff.
It is not only the consumer who relies on receiving these emails. Information Businesses’ revenue also depends on consumers receiving emails. In addition to the subscription fees that some Information Businesses collect from consumers, Information Businesses also have contractual relationships with advertisers or other strategic partners that pay Information Businesses to include advertisements or links along with email content. Alternatively, by providing requested information to consumers, Information Businesses encourage consumer traffic to their websites on which advertisers pay to place advertisements. The amount of these advertising payments is directly related to the number of persons, or “eyeballs” who see advertisements. Advertisers compensate Information Businesses based on the number of “impressions” delivered. Therefore, any activity that reduces the number of consumers who receive and/or review the advertisement, impairs the ability of the entire distribution claim to earn revenue. Brown Aff.
3. Internet Service Providers.
Internet Service Providers provide an important link in the distribution chain by allowing consumers access to the Internet. When Exactis sends email on behalf of an Information Business, the email is delivered electronically to an Internet Service Provider (“ISP”), with whom the ultimate consumer has an account. Examples of ISPs include AOL, Hot Mail, and Prodigy. Exactis has delivered email to these ISPs since its inception and pursuant to an implied agreement that in the ordinary course of business, ISPs will accept and transmit the email communications authorized by the ISPs’ customers. Brown Aff.
4. Mail Abuse Prevention System, LLC.
MAPS is a California limited liability company whose stated mission is to “defend the Internet e-mail system from abuse by spammers.” Affidavit of Heather Shull (“Shull Aff.”) at Exhibit A. The central activity of MAPS is the development and distribution of its Realtime Blackhole List (the “Blackhole List”). See Shull Aff. at Ex. B.
This Blackhole List is not a mere list of networks that expresses MAPS’ opinion. MAPS touts its Blackhole List as a “system for creating intentional network outages (“blackholes”) for the purpose of limiting the transport of known-to-be-unwanted mass email.” Shull Aff. at Ex. B (emphasis added). MAPS describes the operation of the Blackhole List:
The MAPS RBL [or, the “Blackhole List”] creates intentional loss of connectivity for anyone who chooses to use it. While we try to limit that connectivity loss to only networks which are friendly or neutral toward spam, sometimes a spammer hides in and amongst nonspammers so as to share a more positive fate with those nonspammers. What actually happens is that the nonspammers share an unpleasant and negative fate with spammers in that case. In other words, if you are not willing to occasionally throw out a baby with the bathwater (figuratively speaking of course), then the MAPS RBL is not for you.
Shull Aff. at Ex. C.
MAPS thus uses the Blackhole List and markets the Blackhole List as an electronic blockade to shut down sites that MAPS, applying its own standards, considers to be friendly or “neutral” to spammers. By its own admission, by so doing, MAPS intentionally harms innocent networks that send legitimate, authorized email. Shull Aff. at Ex. C. Paul Vixie is the founder and Chief Executive Officer of MAPS and a member of MAPS’ board. Shull Aff. at Ex. C.
MAPS achieves its purpose by assembling, distributing, marketing, and licensing its Blackhole List to ISPs. MAPS also advertises software products that enable use of the Blackhole List to block email communications. Shull Aff. at Ex. C. It is estimated that 20,000 ISPs, comprising 40% of the Internet, receive and use the Blackhole List. Brown Aff. These ISPs have entered into agreements with MAPS by which the ISPs license, receive and/or use the Blackhole List and the software to implement it. See Shull Aff. at Ex. C. The MAPS Blackhole List works by targeting an email sender’s internet protocol address (“IP address”), which is the email sender’s unique, numerical internet return address that must appear in the header of every email communication. If an email sender is listed on the Blackhole List, ISPs, relying on MAPS’ representations, block any email messages originating from that sender. When email is sent to one of the subscribing ISPs for delivery to consumers from a listed sender address, the email is “bounced,” or returned to Exactis, as the original email sender. Because the Blackhole List would block all email originating from Exactis, the consumer would receive no email from Exactis or any Exactis client. Brown Aff.
If MAPS is permitted to maintain Exactis’ IP addresses on the Blackhole List, no consumers who subscribe to an ISP participating in the Blackhole List will receive email from Exactis. Assuming that 40% of Exactis’ email messages are directed towards subscribers of these ISPs, millions of email messages per day will not reach the intended customer. These email messages contain information consented to, requested, and in many cases, relied upon and paid for, by individual consumers. Information Businesses that use Exactis as their email service bureau understandably will leave Exactis if Exactis loses the ability to send email to 40% of their consumers. Brown Aff.
By placing Exactis on MAPS’ Blackhole List, MAPS does much more than block 40% of Exactis’ outgoing email. When 40% of the email messages are blocked, bounce, and are returned to Exactis’ servers, the sudden volume of bounced emails overwhelm Exactis’ computer network and computer system unless Exactis disables its re-send feature, which is designed to ensure that authorized email is received. In addition, Exactis will likely soon lose its customers whose ability to reach their consumers will be decreased by 40%. Brown Aff.
B. The Dispute.
MAPS’ listing Exactis on its Blackhole List does not come as a result of Exactis’ transmission of spam. Rather, MAPS’ threat to list Exactis is the result of a dispute over Exactis’ obligation with respect to email messages that Exactis transmits on behalf of Information Businesses. Affidavit of Christine Frye (“Frye Aff.”). MAPS has demanded that Exactis force each of its clients to adopt an unprecedented “double opt-in” protocol to avoid listing on the Blackhole List. Frye Aff.
Exactis’ standards exceed all legal standards. Of the states that regulate unsolicited commercial email and unsolicited bulk email, no state outright bans unsolicited commercial email. At most, states require only that the recipient be able to unsubscribe or “opt-out” of future email distributions. See, e.g., Colo. Rev. Stat. § 6-2.5-101, et seq.; Cal. Bus. & Prof. Code §§ 17538.4 & 17538.45. Exactis’ standards also meet or exceed industry standards. Among email service bureau providers, the standard generally is that email recipients should “opt-in,” or explicitly sign up to receive the communication or marketing information, with opt-out instructions in every email. Frye Aff. Exactis has adopted the standards recently approved by the Responsible Electronic Communication Alliance (“RECA”).
In contrast to these established legal and industry standards, MAPS contends that Exactis must force each of its clients to adopt an email permission practice using a procedure known as verified opt-in (a/k/a double opt-in, a/k/a closed-loop opt-in, a/k/a closed-loop verification). Under a double opt-in procedure, a consumer not only must once affirmatively sign up with an Information Business; after receiving an email from an Information Business, the customer must then affirmatively verify a second time that he or she wishes to receive the already once- requested email distributions. This double opt-in procedure is not a standard in the email service bureau industry. Further, not all Information Businesses have the technological capability to implement this double opt- in system. Frye Aff.
Exactis not only requires that each of its clients meet or exceed the industry opt-in standard, but Exactis also employs a variety of other measures to protect consumers. Exactis encourages Information Businesses to adopt heightened email permission practices, such as “single opt-in with confirmation” and, where sensible, double opt-in. Exactis also requires that each email contain instructions as to how electronically to unsubscribe or opt out. Thus, even after initially requesting information, the consumer may stop future delivery of email communications at any time, simply by clicking on or responding to any subsequent email message. Exactis also employs other quality control features to eliminate and prevent spam. By way of example only, Exactis will not email pornographic or offensive material. Exactis employs a staff to ensure that customers who wish to opt-out may do so and are quickly removed from mailing lists. Exactis also actively participates in industry-respected privacy organizations such as the RECA. Frye Aff.
Beginning in January 2000 MAPS has, from time to time, threatened to list Exactis on the Blackhole List. In response to MAPS’ coercion, Exactis attempted to find a plan that would appease MAPS. Relying on MAPS’ representation that all email service bureaus were requiring double opt-in practices, among other measures Exactis spent hundreds of man-hours developing new software to enable its clients to adopt the double opt-in verification process if they so choose. Exactis developed educational materials to inform its clients as to the benefits of a double opt-in practice. Exactis personnel spent hundreds of hours talking to clients about email permission issues. Exactis encouraged its clients to move to double opt-in and made public announcements in an effort to move the industry in this direction in order to avoid the Blackhole List. Frye Aff.
As discussions continued, MAPS became more insistent, unreasonable and coercive. MAPS’ employee Margie Arbon wrote:
In closing, I would like to point out that this issue currently sits on my desk. I am rapidly growing impatient with having to hunt down Exactis responses from Mr. Vixie and Mr. Nicholas. If Exactis continues to operate out of band, I will take that as a non-response and proceed with a nomination.
Frye Aff. at Ex. A. MAPS’ capriciousness became more evident as MAPS subjected Exactis to demand after demand. MAPS managing director Peter Popovich wrote:
It’s becoming clear that you misunderstand the position Exactis is in. You are on the verge of being listed as a persistent source of spam. Both the RBL Project (Kelly Thompson) and myself are amazed that Margie has been as lenient with you as she has. October 7th is a long, long, long time from now, far longer than either Kelly or I would have permitted you to continue to send mail without closed-loop confirmation in place.
The only reason you haven’t been listed is that Margie has asked that this matter be kept on her desk. If it leaves her desk, it comes to my desk. If it touches my desk, I’ll be recommending listings for most, if not all, of your mail servers . . . .
If you fail to resolve this matter to [Margie’s] satisfaction by close of business on 6/30, then [Margie’s] highest priority task on 7/3 will be to summarize this matter and place it on my desk.
Frye Aff. at Ex. B. During Exactis’ protracted conversations with MAPS, it became clear that Exactis would have to comply with MAPS’ every demand and daily schedule to avoid listing on the Blackhole List. At one point, while discussing the technological impossibility of MAPS’ demands, one MAPS employee said, “This is not a negotiation . . . .” Frye Aff.
In the course of these conversations, Exactis discovered that it will lose 60% of its clients, representing 80% of its business, if it accedes to MAPS’ demands. Brown Aff. Information Businesses told Exactis that few consumers understand or will tolerate the hassle of twice requesting email delivery - measures not even taken when requesting secured financial transactions or subscribing to traditional newspaper delivery. Exactis’ study of its competitors has shown that Exactis’ current email permission practices are in sync with the marketplace. The true industry “standards” promulgated by RECA do not require any change in Exactis’ current practices. Frye Aff. Exactis’ clients have made it clear that Exactis’ competitors actively tout the fact that “MAPS holds Exactis to a higher standard than it does [Exactis’ competitors],” and that even loyal Exactis clients will take their business elsewhere instead of complying with the double opt-in policy. Brown Aff.
Despite the certain injury to Exactis’ business that double opt-in requirements would have, MAPS has issued an ultimatum: if all Exactis clients do not adopt a double opt-in practice, MAPS will not remove Exactis’ servers from the Blackhole List. MAPS’ Blackhole List does not discriminate according to types of email. By listing Exactis’ servers on the Blackhole List, MAPS blocks and will continue to block all email from Exactis, including paid subscriptions, purchase confirmations, and essential mail. MAPS’ Blackhole List also does not distinguish among Exactis’ clients. The Blackhole List would block email from those Exactis clients who have adopted a double opt-in practice and have had no hint of forged subscriptions. Frye Aff.
Exactis thus faces a Hobson’s choice: If it resists MAPS’ demands and retains its Information Business clients, MAPS’ listing Exactis on the Blackhole List will irreparably harm Exactis’ business. Or, if Exactis accedes to MAPS’ demands by forcing a double opt-in standard, the competitive disadvantage will cause loss of its Information Business customers, and Exactis’ business will be irreparably damaged.
A. The Court Should Issue a Temporary Restraining Order and Preliminary Injunction Under Fed. R. Civ. P. 65
In the Tenth Circuit, preliminary relief is warranted upon a showing (i) that Plaintiff faces irreparable harm, (ii) that the prospective harm to Plaintiff outweighs any damage Defendants might sustain without an injunction, (iii) that injunctive relief is not adverse to the public interest, and (iv) that the case presents serious, substantial, and difficult questions as to the merits, as to make the issues ripe for litigation and deserving of more deliberate investigation. Walmer v. U.S. Dept. of Defense, 52 F.3d 851, 854 (10th Cir. 1995).
1. Exactis’ Threatened Loss of Operations, Clients, and Goodwill Constitute Irreparable Harm.
The threatened shut-down of a business falls squarely within the kind of “irreparable harm” that Fed. R. Civ. P. 65 is designed to prevent. See Tri-State Generation and Transmission Ass’n, Inc. v. Shoshone River Power, Inc., 805 F.2d 351, 356 (10th Cir. 1986) (threat to business viability may constitute irreparable harm). Because injuries to plaintiff’s intangible interests such as reputation and goodwill are inherently unquantifiable, these injuries cannot be remedied by money damages, and injunctive relief is appropriate. See Wynn Oil Co. v. American Way Service Corp., 943 F.2d 595, 608 (6th Cir. 1991). In addition, courts have consistently held that Defendants’ potential inability to pay damages justifies entry of injunctive relief since such inability would make the plaintiff’s injury irreparable through a damage award. Tri-State Generation, 805 F.2d at 355.
If MAPS retains Exactis’ IP addresses on its Blackhole List, the effect on Exactis will be felt throughout the e-commerce web. That MAPS effectively blocks 40% of Internet consumers from receiving email from Exactis’ senders, is merely the most immediate injury. Continued listing would cause loss of revenue. Information Business pay Exactis to send emails. Because Exactis charges Information Businesses per email sent, by preventing Exactis from sending email, MAPS deprives Exactis and its shareholders of about $1.5 million in monthly revenue. Brown Aff.
Yet, the damage does not stop at lost revenue. MAPS’ actions would have ramifications for a host of players in the complex web of e- commerce. Because timeliness is key to Information Businesses, the shut- down of Exactis’ senders would send Exactis’ clients scrambling to find alternative email distributors. MAPS’ actions also prevent new clients from signing on with Exactis. Brown Aff.
The listing will cause loss to Information Businesses, advertisers, and consumers. Exactis is an invisible conduit to the eventual consumers. As a result, Internet consumers who subscribe to and rely on the content provided by Information Businesses and sent by Exactis, have stopped receiving the emails to which they subscribed. The stock quotes, financial reports, IPO updates, transaction confirmations, and financial account information on which consumers depended, are all be blocked by MAPS. Consumers likely will find alternative banks for their accounts, alternative online newspapers for daily headlines, and alternative websites for topical newsletters. With the specter of losing their own customers, Information Businesses could not afford to wait until Exactis prevailed against MAPS at trial, and Exactis’ Information Business clients would establish relationships with other email service bureaus.
This exodus of clients would likely prove irreversible. A listing on the Black Hole List will damage such intangible factors as Exactis’ reputation, Exactis’ relationships with clients, and Exactis’ perceived market share. Brown Aff.
The threatened listing also would cause loss of Exactis’ experienced employees. Exactis’ success has been driven by its dedicated sales force, who form solid and lasting relationships with Exactis’ clients. Since a listing on the Black Hole List would likely mean a dramatic decrease in Exactis’ revenue and the departure of Exactis’ clients, it would also harm Exactis’ employees and cause Exactis to lose its experienced sales staff. Brown Aff.
MAPS understands, and indeed intends these injuries, as a result of listing on the Blackhole List. MAPS’ purpose is to create “intentional loss of connectivity.” Shull Aff. at Ex. C. MAPS even requires licensees of its Blackhole List to sign indemnity agreements “because of the risk of damage to parties who are listed in the MAPS RBL.” Shull Aff. at Ex. C. Finally, MAPS has made it clear that once it has listed a sender, it will not consider removing the sender from the Blackhole List if legal claims are threatened if notified in advance of the assertion of legal claims. MAPS’ public position is that MAPS retaliates against those who assert their legal rights:
One completely ineffective tactic adopted by some administrators when they find out about their listing in the MAPS RBL is to send us threatening e-mail and/or leave us threatening voice mail. Threats of legal action are especially common. . . . Please note that threats of legal action are counterproductive. The moment a lawsuit is threatened, all discussions are halted immediately, and MAPS will take no further action with respect to the listing until the lawsuit threat is retracted. Consequently, any listed site will remain listed.
(emphasis added). Given MAPS’ unannounced listing Exactis on its Blackhole List, the threatened retaliation for informing MAPS of a lawsuit, and the harm that continued listing would cause to Exactis, there is ample evidence that the threatened harm to Exactis is immediate, irreparable, and substantial.
2. MAPS Faces Negligible, if any, Harm Upon the Entry of A Temporary Restraining Order, and the Bond Required, if any, Should be Nominal.
In contrast to the specter of shutting down Exactis, continuing to injure Exactis’ clients and their consumers and advertisers, and continuing to injure Exactis employees, issuing a temporary restraining order and preliminary injunction will cause MAPS no harm. MAPS distributes the Blackhole List “free of charge.” Shull Aff. at Ex. C. It will thus lose no revenue from the Blackhole List. The requested temporary restraining order and preliminary injunction will not otherwise prevent MAPS from compiling, maintaining, publishing, or distributing the Blackhole List. It will not affect MAPS’ ability to raise donations. It will not affect any of MAPS’ activities, except MAPS’ unlawful and illegal conduct. Balancing the equities therefore militates in favor of issuing a temporary restraining order and preliminary injunctive relief.
3. Because MAPS’ Actions Harm Consumers, the Public Interest Supports A Temporary Restraining Order and Preliminary Injunction.
MAPS has severely damaged Exactis, and will prevent millions of consenting consumers from receiving email messages containing information that these consumers specifically have requested. >From account notifications to daily headlines, stock market predictions to college football highlights, blocking email transmissions to consumers deprives consumers of information for which consumers contracted. Likewise, Exactis clients and the advertisers who contract with Exactis clients would be harmed by MAPS’ unlawful and illegal actions. Because of the additional threatened harm to the Information Businesses, advertisers, and consumers, the public interest would be served by the requested temporary restraining order and preliminary injunction motion.
4. Exactis is Substantially Likely to Succeed On the Merits.
After establishing the first three elements, Exactis may obtain a restraining order against its listing on the Blackhole List by showing that the issues in this case are “serious, substantial, difficult, and doubtful” enough to deserve more sober and deliberate investigation by the parties and the Court. Walmer, 52 F.3d at 854. Exactis meets this standard for each of the claims in its Complaint.
a. MAPS’ Threatened Action Violates Criminal Wiretapping Statutes, Criminal Extortion Statutes, and COCCA.
Under Colorado law, it is a crime to prevent, obstruct, or delay the sending, transmission, or delivery of any electronic communication. Colo. Rev. Stat. § 18-9-303(e) (“Any person not a sender or intended receiver of a telephone or telegraph communication commits wiretapping if he . . . knowingly prohibits, obstructs, or delays, by any means whatsoever, the sending, transmission, conveyance, or delivery in this state of any message, communication, or report by or through any telegraph or telephone line, wire, cable, or other facility or any electronic, mechanical or other device . . . .”). Colorado law also prohibits using any apparatus to prevent, obstruct, or delay electronic communications, or aiding, authorizing, agreeing with, employing, permitting, or intentionally conspiring with any person to prevent, obstruct or delay electronic communications. Colo. Rev. Stat. § 18-9-303(f).
Also prohibited under Colorado law is extortion, i.e., threats to cause economic injury or damage to the economic well-being or reputation of the threatened person, with the intent to induce another against his will to do an act or refrain from doing a lawful act. Colo. Rev. Stat. § 18-3-207.
Despite these criminal statutes, MAPS has repeatedly threatened, and has carried through on its threat, to obstruct the transmission of Exactis’ email communications both within and outside Colorado, unless Exactis complies with its demands to refrain from sending lawful emails. MAPS also aids, authorizes, agrees with, permits, or intentionally conspires with ISPs to block Exactis’ email communications. MAPS’ continuing threats to block Exactis’ email communications if Exactis refuses its demands, constitute a pattern of violations of wiretapping and extortion statutes and are a pattern of racketeering activity that should be enjoined.
These violations constitute predicate acts under the Colorado Organized Crime Control Act (“COCCA”). COCCA authorizes civil relief for any person aggrieved or injured by violation of Colo. Rev. Stat. § 18-17-104. This statute prohibits, among other things, conducting or participating in an enterprise that engages in a pattern of racketeering activity; acquiring or maintaining an enterprise that engages in a pattern of racketeering activity; and conspiring or endeavoring to do either. Colo. Rev. Stat. §§ 18-3-207, 18-9-303 and 18-17-106(6) expressly authorizes this Court to exercise its equitable power in conformity with general equitable principles governing relief from “threatened loss or damage,” except that plaintiffs are not required to show special or irreparable damage. To obtain equitable relief under COCCA, Plaintiffs need only show that there is an immediate danger of significant harm or damage. Colo. Rev. Stat. § 18-17-106(6); FDIC v. Antonio, 843 F.2d 1311 (10th Cir. 1988) (granting preliminary injunctive relief for alleged COCCA violations).
b. MAPS’ Demand and Threats Intentionally Interfere With Exactis’ Contractual Relations.
A party may recover for tortious interference with a contract or prospective contractual relations upon showing (1) that it has contracts or a reasonable expectation of contracting with third parties; (2) that the Defendant knew of the contract or relationship or facts which would reasonably cause him to know of it; (3) that by words, conduct, or both, the Defendant intentionally interfered with the contract by inducing a nonperformance or preventing the expectation from being realized; and (4) that such action damaged the Plaintiff. Galleria Towers v. Crump Warren & Sommers, 831 P.2d 908, 912 (Colo. App. 1991). Recovery for intentional interference with prospective business relations is available if, in addition to the above items, the interference was “improper.” Memorial Gardens, Inc. v. Olympian Sales & Management Consultants, Inc., 690 P.2d 207, 210 (Colo. 1984).
Exactis’ relationships with its Information Business clients are governed by contracts. These contracts govern the amount, type, time and volume of email Exactis will send on behalf of Information Businesses, the cost of Exactis’ services, the features that Information Businesses will use, and the details of the email permission practices with which each Information Business must agree to comply. Frye Aff. Exactis also has implied contracts with ISPs, which have, since Exactis’ inception delivered the email sent by Exactis to the requesting consumers. That MAPS knew of the existence of these contracts is beyond dispute. MAPS’ demands included a schedule for Exactis to revise its contracts with its Information Business clients. One MAPS employee stated that she did not care about Exactis’ contractual duties to its clients, since these were “Exactis’ client issues.” Frye Aff. Exactis informed MAPS that its singling Exactis out for differential treatment has and will harm Exactis’ ability to attract new clients -Information Businesses that are not willing to comply with heightened email permission standards and/or are not willing to take the risks associated with MAPS’ listing Exactis on the Blackhole List. Frye Aff.
MAPS also cannot claim that this interference is anything but intentional. MAPS touts its intent and ability to interfere with Exactis’ performance of its contractual obligations. MAPS describes the Blackhole List as “a system for creating intentional network outages.” Shull Aff. at Ex. B (emphasis added).
MAPS’ actions are improper. MAPS’ threat and the substance of MAPS’ threat violate COCCA and Colorado wiretapping and extortion statutes. By characterizing Exactis as a “spammer,” despite Exactis’ email permission practices, MAPS disparages Exactis’ business reputation, which is itself evidence of an intent to interfere. MAPS also intends to interfere with the ability of any server on the Blackhole List to send email to cause damage to Exactis. This intentional and flagrant interference with Exactis’ existing and prospective contractual relations should be enjoined.
B. MAPS’ Threat to List Exactis Would Amount to a Group Boycott and Should be Enjoined Under Both the Federal Antitrust Act and the Colorado Antitrust Act
The Sherman Act forbids any “contract, combination . . . or conspiracy, in restraint of trade or commerce among the several states. 15 U.S.C. § 1. The Sherman Act authorizes liability for and injunctive relief to enjoin group boycotts or concerted refusals to deal with other economic actors. 15 U.S.C. § 16; Northwest Wholesale Stationers, Inc. v. Pacific Stationery and Printing Co., 472 U.S. 284, 288 (1985). Horizontal boycotts, including group boycotts, are per se illegal under the Sherman Act when they serve no pro-competitive rationale and when they involve efforts by one or more firms to disadvantage market players by either directly denying or persuading or coercing suppliers or customers to deny relationships the market players need in the competitive struggle. Id. Two things characterize a group boycott that is per se illegal: (1) the boycott cuts off access to a supply, facility, or market necessary for the boycotted firm to compete; and (2) the refusal to deal is not justified by economic efficiencies. Id. As long as two or more horizontal competitors participate in the combination, an injured plaintiff may establish an antitrust violation even if the conspirators are not located at the same market level as the plaintiff. Full Draw Productions, Inc. v. Easton Sports, Inc., 182 F.3d 745, 751 (10th Cir. 1999). Even if the Court determines that a group boycott is not per se illegal, it may still be prohibited under the “rule of reason.” The “rule of reason” requires the Court first to determine whether the conduct has a substantially adverse effect on competition and then to evaluate whether the pro-competitive virtues of the alleged conduct justify the otherwise anti-competitive impacts. Law v. NCAA, 139 F.3d 1010, 1017 (10th Cir. 1998).
The Sherman Act was designed to protect against, and indeed enjoin, the very kind of conduct with which MAPS threatens Exactis. The antitrust laws were designed to prevent competitors from acting in concert to force a Hobson’s choice in which either choice threatens the survival of a business. Blue Cross Blue Shield of Virginia, Inc. v. McCready, 457 U.S. 465, 483, 102 S. Ct. 2540, 2550 (1982). The antitrust laws also provide that injunctive relief is an appropriate remedy when market actors act in concert to deny market access. Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 107 S.Ct. 484 (1986). See also Big Bear Lodging Ass’n v. Snow Summit, Inc., 182 F.3d 1096, 1103 (9th Cir. 1999) (group boycott claim made our when ski resort owner, which controlled resort association, refused to permit any association members from selling discount lift tickets to non-members). Like the federal antitrust act, the Colorado Antitrust Act, which contains similar language, prohibits similar conduct. People v. North Avenue Furniture & Appliance, Inc., 645 P.2d 1291 (Colo. 1982); McCormick v. Bradley, 870 P.2d 599, 603 (Colo. App. 1993). Violation of the Colorado Consumer Protection Act constitutes prima facie evidence of a lessening of competition. Colo. Rev. Stat. § 6-1- 105(2).
MAPS’ listing of Exactis on the Blackhole List cuts off the most basic facility Exactis needs to survive - the ability to send email communications to the millions of consumers who expressly request email communications from Information Businesses. MAPS’ action presents the very kind of Hobson’s choice against which antitrust laws are designed to protect. Exactis can accede to MAPS’ demands to force its Information Business clients to adopt a double opt-in practice and will eventually lose its clients to other email service bureaus that have not been forced to adopt such verification practices. Or, Exactis can resist MAPS’ demand and be listed on the Blackhole List.
Further, MAPS can show no pro-competitive effects of the threatened boycott. The Court should therefore enjoin MAPS from listing Exactis on its Blackhole List.
C. MAPS Has Disparaged and Defamed Exactis in Violation of the Colorado Consumer Protection Act and Under Common Law Defamation Theories
Colorado’s Consumer Protection Act prohibits any person or entity from knowingly making a false statement as to the characteristics of services of any business entity. It also prohibits disparaging the goods, services, property, or other business of another by false or misleading representation of fact. Colo. Rev. Stat. §§ 6-1- 105(1)(e) and 105(1)(h). Under common law, a plaintiff may prove defamation per se by showing that the defendant will publish or cause to be published a false statement that will cause plaintiff actual damages and that the defendant knew or recklessly disregarded whether the statement was false. Williams v. District Court, 866 P.2d 908, 911 n.4 (Colo. 1993). A plaintiff can show defamation per quod upon the additional showing that (1) the statement was understood to be defamatory by readers of the publication and (2) that plaintiff has suffered special damages.
MAPS terms those listed on its Blackhole List “spammers,” “thieves” and “lying con men.” Shull Aff. at Ex. F. The District Court of Colorado even acknowledged that “[S]pam  is a controversial and much maligned practice.” Seidl v. Greentree Mortgage Co., 30 F. Supp.2d 1292, 1298 (D. Colo. 1998) (emphasis added). See also American Online, Inc. v. LCGM, Inc., 46 F. Supp.2d 444, 446 n.1 (E.D. Va. 1998); Compuserve, Inc. v. Cyber Promotions, Inc., 962 F. Supp. 1015, 1018 & n.1 (S.D. Ohio 1997). MAPS knows that, except for the rare instances of forged email consents, Exactis does not send emails that were not specifically requested by the recipient. By listing Exactis on its Blackhole List and identifying Exactis as a “spammer,” while knowing that Exactis’ anti-spam policies meet or exceed true industry standards, MAPS knowingly makes a false statement as to the characteristics of Exactis’ business and services, thereby defaming and disparaging Exactis.
For the reasons set forth above, Exactis has shown that under COCCA and Federal Rule of Civil Procedure 65, Exactis is entitled to a temporary restraining order and preliminary injunction.
Dated: November ____, 2000 COOLEY GODWARD LLP William J. Leone Heather J. Shull Sean May By: Attorneys for Plaintiff Exactis.co m, Inc. One Tabor Center 1200 17th Street, Suite 2100 Denver, CO 80202-5835 Telephone: (303) 606-4800 Plaintiff’s Address: 717 17th Street, Suite 500 Denver, CO 80202