Firm's Seventh Circuit Win for Client Spamhaus Reduces Damages From $11.7 Million to $3

Jenner & Block Partner Craig C. Martin recently achieved a significant win for the Firm’s pro bono client Spamhaus Project, a British-based nonprofit anti-spam organization, in a long-running lawsuit against it by e360 Insight, a now-defunct internet marketing company.  On September 2, 2011, the United States Court of Appeals for the Seventh Circuit reduced a damages award against Spamhaus, which had begun as an $11.7 million judgment, to three dollars.

In 2006, e360 sued Spamhaus, claiming that it had been unfairly labeled a spammer by the organization.  While Spamhaus was represented by predecessor counsel, the district court found it in default and entered the nearly $12 million damages judgment and a permanent injunction against it.  Mr. Martin then took over Spamhaus’ representation, appealing that judgment to the Seventh Circuit and winning a remand back to the district court for a bench trial that, in June 2010, resulted in a reduction of the award to $27,002. 

The Firm then appealed the $27,000 judgment, with Mr. Martin presenting the oral argument before the Seventh Circuit.  In writing the Court’s opinion, Judge David Hamilton commented on sanctions leveled by the district court against e360 for its refusal to comply with discovery orders and its owner’s failure to appear for depositions.  “By failing to comply with its basic discovery obligations, a party can snatch defeat from the jaws of certain victory,” Judge Hamilton wrote.  The plaintiff’s “pattern of delay…cost it the testimony of all but one witness with any personal knowledge of its damages,” who “lost all credibility when he painted a wildly unrealistic picture of e360’s losses,” the judge continued.  “Having squandered its opportunity to present its case, e360 must content itself with nominal damages on each of its claims, and nothing more,” the opinion concluded.  The three dollar amount represented one dollar for each of e360’s claims.