Hypertouch, Inc. v. Valueclick, Inc. (192 Cal. App. 4th 805, 2011)

Opinion

ZELON, J.

INTRODUCTION

Appellant Hypertouch, Inc. (Appellant), filed an action alleging that ValueClick, Inc., various ValueClick subsidiaries and PrimaryAds, Inc. (Respondents), violated Business and Professions Code section 17529.5, subdivision (a), which prohibits entities from advertising in a commercial electronic message (e-mail) that contains various types of deceptive content. Respondents moved for summary judgment, arguing that Appellant’s claims were preempted by the “Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003” (CAN-SPAM Act or Act; 15 U.S.C. § 7701 et seq.). Alternatively, Respondents argued that (1) Appellant had failed to establish a triable issue of fact as to whether Respondents had violated section 17529.5, and (2) any claim predicated on an e-mail received more than one year prior to the filing of the complaint was barred by the one-year statute of limitations in Code of Civil Procedure section 340, subdivision (a).

The trial court granted summary judgment, ruling that the CAN-SPAM Act preempted Appellant’s section 17529.5 claims. Although the Act expressly exempts from preemption state laws prohibiting “falsity or deception” in commercial e-mail, the court concluded this exemption was only intended to apply to state statutes that require a plaintiff to establish each element of common law fraud. The court entered judgment dismissing the case in its entirety and awarded Respondents approximately $100,000 in costs.

On appeal, Appellant argues that the court erred in ruling that the CAN-SPAM Act preempts claims arising under section 17529.5. In addition, Appellant argues that (1) it introduced sufficient evidence to establish a triable issue of fact as to whether Respondents violated section 17529.5; (2) section 17529.5 claims are governed by the three-year statute of limitations in Code of Civil Procedure section 338, rather than the one-year period described in section 340, subdivision (a); and (3) the trial court abused its discretion in awarding Respondents $100,000 in costs.

We reverse the trial court’s grant of summary judgment, concluding that the CAN-SPAM Act does not preempt Appellant’s claims and that Respondents have failed to satisfy their initial burden to produce evidence showing the nonexistence of any triable issue of fact with respect to whether they violated section 17529.5.

FACTUAL AND PROCEDURAL BACKGROUND

I. Description of the Parties

A. Appellant Hypertouch, Inc.

Hypertouch, Inc., provides electronic mail service to approximately 100 customers located inside and outside of California, including Internet startup companies, corporations, charitable organizations and various people related to the president of Hypertouch, Joseph Wagner. Since its inception, Hypertouch’s customers have received “massive quantities” of unsolicited commercial e-mail, commonly referred to as “spam.” Some Hypertouch users have complained about “their spam load and the difficulties that it causes them.” Hypertouch alleges that it has been forced to spend a considerable amount of money on “hardware and software as a direct result of the yearly increasing onslaught of spam e-mails.”

B. Respondent ValueClick, Inc., and Its Subsidiaries

ValueClick and its subsidiaries (collectively ValueClick) provide online marketing services to third party advertisers that promote retail products. ValueClick contracts with these third party advertisers to place promotional offers on Web sites that are owned and operated by various ValueClick entities. Consumers, in turn, can visit ValueClick’s Web sites and earn rewards in exchange for participating in the advertised promotional offers.

ValueClick contracts with thousands of independent “affiliates” to drive traffic to their Web sites through e-mail placements and other forms of advertising. ValueClick provides affiliates with the creative material associated with any given promotion. The affiliates, in turn, send out commercial e-mail advertisements that include a link redirecting the consumer to a promotion on ValueClick’s Web sites. In many cases, the affiliates hire subaffiliates to conduct the e-mailing. Normally, each e-mail advertisement contains a tracking code indicating the affiliate or subaffiliate responsible for driving the consumer to ValueClick’s Web site. If a consumer clicks through an e-mail advertisement and participates in a promotional offer, the affiliate or subaffiliate who sent the initial e-mail is then compensated for generating a customer “lead.”

As a result of its business model, ValueClick has no knowledge of, or control over, the e-mail delivery methods or header information used by affiliates or their subaffiliates.

C. Respondent PrimaryAds, Inc.

Respondent PrimaryAds, Inc., is an online marketing service that owns and operates a private Web site containing creative content associated with numerous third party promotional offers. PrimaryAds contracts with a network of independent affiliates who download advertisement materials from PrimaryAds’s Web site and “utilize the . . . [advertisements] in [commercial] e-mails.”

“When an affiliate places downloaded creative material in an e-mail . . . [consumers] may click on a link in the e-mail,” which directs them to the PrimaryAds’s Web site and then immediately redirects them to the third party advertiser’s Web site which contains the promotional offer. PrimaryAds, in turn, tracks which affiliate is responsible for driving traffic to the third party advertiser’s offer page. If the consumer participates in the promotional offer, a tracking link notifies PrimaryAds, and the affiliate receives a commission. PrimaryAds is compensated by the third party advertiser each time a consumer participates in an offer.

Before providing access to its private Web site and allowing affiliates to e-mail its advertising materials, PrimaryAds requires each affiliate to sign a contract prohibiting it from issuing spam or violating any antispam laws. Like ValueClick, PrimaryAds alleges that it has “no control over the e-mail delivery methods used by affiliates.”

II. Hypertouch’s Complaint and the Trial Court Proceedings

On April 3, 2008, Hypertouch filed a complaint against ValueClick, numerous ValueClick subsidiaries and PrimaryAds (collectively Respondents) alleging that, between April 2, 2004, and the date the action was filed, Respondents had advertised in over 45,000 e-mails received by Hypertouch customers that contained deceptive “header information” in violation of section 17529.5. The complaint also included a separate cause of action alleging Respondents had violated section 17200.

During discovery, Hypertouch produced thousands of e-mails that allegedly contained links to Respondents’ promotional offers. According to Hypertouch, each e-mail also contained one of three categories of deceptive header information that violated section 17529.5. First, Hypertouch alleged that numerous e-mails contained “falsified” header information because the “From” or “To” fields did not accurately reflect the identity of the sender or recipient of the e-mail. Second, Hypertouch alleged that the subject lines of many e-mails contained statements likely to mislead recipients into believing that they could obtain a free gift when, in fact, the gift could only be obtained by paying a fee or participating in additional promotional offers. Finally, Hypertouch alleged that some of the e-mails contained a “third-party’s domain name without the permission of the third party.”

Approximately 10 months after the case was filed, ValueClick filed a motion for summary judgment, which PrimaryAds joined. ValueClick argued that Hypertouch’s section 17529.5 claims were preempted by the CAN-SPAM Act, 15 United States Code section 7701 et seq., which contains a preemption clause barring any state statute “that expressly regulates the use of electronic mail to send commercial messages, except . . . any . . . statute . . . [that] prohibits falsity or deception in any portion of [an e-mail].” (15 U.S.C. § 7707(b)(1).) ValueClick argued that the exemption for state statutes prohibiting “falsity or deception” was only intended to permit state law claims based on all of the elements of common law fraud, including knowledge of falsity, intent to deceive, reliance and damages proximately caused by the misrepresentation. Respondents further argued that because Hypertouch had no evidence Respondents actually knew about the alleged e-mails or that any Hypertouch customer relied on or was harmed by the deceptive content in the e-mails, its claims were necessarily preempted. Alternatively, ValueClick argued that it was entitled to summary judgment because the allegedly “deceptive” content in the e-mails did not violate the substantive prohibitions described in section 17529.5.

PrimaryAds also filed a motion for summary judgment, which was accompanied by a motion for summary adjudication, raising two additional arguments. First, PrimaryAds contended that section 17529.5 required the plaintiff to establish that the defendant actually sent or had knowledge of the unlawful e-mails, which Hypertouch had failed to do. Second, PrimaryAds argued that, pursuant to Code of Civil Procedure, section 340, it was entitled to summary adjudication on any claim predicated on an e-mail received more than one year prior to the filing of the action.

In its opposition, Hypertouch conceded that it could not establish all of the elements associated with common law fraud, but argued that section 17529.5 only required evidence that Respondents had “advertised” in e-mails containing any category of content prohibited by the statute. Hypertouch also argued that section 17529.5 was not preempted by the CAN-SPAM Act because it prohibited “falsity and deception,” and therefore fell within the narrow exception recognized in the federal statute’s preemption clause.

The trial court granted summary judgment in favor of ValueClick and PrimaryAds on all of Hypertouch’s claims. The- court first concluded that, under section 17529.5, Respondents could only be held liable for e-mails that they actually sent to Hypertouch customers. It further concluded that Hypertouch had only established that Respondents sent 24 of the 45,000 e-mails at issue and, as a result, those were the only e-mails at issue in the suit.

he court next considered whether the CAN-SPAM Act preempted Hypertouch’s section 17529.5 claims and concluded that it did. The court agreed with Respondents’ interpretation of the CAN-SPAM Act, ruling that it barred any state laws regulating falsity or deception in commercial e-mails “unless such claims are for ‘common law fraud or deceit.’ ” The court further stated that “Plaintiff has [not] . . . adduced evidence . . . that any elements of fraud exist in this case. . . . [E]ven if the Court ignores all the other elements of fraud, Plaintiff’s complaint is preempted by federal law since Plaintiffs complaint omits intent to deceive or intent to cause deception.”

The court entered judgment in favor of Respondents and subsequently awarded Respondents approximately $100,000 in costs. Hypertouch filed a timely appeal of the trial court’s judgment.

DISCUSSION

This appeal raises three issues. First, we must determine whether the CAN-SPAM Act preempts claims arising under section 17529.5. Because we conclude that section 17529.5 is not preempted, we must next determine whether Hypertouch has established a triable issue of fact as to whether Respondents violated section 17529.5. Third, we must determine whether Primary Ads is entitled to summary adjudication on any claim predicated on an e-mail that Hypertouch received more than one year prior to the filing of the complaint.

I. Standard of Review

“The standard for deciding a summary judgment motion is well-established, as is the standard of review on appeal.” (Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 572 [32 Cal.Rptr.3d 244].) “A defendant moving for summary judgment has the burden of producing evidence showing that one or more elements of the plaintiff’s cause of action cannot be established, or that there is a complete defense to that cause of action. [Citations.] The burden then shifts to the plaintiff to produce specific facts showing a triable issue as to the cause of action or the defense. [Citations.] Despite the shifting burdens of production, the defendant, as the moving party, always bears the ultimate burden of persuasion as to whether summary judgment is warranted. [Citation.]” (Garcia v. W&W Community Development, Inc. (2010) 186 Cal.App.4th 1038, 1041 [112 Cal.Rptr.3d 394] (Garcia).)

“On appeal, we review de novo an order granting summary judgment. [Citation.] The trial court must grant a summary judgment motion when the evidence shows that there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. [Citations.] In making this determination, courts view the evidence, including all reasonable inferences supported by that evidence, in the light most favorable to the nonmoving party. [Citations.]” (Garcia, supra, 186 Cal.App.4th at p. 1041.)

II. Hypertouch’s Section 17529.5 Claims Are Not Preempted by the CAN-SPAM Act

A determination whether Hypertouch’s claims are preempted by federal law requires an analysis of both section 17529.5 and the CAN-SPAM Act. (See generally Gordon v. Virtumundo (9th Cir. 2009) 575 F.3d 1040, 1047 (’Virtumundo) [interpreting breadth of Wn. State statute before determining whether preemption applied].)

A. Overview of Section 17529.5 and the CAN-SPAM Act

1. Business and Professions Code section 17529.5

a. Overview of Senate Bill No. 186 and section 17529.5

In 2003, the California Legislature passed Senate Bill No. 186 (2003-2004 Reg. Sess.) (Senate Bill 186), which imposed broad restrictions on advertising in unsolicited commercial e-mail advertisements sent from or to a computer within California. (See § 17529 et seq.) According to the Legislature’s “findings and declarations,” the bill was adopted to address the “skyrocketing]” costs and “annoyance[s]” associated with “spam,” which the statute defines as “unsolicited commercial e-mail advertisements.” (§ 17529, subds. (a)-(e).) The Legislature concluded that, to effectively regulate the abuses associated with spam, it was necessary to target not only the entities that send unsolicited commercial e-mail advertisements, but also the advertisers whose products and services are promoted in those e-mails: “Many spammers have become so adept at masking their tracks that they are rarely found . . . . [|] There is a need to regulate the advertisers who use spam, as well as the actual spammers, because the actual spammers can be difficult to track down . . . . [f] The true beneficiaries of spam are the advertisers who benefit from the marketing derived from the advertisements.” (§ 17529, subds. (i), (j) & (k).)

Although Senate Bill 186 includes a provision that prohibits the transmission of any “unsolicited commercial e-mail advertisement[s]” (§ 17529.2), the statute also prohibits certain deceptive practices in commercial e-mail, which are enumerated in section 17529.5, subdivision (a):

“(a) It is unlawful for any person or entity to advertise in a commercial e-mail advertisement either sent from California or sent to a California electronic mail address under any of the following circumstances:

“(1) The e-mail advertisement contains or is accompanied by a third-party’s domain name without the permission of the third party.

“(2) The e-mail advertisement contains or is accompanied by falsified, misrepresented, or forged header information. . . .

“(3) The e-mail advertisement has a subject line that a person knows would be likely to mislead a recipient, acting reasonably under the circumstances, about a material fact regarding the contents or subject matter of the message.”

Section 17529.5, subdivision (b), in turn, contains an enforcement provision that permits the “Attorney General,” “[a]n electronic mail service provider” or “[a] recipient of an unsolicited commercial e-mail advertisement” to “bring an action against a person or entity that violates any provision of this section.” (§ 17529.5, subd. (b)(1)(A)(i)—(iii).)

Section 17529.5, subdivision (b) also lists the remedies available under the statute, which include “either or both of the following: [f] (i) Actual damages, [f] (ii) Liquidated damages of one thousand dollars ($1,000) for each unsolicited commercial e-mail advertisement transmitted in violation of this section, up to one million dollars ($1,000,000) per incident.” (§ 17529.5, subd. (b)(1)(B).) The statute further provides, however, that if the court finds the “defendant established and implemented, with due care, practices and procedures reasonably designed to effectively prevent unsolicited commercial e-mail advertisements that are in violation of this section, the court shall reduce the liquidated damages ... to a maximum of one hundred dollars ($100) for each unsolicited commercial e-mail advertisement, or a maximum of one hundred thousand dollars ($100,000) per incident.” (§ 17529.5, subd. (b)(2).)

b. Section 17529.5 does not include many elements associated with traditional common law fraud

Like several other California consumer protection statutes targeting deceptive advertising practices, section 17529.5 dispenses with many of the elements associated with common law fraud, which normally requires the plaintiff to prove “ ‘(a) [a] misrepresentation . . . ; (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’ ” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 [49 Cal.Rptr.2d 377, 909 P.2d 981]; see Morgan v. AT&T Wireless Services, Inc. (2009) 111 Cal.App.4th 1235, 1255 [99 Cal.Rptr.3d 768] [“A claim based upon the fraudulent business practice prong of [section 17200] is ‘distinct from common law fraud. “A [common law] fraudulent deception must be actually false, known to be false by the perpetrator and reasonably relied upon by a victim who incurs damages. None of these elements are required to state a claim for . . . relief’ under [section 17200].’ ”].) Section 17529.5 differs from common law fraud in at least three ways.

(i) Section 17529.5prohibits “advertising” in a deceptive commercial e-mail, rather than sending or initiating a deceptive e-mail

First, unlike traditional common law fraud, section 17529.5 does not require the plaintiff to show that the defendant actually made a false or deceptive statement. (Perlas v. GMAC Mortgage, LLC (2010) 187 Cal.App.4th 429, 434 [113 Cal.Rptr.3d 790] [fraud claim requires plaintiff to establish “ ‘defendant represented to the plaintiff that an important fact was true [and that the] representation was false . . .’ ”].) Instead, section 17529.5 makes it unlawful for a person or entity “to advertise in a commercial e-mail advertisement” that contains any of the deceptive statements described in subdivision (a)(1) to (3). Thus, by its plain terms, the statute is not limited to entities that actually send or initiate a deceptive commercial e-mail, but applies more broadly to any entity that advertises in those e-mails.

Other portions of the statute confirm that the Legislature did not intend the statute to apply solely to those entities that actually send or initiate a deceptive e-mail. For example, the legislative findings in section 17529 state that “[t]here is a need to regulate the advertisers who use spam . . . because the actual spammers can be difficult to track down . . .” and have become “adept at masking their tracks.” (§ 17529, subds. (j), (i).) The Legislature further concluded that regulating advertisers, rather than merely the senders of spam, was necessary because they are the “true beneficiaries . . . who benefit from the marketing derived from the [spam] advertisements.” (§ 17529, subd. (k).)

Similar statements appear throughout the legislative history. (See generally In re Microsoft I-V Cases (2006) 135 Cal.App.4th 706, 719 [37 Cal.Rptr.3d 660] [“Even when a statute is unambiguous, it is nevertheless common for a court to review legislative history in order to confirm its statutory analysis.”].) For example, the Assembly Committee on the Judiciary’s analysis of Senate Bill 186 includes a statement summarizing the purpose of the statute: “ ‘[t]his bill will get at the real solution to unsolicited e-mails by allowing people to sue the advertisers of unsolicited e-mails. SB 186 seeks to get to the heart of the matter by penalizing the actual advertiser of the spam e-mails. . . . We need to go after the companies that are profiting by these e-mails and allow recipients to hold the advertisers financially responsible.’ ” (Assem. Com. on Judiciary, Analysis of Sen. Bill No. 186 (2003-2004 Reg. Sess.) as amended June 26, 2003, p. 5.) Similarly, in a memo prepared for the Senate Business and Professions Committee, the author of Senate Bill 186 explained that “[t]he real problem lies with the actual businesses whose products are advertised through these e-mails. Those companies are just as responsible if not more for these e-mails and need to be held accountable. They are profiting at the expense of the consumer.” (Sen. Bus. & Prof. Com., Background Information Sheet for Senate Bill No. 186 (2003-2004 Reg. Sess.) Apr. 7, 2003; see also Armijo v. Miles (2005) 127 Cal.App.4th 1405, 1415, in. 5 [26 Cal.Rptr.3d 623] [“Background information requests are a proper source for ascertaining legislative intent”].)

In sum, both the text and legislative history of Senate Bill 186 make clear that section 17529.5 was intended to apply to entities that advertise in deceptive commercial e-mails, not only the spammers who send them.

(ii) Section 17529.5 does not contain a “scienter” element

The second way in which section 17529.5 differs from traditional common law is that it does not include any “scienter” or intent requirement. Specifically, the statute does not contain “qualifying language such as ‘knowingly’ or ‘intentionally[,]’ . . . [which] indicates the [Legislature] ... did not intend guilty knowledge or intent to be elements of a violation.” (Margarito v. State Athletic Com. (2010) 189 Cal.App.4th 159, 168 [116 Cal.Rptr.3d 888]; see In re Marley (1946) 29 Cal.2d 525, 529-530 [175 P.2d 832]; see also Khan v. Medical Board (1993) 12 Cal.App.4th 1834, 1844-1845 [16 Cal.Rptr.2d 385]; Northern Wind v. Daley (1st Cir. 1999) 200 F.3d 13, 19 [“As a general matter, scienter is not required to impose civil penalties for regulatory violations when the regulation is silent as to state of mind.”].) Thus, like other California statutes prohibiting false or misleading business practices, the statute makes an entity strictly liable for advertising in a commercial e-mail that violates the substantive provisions described in section 17529.5, subdivision (a) regardless of whether the entity knew that such e-mails had been sent or had any intent to deceive the recipient. (See generally Paduano v. American Honda Motor Co., Inc. (2009) 169 Cal.App.4th 1453, 1468 [88 Cal.Rptr.3d 90] [explaining that § 17200 “ 1 “ ‘imposes strict liability’ ” ’ ”]; People ex reL. Van de Kamp v. Cappuccio, Inc. (1988) 204 Cal.App.3d 750, 760-761 [251 Cal.Rptr. 657].)

Although the Legislature chose to impose liability without regard to knowledge or intent, the statute’s remedy provisions include a mechanism that allows a defendant to significantly reduce its liability if it can show that it adopted “practices and procedures reasonably designed to effectively prevent unsolicited commercial e-mail advertisements that are in violation of [section 17529.5].” (§ 17529.5, subd. (b)(2).) If the defendant makes such a showing, the trial court is required to “reduce the liquidated damages ... to a maximum of . . . [$100 per e-mail or $100,000] per incident.” (§ 17529.5, subd. (b)(2).) Thus, rather than facing mandatory liquidated damages of $1,000 per e-mail or $1 million per incident (see § 17529.5, subd. (b)(l)(B)(ii)), an entity that violates the statute despite its good faith effort to prevent deceptive commercial e-mail might only be subject to nominal liquidated damages. (See The TJX Companies, Inc v. Superior Court (2008) 163 Cal.App.4th 80, 85-86 [77 Cal.Rptr.3d 114] (TJX Companies) [statute imposing maximum penalty of $250 provided trial court discretion to impose “ ‘range of penalties’ ” that “could span between a penny ... to the maximum amounts authorized by the statute”].)

(iii) Section 17529.5 does not require reliance or damages

Finally, section 17529.5 differs from common law fraud in that it does not require the plaintiff to prove that it relied on the deceptive commercial e-mail message or that it incurred damages as a result of the deceptive message. (See AsIs Internet Services v. Consumerbargaingiveaways, LLC (N.D.Cal. 2009) 622 F.Supp.2d 935, 941 (Consumerbargaingiveaways) [“Section 17529.5(a) does not . . . purport to require reliance or actual damages . . . .”].)

2. Overview of the CAN-SPAM Act

a. Summary of the CAN-SPAM Act’s substantive provisions

Shortly after California adopted Senate Bill 186, Congress enacted the CAN-SPAM Act, which, like Senate Bill 186, was passed “in response to mounting concerns associated with the rapid growth of spam e-mails.” (Virtumundo, supra, 575 F.3d at p. 1047.) The Act does “not ban spam outright, but rather provides a code of conduct to regulate commercial e-mail messaging practices. Stated in general terms, the CAN-SPAM Act prohibits such practices as transmitting messages with ‘deceptive subject headings’ or ‘header information that is materially false or materially misleading.’ [Citation.] The Act also imposes requirements regarding content, format, and labeling. For instance, unsolicited e-mail messages must include the sender’s physical postal address, indicate they are advertisements or solicitations, and notify recipients of their ability to decline further mailings. [Citation.]” (Id. at pp. 1047-1048.)

The Act’s enforcement provision “empowers the Federal Trade Commission, state attorneys general, and other state and federal agencies to pursue legal actions to enforce the Act[] .... Congress also provided a limited private right of action, which states: A ‘provider of Internet access service adversely affected by a violation of’ [the prohibited acts] . . . ‘may bring a civil action in any district court’ to enjoin further violation by a defendant or to recover either actual or statutory damages, whichever is greater.” (Virtumundo, supra, 575 F.3d at p. 1048, citations omitted.) Thus, unlike section 17529.5, the CAN-SPAM Act only provides a private cause of action to Internet service providers that have been “adversely affected” by prohibited commercial e-mails and does not extend a cause of action to the recipients of such e-mails.

The substantive provisions of the Act prohibit any person from “initiating] the transmission” of any commercial e-mail containing “header information that is materially false or materially misleading” or “a subject heading” that is “likely to mislead a recipient, acting reasonably under the circumstances, about a material fact regarding the contents or subject matter of the message.” (15 U.S.C. § 7704(a)(1), (2).) The Act requires the plaintiff to prove that the defendant acted with knowledge and intent in some instances, but not others. For example, government entities seeking injunctive relief are not required to prove the defendant’s “state of mind.” (15 U.S.C. § 7706(e), (f)(2).) Internet service providers and state government agents seeking damages, however, must generally prove that the defendant acted with “actual knowledge” or consciously avoided knowledge of the statutory violations. (15 U.S.C. § 7706(f)(9), (g)(2).)

b. The CAN-SPAM Act’s preemption provision

The CAN-SPAM Act includes a provision that expressly preempts state statutes that regulate the use of commercial e-mail “except to the extent that any such statute . . . prohibits falsity or deception in any portion of a commercial [e-mail].” (15 U.S.C. § 7707(b)(1).) The preemption clause reflects one of the primary goals of the CAN-SPAM Act: to regulate commercial electronic mail “on a nationwide basis.” (15 U.S.C. § 7701(b)(1).) As stated in the congressional findings accompanying the Act, the federal statute was intended to “to implement ‘one national standard’ [citation]” regarding the content of commercial e-mail because “the patchwork of state laws had proven ineffective . . . .” (Virtumundo, supra, 575 F.3d at pp. 1062-1063.)

The legislative history also makes clear, however, that the Act’s preemption provision was largely intended to target state statutes imposing content requirements on commercial e-mails, while leaving states free to regulate the use of deceptive practices in commercial e-mails in whatever manner they chose. For example, the Senate report that accompanied the legislation states: “[the Act] supersede^] State and local statutes . . . that expressly regulate the use of e-mail to send commercial messages except for statutes . . . that target fraud or deception in such e-mail. Thus, a State law requiring some or all commercial e-mail to carry specific types of labels, or to follow a certain format or contain specified content, would be preempted. By contrast, a State law prohibiting fraudulent or deceptive headers, subject lines, or content in commercial e-mail would not be preempted. . . . [I]n contrast to telephone numbers, e-mail addresses do not reveal the State where the holder is located. As a result, a sender of e-mail has no easy way to determine with which State law to comply. Statutes that prohibit fraud and deception in e-mail do not raise the same concern, because they target behavior that a legitimate business trying to comply with relevant laws would not be engaging in anyway.” (Sen.Rep. No. 108-102, 1st Sess. (2003) [2003, WL 21680759; 2004 U.S.C.C.A.N. 2348].)

B. The CAN-SPAM Act Does Not Preempt Claims Arising Under Section 17529.5

The trial court concluded that the CAN-SPAM Act’s savings clause, which permits states to regulate “falsity or deception” in a commercial e-mail, only applies to state statutes that require the plaintiff to establish every element of common law fraud. For the reasons that follow, we disagree with the trial court’s interpretation of the CAN-SPAM Act and hold that the federal statute does not preempt state law claims arising under section 17529.5.

1. General principles governing preemption

“ ‘Under the supremacy clause of the United States Constitution (art. VI, cl. 2), Congress has the power to preempt state law concerning matters that lie within the authority of Congress. [Citation.] In determining whether federal law preempts state law, a court’s task is to discern congressional intent.’ ” (Farm Raised Salmon Cases (2008) 42 Cal.4th 1077, 1087 [72 Cal.Rptr.3d 112, 175 P.3d 1170] (Farm Raised Salmon).) “Congress may indicate pre-emptive intent through a statute’s express language or through its structure and purpose. [Citation.] If a federal law contains an express pre-emption clause, it does not immediately end the inquiry because the question of the substance and scope of Congress’ displacement of state law still remains.” (Altria Group, Inc. v. Good (2008) 555 U.S. 70, 76 [172 L.Ed.2d 398, 129 S.Ct. 538, 543] (Altria).)

“Although the analysis of the scope of preemption begins with the text, ‘interpretation of that language does not occur in a contextual vacuum.’ [Citation.] Rather, this inquiry is guided by two principles about the nature of preemption. First, there is a presumption against supplanting ‘the historic police powers of the States’ by federal legislation ‘unless that [is] the clear and manifest purpose of Congress.’ [Citation.]”(Virtumundo, supra, 575 F.3d at p. 1060.) This “presumption against preemption” applies “with particular force” in the context of “ ‘[c]onsumer protection laws’ ” that regulate “the prevention of deceptive sales practices.” (Farm Raised Salmon, supra, 42 Cal.4th at p. 1088.) As a result, we must give the express preemption clause a “ ‘narrow interpretation’ ” (Virtumundo, supra, 575 F.3d at p. 1060), and if the text “is susceptible of more than one plausible reading, . . . ‘accept the reading that disfavors pre-emption.’ [Citation.]” (Altria, supra, 555 U.S. at p. 77 [129 S.Ct. at p. 543].)

“Second, the preemption analysis is guided by the ‘oft-repeated comment . . . that the purpose of Congress is the ultimate touchstone in every preemption case.’ [Citation.] ‘As a result, any understanding of the scope of a pre-emption statute must rest primarily on a fair understanding of congressional purpose,’ and calls for courts to consider not only the language of the statute itself but also the ‘statutory framework’ surrounding it and the ‘structure and purpose of the statute as a whole.’ [Citations.]” (Virtumundo, supra, 575 F.3d at p. 1060; see also Altria, supra, 555 U.S. at pp. 76-77 [129 S.Ct. at p. 543].)

“It is with these principles in mind that we consider whether it was the ‘ “clear and manifest purpose” ’ of Congress [citation] to preclude states from” regulating deceptive commercial e-mail messages in a manner that does not require proof of each and every element of common law fraud. (Farm Raised Salmon, supra, 42 Cal.4th at p. 1088.)

2. The language of the CAN-SPAM Act does not support the trial court’s interpretation

The preemption clause at issue states: “This chapter supersedes any statute, regulation, or rule of a State or political subdivision of a State that expressly regulates the use of electronic mail to send commercial messages, except to the extent that any such statute, regulation, or rule prohibits falsity or deception in any portion of a commercial electronic mail message or information attached thereto.” (15 U.S.C. § 7707(b)(1).)

The savings clause does not reference either fraud or the common law, but rather permits any state law that prohibits “ ‘falsity or deception in any portion of a commercial electronic mail message.’ ” (Asis Internet Services v. Subscriberbase Inc. (N.D.Cal., Apr. 1, 2010, No. 09-3503 SC) 2010 U.S.Dist. Lexis 33645, p. *38 (Subscriberbase).) As a result, the text of the statute “betrays no intention by Congress to limit state regulation to the simple codification of common law fraud in its purest form.” (Id. at pp. *34—*35.) Congress “is certainly familiar with the word ‘fraud’ and choose not to use it; the words ‘falsity or deception’ suggest broader application.” (Consumerbargaingiveaways, supra, 622 F.Supp.2d at p. 942.)

Other sections of the CAN-SPAM Act indicate that the phrase “falsity and deception” was not intended to apply only to common law fraud. First, the provision that immediately follows 15 United State Code section 7707(b)(l)’s preemption clause states that, in addition to permitting state laws prohibiting falsity or deception in commercial e-mails, the CAN-SPAM Act does not preempt “State laws that are not specific to electronic mail, including . . . tort law . . . or [f] . . . other State laws to the extent that those laws relate to acts of fraud or computer crime.” (15 U.S.C. § 7707(b)(2)(A) & (B).) Interpreting the phrase “falsity or deception” to mean fraud, when the very next section of the statute actually uses the word fraud, would “contravene[] the principle that ‘when different words are used in contemporaneously enacted, adjoining subdivisions of a statute, the inference is compelling that a difference in meaning was intended.’ [Citations.]” (Kleffman v. Vonage Holdings Corp. (2010) 49 Cal.4th 334, 343 [110 Cal.Rptr.3d 628, 232 P.3d 625] (Kleffman).)

Second, other provisions of the CAN-SPAM Act use the word “deceptive” in association with section 45 of the Federal Trade Commission Act (FTC Act; 15 U.S.C. § 41 et seq.), which is much broader than common law fraud. For example, 15 United State Code section 7704(a)(2) prohibits the use of “deceptive subject headings,” which is defined as a subject heading that “would be likely to mislead a recipient. . . consistent with the criteria used in enforcement of section [45 of the FTC Act].” Similarly, 15 United States Code section 7707(a)(2) clarifies that the CAN-SPAM Act does not affect the Federal Trade Commission’s “authority to bring enforcement actions under [the] FTC Act for materially false or deceptive representations.” Unlike common law fraud, to establish liability for deceptive statements under the FTC Act “[n]either proof of consumer reliance nor consumer injury is necessary to establish a . . . violation.” (F.T.C. v. Freecom Communications, Inc. (10th Cir. 2005) 401 F.3d 1192, 1203.) “[Ijntent to deceive ” is also not required. (F.T.C. v. World Travel Vacation Brokers, Inc. (7th Cir. 1988) 861 F.2d 1020, 1029.) The fact that other provisions of the CAN-SPAM Act “direct[] that the word ‘deceptive should be understood not as referencing common-law fraud . . . but rather deception as utilized in the FTC Act” (Consumerbargaingiveaways, supra, 622 F.Supp.2d at p. 942), is a strong indication that the word “deception” in the preemption clause was not intended to refer to common law fraud. (See People v. Crowson (1983) 33 Cal.3d 623, 633 [190 Cal.Rptr. 165, 660 P.2d 389] [“[i]t is . . . generally ‘presumed, in the absence of anything in the statute to the contrary, that a repeated phrase or word in a statute is used in the same sense throughout. [Citations.]’ [Citation.]”], overruled on other grounds in People v. Guerrero (1988) 44 Cal.3d 343 [243 Cal.Rptr. 688, 748 P.2d 1150].)

Reading the phrase “falsity or deception” as encompassing something broader than common law fraud also finds support in the legislative history. The Senate Report accompanying the legislation stated that the CAN-SPAM Act would “supersede State and local statutes . . . that expressly regulate the use of e-mail to send commercial messages except for statutes . . . that target fraud or deception in such e-mail. ... [A] State law prohibiting fraudulent or deceptive headers, subject lines, or content in commercial e-mail would not be preempted.” (Sen.Rep. No. 108-102, 1st Sess. (2003) [2003 WL 21680759; 2004 U.S.C.C.A.N. 2348], italics added.) The report further explains that although the prnpose of the CAN-SPAM Act was to impose a single national standard on commercial e-mail content, the savings clause in the preemption provision reflected the Legislature’s belief that “Statutes that prohibit fraud and deception in e-mail do not raise the same concern, because they target behavior that a legitimate business trying to comply with relevant laws would not be engaging in anyway.” (Ibid., italics added.) Thus, in three separate instances, the report refers disjunctively to state law claims predicated on “fraud or deception.” The Legislature’s use of the “term ‘deception’ would be redundant (if not misleading) if Congress meant to limit state regulation solely to common law fraud.” (Subscriberbase, supra, 2010 U.S.Dist. Lexis 33645 at p. *35.)

Finally, a review of the state laws in effect at the time Congress enacted the CAN-SPAM Act provides further support that the federal statute did not intend to “save” only those claims that were predicated on common law fraud. (See Hoang v. Reunion.com, Inc. (N.D.Cal., Mar. 31, 2010, No. C-08-3518 MMC) 2010 U.S.Dist. Lexis 34466, p. *17 (Reunion.com).) Before the CAN-SPAM Act was passed, section 17529.5 was one of several state statutes in existence that imposed liability for the use of deceptive commercial e-mails regardless of whether the recipient actually relied on, or was damaged by, those misrepresentations. (See id. at pp. *18-*19, citing Minn. & Wn. State statutes; see also Kan. Stat. Ann. § 50-6, 107(c)(1)(A) & (B); Ariz. Rev. Stat. § 44-1372.01.A.2.) Generally, when interpreting a statute, courts “presume that Congress is aware of the legal context in which it is legislating.” (Abrego v. Dow Chemical Co. (9th Cir. 2006) 443 F.3d 676, 684; see also Albernaz v. United States (1981) 450 U.S. 333, 341 [67 L.Ed.2d 275, 101 S.Ct. 1137] [“Congress is ‘predominantly a lawyer’s body,’ [citation], and it is appropriate for us ‘to assume that our elected representatives . . . know the law.’ [Citation.]”].) We therefore must assume that, at the time the CAN-SPAM Act was passed, Congress was aware that many states imposed liability for deceptive commercial e-mails without requiring reliance or other elements of common law fraud. Despite this knowledge, Congress chose not to use the word “fraud” in the savings provision, thereby suggesting that it intended the phrase “falsity or deception” to have a broader application.

3. Permitting state law claims that lack elements of common law fraud does not undermine the CAN-SPAM Act’s national standard

Respondents argue that, regardless of the actual language of the preemption clause, permitting claims for misleading or deceptive statements in a commercial e-mail without requiring a plaintiff to establish scienter, reliance and proximate damages would frustrate the CAN-SPAM Act’s central purpose, which was to impose a “national standard” for the content of commercial e-mails. (See generally Virtumundo, supra, 575 F.3d at p. 1063 [“We are compelled to adopt a reading of the preemption clause that conforms with the statute’s structure as a whole and the stated legislative purpose.”].)

We agree that the CAN-SPAM Act was intended to establish uniform standards for the content of commercial e-mail. The substantive provisions of the Act make clear that this “uniform standard” includes prohibitions on the use of “materially false or materially misleading header information,” as well as deceptive subject lines that are likely to mislead the recipient of a commercial e-mail. (Virtumundo, supra, 575 F.3d at p. 1062 [“the CAN-SPAM Act prohibits only deceptive subject line headings or materially false or materially misleading header information. [Citations.] Significantly, Congress intended this standard to regulate commercial e-mail messaging practices ‘on a nationwide basis.’ [Citation.]” (fn. omitted)]; see also 15 U.S.C. § 7704(a)(1), (2).) The justification for the CAN-SPAM Act’s preemptive effect, in turn, is to prevent state and local lawmakers from “manipulating] that standard” by broadening the scope of e-mail content that might subject a defendant to liability. (Virtumundo, supra, 575 F.3d at p. 1063.)

The fact that California imposes liability for e-mails containing deceptive header information without requiring the traditional elements of fraud does not alter the “uniform standard” governing commercial e-mail content established under the CAN-SPAM Act. The elements of reliance and damages, for example, have nothing to do with the content of an e-mail. Whether those elements are present in any case depends not on the “substance of the e[-]mails or subject lines” at issue, but rather “upon the naivete, vulnerability, or circumstance of the recipient.” (Subscriberbase, supra, 2010 U.SDist. Lexis 33645 at p. *36.) Similarly, imposing strict liability for advertising in commercial e-mails that contain materially deceptive content does not alter the type of content that might subject a defendant to liability. Instead, it broadens the class of persons who may be held responsible for such content.

Rather than broadening the scope of prohibited content in commercial e-mail, California’s decision to dispense with the elements of common law fraud was intended to create a more effective mechanism for eradicating the use of deceptive commercial e-mails. Section 17529.5 seeks to accomplish this goal in two ways. First, the statute permits a recipient of a deceptive commercial e-mail to bring suit regardless of whether they were actually mislead or harmed by the deceptive message. This ensures that the use of deceptive e-mail will not go unpunished merely because it failed to mislead its targets. Second, imposing strict liability on the advertisers who benefit from (and are the ultimate cause of) deceptive e-mails, forces those entities to take a more active role in supervising the complex web of affiliates that are promoting their products. While the CAN-SPAM Act establishes a national standard for the content of commercial e-mail, that standard is simply not altered or frustrated by “allowing variation in laws governing who may bring suit” or who those suits may be brought against. (AsIs Internet- Services v. Member Source Media, LLC (N.D.Cal., Apr. 20, 2010, No. C-08-1321 EMC) 2010 U.S.Dist. Lexis 47865, p. *10 (Member Source Media).) As one federal court recently explained, the CAN-SPAM Act “authorized California to ‘prohibit . . . falsity or deception in any portion of a commercial electronic mail message,’ 15 U.S.C. § 7707(b)(1), and it indicated no intent to limit the mechanisms that California may authorize to enforce such prohibitions.” (Subscriberbase, supra, 2010 U.SJDist. Lexis 33645 at p. *38.)

Finally, although Respondents contend that section 17529.5 frustrates the CAN-SPAM Act by dispensing with the elements of reliance, proximate damages, or scienter, it overlooks the fact that, in many cases, the federal statute does not impose such requirements. For example, 15 United States Code section 7706(g)(1) permits a “provider of Internet access service adversely affected” by commercial e-mail to bring an action for damages. The Act does not require that the Internet access service (IAS) demonstrate that it, or any of its customers, relied on or was harmed by the deceptive content in the e-mail. In addition, the Act permits states to bring actions to enjoin the use of “materially false or materially misleading” header information without proving actual knowledge. (15 U.S.C. § 7704(a)(1).) Similarly, the Federal Trade Commission and the states attorney generals may bring suit to enjoin the use of “a subject heading [that] would be likely to mislead a recipient” without proving “state of mind.” (15 U.S.C. §§ 7704(a)(2), 7706(e), (f)(2).) Thus, even under the CAN-SPAM Act, defendants may be subject to suit for deceptive subject lines and header information without regard to their knowledge or mental state, and regardless of whether anyone was actually deceived.

4. Our holding is consistent with Gordon v. Virtumundo and Omega World Travel, Inc. v. Mummagraphics

Respondents also argue that two federal circuit court decisions, Virtumundo, supra, 575 F.3d 1040, and Omega World Travel, Inc. v. Mummagraphics (4th Cir. 2006) 469 F.3d 348 (Omega), have expressly held that the CAN-SPAM Act preempts “strict liability” claims pertaining to false or deceptive commercial e-mail content. In Respondents’ view, these cases stand for the proposition that the CAN-SPAM Act preempts claims that do not impose a knowledge or intent requirement.

a. Summary of Omega and Virtumundo

In Omega, supra, 469 F.3d 348, the Fourth Circuit considered whether the CAN-SPAM Act preempted state claims for “immaterial errors” contained within the header of a commercial e-mail. (469 F.3d at p. 353.) The court began its analysis by considering whether the term “falsity,” as used in the CAN-SPAM Act’s savings clause, was intended to permit state law claims for any error or misstatement in a commercial e-mail. The court reasoned that because the term “falsity” had been paired with “deception,” it necessarily implied “an element of tortiousness or wrongfulness, as in ‘deceitfulness, untrustworthiness, faithlessness’ ” (469 F.3d at p. 354), which went beyond mere error.

The court then reviewed the structure and purpose of the CAN-SPAM Act as a whole, and “concluded that Congress could not have intended, by way of the carve-out language, to allow states to enact laws that prohibit ‘mere error’ or ‘insignificant inaccuracies.’ ” (Virtumundo, supra, 575 F.3d at p. 1061 [discussing and analyzing Omega, supra, 469 F.3d at pp. 354-355].) Specifically, the court noted that the CAN-SPAM Act provided a private cause of action for “ ‘header information that is materially false or materially misleading,’ suggesting that Congress only intended to “target[] . . . e-mails containing something more than an isolated error.” (Omega, supra, 469 F.3d at pp. 354, 355, original italics.) In the court’s view, state laws providing a cause of action for “bare error” (id. at p. 354) in a commercial e-mail would necessarily frustrate this “national standard” (id. at p. 355).

In Virtumundo, supra, 575 F.3d 1040, the Ninth Circuit considered whether the CAN-SPAM Act preempted a state law claim alleging that the defendant sent commercial e-mails from domain names that “obscure[d] the identity of the sender.” (575 F.3d at p. 1058.) The defendant, Virtumundo, Inc., had sent the plaintiff commercial e-mails from several different domain names, including “vmmail.com,” “vmadmin.com,” “vtarget.com,” and “vmlocal.com.” (Id. at p. 1064.) The plaintiff conceded that the domain names were “properly registered to Virtumundo,” but argued that they “fail[ed] to clearly identify Virtumundo as the e-mails’ sender and therefore misrepresented] or obscure[d] the identity of the sender” in violation of Washington law. (Id. at pp. 1064, 1063.)

Like the Omega court, the Ninth Circuit began its analysis by interpreting the meaning of the phrase “falsity or deception” as used in the CAN-SPAM Act’s carve-out provision. After reviewing the text and history of the statute, the court agreed with Omega’s conclusion that the phrase was not intended to permit states to “to create liability for immaterial inaccuracies or omissions.” ('Virtumundo, supra, 575 F.3d at p. 1062.) The court explained that the CAN-SPAM Act specifically prohibited “deceptive subject line headings or materially false or materially misleading header information” and “intended this standard to regulate commercial e-mail messaging practices ‘on a nationwide basis.’ [Citation.]” (575 F.3d at p. 1062, fn. omitted.) In the court’s view, “[i]t would be logically incongruous to conclude that Congress endeavored to erect a uniform standard but simultaneously left states and local lawmakers free to manipulate that standard . . .” by imposing liability for inaccuracies that did not rise to the level of deception. (Id. at p. 1063.)

The court further concluded that, under its interpretation of the Act, the plaintiff’s claims for “obscured” domain names were necessarily preempted, explaining that “[t]here is . . . nothing inherently deceptive in Virtumundo’s use of fanciful domain names.” (Virtumundo, supra, 575 F.3d at p. 1063.) As a result, the plaintiff’s claims “relate[d] to, at most, non-deceptive statements or omissions” (id. at p. 1064), and targeted “e-mail activity that is not unfair or deceptive” (id. at p. 1063, fn. 21, italics omitted).

b. Our holding is consistent with Virtumundo and Omega

Neither Virtumundo nor Omega decided the issue presented here: whether a state law that targets commercial e-mails containing deceptive content is preempted by the CAN-SPAM Act because it does not require the plaintiff to establish all elements of a traditional fraud claim. (See Subscriberbase, supra, 2010 U.S.Dist. Lexis 33645 at pp. *29-*33 [Virtumundo and Omega did not resolve whether the “CAN-SPAM Act spared section 17529.5 plaintiffs from pleading” all of the elements of common law fraud]; Consumerbargaingiveaways, supra, 622 F.Supp.2d at p. 943 [Omega “merely held that state laws were preempted insofar as they permitted claims for immaterial errors. ... It did not hold . . . that all elements of common-law fraud were required or that any particular element other than materiality was required to survive preemption.” (citation omitted)].) Instead, those cases held that the “CAN-SPAM Act forbids state statutes that reach non-deceptive practices” in commercial e-mails, such as mere errors or immaterial misstatements. (Subscriberbase, supra, 2010 U.S.Dist. Lexis 33645 at p. *31.) In other words, Omega and Virtumundo concluded that state statutes that broaden the scope of prohibited commercial e-mail content beyond the uniform standard established by the CAN-SPAM Act are preempted. As explained above, California’s decision to remove the elements of common law fraud does not affect the type of statement that might subject a defendant to liability and, as a result, Virtumundo’s and Omega’s analyses are of limited relevance.

Respondents disagree, arguing that Omega specifically held that the CAN-SPAM Act preempts state law claims imposing “strict liability” for deceptive e-mail content. Omega, however, held that the federal statute preempts state law claims “imposing strict liability for insignificant inaccuracies” or “errors.” (Omega, supra, 469 F.3d at p. 355.) It did not hold that Congress preempted state law claims that impose strict liability for commercial e-mails that contain materially deceptive content.

In sum, we conclude that the CAN-SPAM Act’s savings clause applies to any state law that prohibits material falsity or material deception in a commercial e-mail regardless of whether such laws require the plaintiff to prove and plead each and every element of common law fraud. We find nothing in the Act suggesting that it was Congress’s “ ‘clear and manifest’ ” intention that the phrase “falsity and deception” should apply as narrowly as Respondents suggest. (Virtumundo, supra, 575 F.3d at p. 1060; see Altria, supra, 555 U.S. at p. 77 [129 S.Ct. at p. 543].)

HI. Respondents Have Not Demonstrated an Entitlement to Summary Adjudication Concerning Hypertouch’s Section 17529.5 Claim

Because the CAN-SPAM Act does not preempt claims arising under section 17529.5, we must review Respondents’ alternative argument that summary judgment is appropriate because Hypertouch failed to establish a triable issue of fact as to whether Respondents violated section 17529.5. Respondents argue that they are entitled to summary judgment on Hypertouch’s section 17529.5 claim for two reasons. First, they argue that Hypertouch failed to establish that Respondents sent or had any knowledge of the offending e-mails. Second, Respondents argue that the allegedly “deceptive” content of the e-mails did not violate the substantive prohibitions described in section 17529.5.

A summary judgment may be granted only where it is shown that the entire “action” has no merit. (Code Civ. Proc., § 437c, subd. (a).) Therefore, if there is a triable issue of fact regarding any portion of Hypertouch’s section 17529.5 claim, summary judgment must be denied.

A. Hypertouch Is Not Required to Demonstrate That Respondents Sent or Had Knowledge of the Offending E-mails

Respondents first argue that summary judgment is appropriate because Hypertouch has failed to identify any evidence establishing that Respondents “sent the e-mails at issue,” or “knew” that an affiliate was sending e-mail advertisements containing content prohibited under section 17529.5.

As discussed above, the plain text of section 17529.5 indicates that its application is not limited to entities that “send” the offending e-mails nor does it require the plaintiff to establish that the defendant had knowledge of such e-mails. Rather, the statute imposes liability on any “person or entity” that “advertise[s]” in an e-mail containing any of the forms of deceptive content described in section 17529.5, subdivision (a)(1) to (3). The legislative findings make clear that the statute was specifically intended to apply to “the advertisers who use spam, as well as the actual spammers” because “the actual spammers can be difficult to track down . . .” and “[t]he true beneficiaries of spam are the advertisers . . . .” (§ 17529, subds. (j), (k).)

Therefore, for purposes of section 17529.5, the relevant question is not whether Hypertouch can demonstrate that Respondents sent or had knowledge of the e-mails, but rather whether they advertised in those e-mails. In this case, the evidence raises a triable issue of fact as to whether Respondents advertised in some or all of the e-mails received by Hypertouch.

The record demonstrates that Respondents market and advertise third party promotional offers. To increase participation in these offers, Respondents contract with “affiliates” that send commercial e-mails containing links to the offers. If a consumer opens the e-mail, and ultimately chooses to participate in the promotional offer, Respondents pay the affiliate a fee for generating a consumer lead. Hypertouch’s evidence showed that at least some portion of the e-mails it received contained a link redirecting the consumer to Respondents’ promotional materials. Moreover, Respondents admitted that thousands of these e-mails were sent by their affiliates. We believe this evidence is sufficient to raise a triable issue of fact as to whether Respondents “advertised” in the e-mails at issue.

B. Respondents Have Failed to Carry Their Burden with Respect to Whether the Content of the E-mails Violated Section 17529.5

Respondents next contend that they are entitled to summary judgment because Hypertouch has failed to establish a triable issue of fact as to whether the e-mails at issue in this suit contained content that violates the substantive prohibitions described in section 17529.5, subdivision (a).

Hypertouch has asserted three different categories of section 17529.5 violations. First, it alleges that Respondents violated section 17529.5, subdivision (a)(1) by advertising in e-mails that contained a third party’s domain name without the permission of the third party. Second, it alleges that Respondents violated section 17529.5, subdivision (a)(2) by advertising in e-mails that included fictitious names in the “From” and “To” fields. Third, it alleges that Respondents violated section 17529.5, subdivision (a)(3) by advertising in e-mails that contained false and misleading subject lines. For the reasons that follow, we conclude that Respondents have failed to satisfy their initial burden to produce evidence showing the nonexistence of any triable issue of material fact as to whether they violated subdivision (a)(3). (See Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 [107 Cal.Rptr.2d 841, 24 P.3d 493] (.Aguilar) [moving party has “initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact”].)

1. Summary of alleged violations of section 17529.5, subdivision (a)(3)

Hypertouch has alleged that numerous e-mails at issue in this suit violate section 17529.5, subdivision (a)(3), which prohibits the use of “a subject line that a person knows would be likely to mislead a recipient, acting reasonably under the circumstances, about a material fact regarding the contents or subject matter of the message.” Hypertouch identified numerous e-mails that contain subject lines purportedly offering the recipient free products or merchandise. Representative subject lines include: “Get a FREE Golf Retreat to 1 of 10 destinations”; “Let us know your opinion and win a free gift card”; “Do you think Hillary will win? Participate now for a Visa gift card”; “which would you choose? win a free gift card for letting us know.” Hypertouch contends that, in fact, in order to procure such items the recipient was required to spend money or sign up for another offer of products or services promoted on Respondents’ Web sites.

In support of these allegations, Hypertouch’s president provided deposition testimony that, after receiving some of these e-mails, he clicked on a link that took him to a promotion page demonstrating that “in order to receive [the advertised free item] you have to . . . purchase from one these offers ... I do not recall ever seeing an offer for an incentive award . . . that did not require a purchase or other obligation.”

2. Respondents h