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Spamhaus is on the move...Ditto e360insight
Friday, October 27 2006 @ 02:14 AM EDT

Spamhaus has a new attorney, and yesterday the new firm, Jenner & Block, filed three motions:

It appears it was just in the nick of time too. Plaintiff e360insight filed on October 24th a Certificate of Service [PDF], evidencing that it served defendants with a copy of a Writ of Execution, meaning they have asked the court to get the marshall to execute the default judgment, so they can collect their $11 million. Now, as it happens, they know there is an appeal lodged, so ... well, I'll just say I don't think it will fly. But lawyers file things they think might not work, because, hey, you never know, and they've done pretty well so far. But Spamhaus tells the court that it does no business in Illinois, being a UK company. If that is so, where is the Illinois marshall going to go to get $11 million? If Illinois is like other states I'm more familiar with, it can't touch assets outside the state with an Illinois writ of execution. So it's a bit puzzling to me why they are doing that, unless perhaps they think or know that there are assets in the state.

Each of Spamhaus's filings includes words to this effect in a footnote on the opening page:

Defendant expressly objects to this Court's jurisdiction over the Spamhaus Project because it is based solely in the United Kingdom and does not conduct or transact business in Illinois. Moreover, Defendant reserves its arguments based on Plaintiff's failure to properly effect service of process. These objections are made notwithstanding Defendant's filing of this motion, and had previously been raised in the Notice of Removal and the Answer that was withdrawn with leave of this Court.

Now, a few more details. The Motion to Quash Citation to Discover Assets has to do with e360insight having commanded that a Spamhaus person show up in Illinois and bring documents relating to the project's assets. The motion to quash says there are no Illinois Spamhaus folks and the court lacks personal jurisdiction over Spamhaus's UK people, the project being based solely in the UK. If the court doesn't quash, they ask for a briefing schedule and a protective order.

The motion to stay is asking for a stay of the earlier default judgment until the appeal can be heard. It acknowledges that the court has subject matter jurisdiction, as opposed to personal. Now, to explain, using as ever my handy legal dictionary:

JURISDICTION - the power to hear and determine a case.... This power may be established and described with reference to particular subjects or to parties who fall into a particular category. In addition to the power to adjudicate, a valid exercise of jurisdiction requires fair notice and an opportunity for the affected parties to be heard. Without jurisdiction, a court's judgment is void. A court must have both subject matter jurisdiction and personal jurisdiction...

Personal jurisdiction, then, is whether they can subpoena *you* as a person and make you show up; subject matter is whether the court can rule on the matter presented, the type of case. If it is an Illinois court, and the defendant lives in the UK, unless the defendant has more than minimal contacts with Illinois, the court lacks personal jurisdiction. e360insight will have to demonstrate, assuming this court is willing to go into all this, that Spamhaus has that kind of Illinois presence. Spamhaus is here arguing that the court has subject matter jurisdiction, but it lacks personal, not only because Spamhaus is a UK company, but also because Spamhaus wasn't properly served and it never had a chance to be properly heard.

Here's an interesting detail I haven't seen mentioned in the media. When Spamhaus filed its Notice of Removal, back in July, moving the case to federal court, it "maintained that service had not been perfected against it. Further, Defendant filed an Answer that same day, expressly asserting its defenses based on a lack of personal jurisdiction and insufficient service of process." I certainly read media reports saying that Spamhaus somehow neglected to mention the lack of personal jurisdiction. That turns out not to be so, evidently.

Then when the prior attorney was allowed to leave and the new firm took over, it also preserved those objections in the Notice of Appeal filed in the Court of Appeals for the Seventh Circuit. Those same objections are now before this lower court in Spamhaus's Motion to Vacate the Entry of Default Judgment, based on Rule 60(b). Spamhaus therefore asks the court to enter a stay pending the appeal and also pending its own ruling on the new Motion to Vacate.

The Motion to Vacate provides a little more information. In it we learn that the deadline to file the Notice of Appeal was October 13th. That's the very day that Spamhaus retained the new law firm. The Notice was timely filed to preserve the appeal of the default judgment. But the lower court, Spamhaus argues, with cases to support its position, still has the authority to grant a motion to vacate its own judgment. The briefs are not even filed yet in the appellate court, so there is time to make that moot. The new firm has been on the job only about two weeks, they point out, so they're hitting the ground running, but they're still not fully up to speed, because for one thing they haven't been able to get transcripts yet. They're ordered but not yet available. Still they believe that the Federal Rules of Civil Procedure 60(b)(1), (4), and (6) provide three separate and adequate grounds to vacate.

Under 60(b)(1), they argue, the judgment can be vacated on the grounds of "excusable neglect, inadvertence, and/or mistake" as Defendant wasn't willful, just confused about US court procedures.

Under 60(b)(4), the judgment can be vacated on the grounds that the court lacks personal jurisdiction over the Defendant and that the Plaintiff didn't serve them properly.

Finally under 60(b)(6), the judgment can be vacated "for any other reason justifying relief, and vacating the judgment in this case would be manifestly in the interests of justice." Spamhaus offers some possible reasons for relief: that e360insight's complaint failed to allege facts sufficient to support the elements of the causes of action, being based on "conclusory statements of opinion and law, not facts." Further, the damages were awarded without a hearing, findings of fact, "or a sufficient evidentiary basis for the award." Further the magnitude of the judgment, including damages for injury to reputation, is based, Spamhaus says, on "unsupported and inadmissable affidavit testimony of the party in interest, and thus suggests a clear deviation from accepted principles of common law and federal procedure." The injunctive relief wasn't warranted, Spamhaus argues, because the plaintiff "failed to demonstrate irreparable harm or lack of an adequate remedy at law, and no findings support such relief. The injunctive relief awarded in the default judgment thus applies an improper legal standard and improperly shifts the burden of proof onto Defendant." The judge will notice that last bit. He has to seriously consider it, because they are saying his judgment isn't going to withstand an appeal.

But Spamhaus isn't done. The permanent injunction, it argues, prohibits Spamhaus from expressing its opinion of what spamming is and whether companies should do business with the Plaintiff, and that would "constitute an improper prior restraint on Defendant's freedom of speech under the First Amendment." Further, requiring Spamhaus to publish a notice on its own website that the Plaintiff is *not* a spammer "also violates Defendant's rights under the Free Speech Clause". Spamhaus has meritorious defenses that deserve a trial, it says.

Zowie. Here's how I read this. Spamhaus is telling the court that it goofed. It listened to only one side and issued relief that went so far that this is now a case that could conceivably go all the way to the Supreme Court, which is where free speech issues sometimes end up, but only *if* Spamhaus really is found to be subject to this court's jurisdiction. If the court finds it wishes to vacate on the grounds that it lacks jurisdiction, then this entire episode can be over. Of course, e360insight can sue in the UK, if it wants to. Or the parties can duke it out the long way in this court and the appellate court, if the court so wishes.

OK. So that's their side. On e360insight's side, they want their money and they want it now. [Update: If you look on page three of the Writ, what e360insight specifically are asking for is the domain name, which the marshall is somehow to seize from Tucows. They list an address for Tucows as "Starkville, MS". However, Tucows is a Canadian company, so you'd have to ask e360insight's lawyers what they are thinking. Tucows does have a billing service with an office in Mississippi, leftover from a buy of Boardtown, but what that has to do with Illinois is unknown to me.] I suspect that is unlikely to happen, but you never really know. Who'd have thought something like this could happen in the first place? There's a reason why Abraham Lincoln said the best lawyers keep their clients out of court and Jesus is recorded as saying that if someone wants to take you to court, try to work it out before you end up there and maybe lose your shirt. I'm just paraphrasing in my own words, of course. But as you can see, a mopping up operation is a lot harder than not getting into a mess in the first place.

So that's your Spamhaus report. Our earlier coverage is here, which also has a link to e360insight's page of court documents. The new ones by Spamhaus are not yet on that page. Here's an article with some background, which someone asked me to add. I know a lot of you are interested in this case, so I wanted to let you know what is going on.

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