TUCSON, Ariz. - After being ordered to pay a $413,000 civil penalty under a settlement with the Federal Trade Commission and the Department of Justice, Cyberheat released its first statement Friday exclusively to AVN Online.
The settlement, announced Tuesday, also requires Cyberheat to closely monitor its affiliates to ensure that they are complying with the law and bars the company from future violations of the CAN-SPAM Act and the Adult Labeling Rule.
Cyberheat's statement reads as follows:
"A company sued in 2005 by the Department of Justice (DOJ) under CAN-SPAM - despite the fact that it neither sent nor authorized the sending of illegal emails - has settled that lawsuit. On March 5, 2008, on the basis of a joint motion by the DOJ and defendant Cyberheat Inc. (Cyberheat), the United States District Court for the District of Arizona accepted the settlement negotiated by the parties, thereby ending the three-year-old lawsuit.
"The settlement recites Cyberheat's denial of the allegations giving rise to the DOJ's complaint and, by its express language, does not constitute any admission by Cyberheat of wrongdoing or violation of the law. The lawsuit was noteworthy for the theory advanced by the DOJ: that, notwithstanding the clear language of CAN-SPAM, website owner Cyberheat should be liable for illegal promotional emails sent by third-party independent contractors, even where those contractors were absolutely forbidden by Cyberheat from spamming or, in some cases, sending any commercial emails at all.
"Cyberheat neither sent, allowed to be sent, nor approved in any way the violative emails that gave rise to the lawsuit. Indeed, the offending emails involved only a few rogue contractors who stood in stark contrast to the thousands of Cyberheat's law-abiding affiliates. Cyberheat's affiliates were required at all times by contract to comply with federal laws and regulations dealing with commercial email, including CAN-SPAM and the Adult Labeling Rule. Several of the affiliates whose actions the DOJ sought to impute to Cyberheat were, in fact, forbidden by Cyberheat from sending any form of commercial email whatsoever. Other affiliates accused by the DOJ of engaging in illegal email campaigns presented compelling evidence that the offending emails had, in fact, been sent by unrelated third-parties (a "joe job").
"The overriding theory of the DOJ's case - absolute liability for the owners of websites advertised by email - seemed especially ominous to Cyberheat's attorney Pete Wellborn, who stated, ‘Any company with an Internet presence should run - not walk - to the office of their nearest congressperson and demand congressional action to prevent and eliminate this absurdly tortuous construction of CAN-SPAM by the government.'
"Although Cyberheat defended the case vigorously throughout and remains convinced that it would have won at trial, it ultimately settled the case for just over $400,000, a fraction of the amount demanded and obtained by the government in similar lawsuits involving CAN-SPAM. According to Wellborn, ‘Cyberheat's three-year battle included a number of hard-fought victories vindicating the rights of Cyberheat and its affiliates. Nonetheless, as the cost of settling decreased, as the cost of defending continued to grow, and as the negotiated deal moved farther and farther from the onerous terms the government typically demands and gets in these cases, it became prudent to settle.' The settlement was also made possible by Cyberheat's planned departure from the business of owning and promoting websites."
