IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria DivisionAMERICA ONLINE, INC., Plaintiff,v. LCGM, INC. et al., Defendants.CIVIL ACTION NO. 98-102-A 46 F. Supp. 2d 444MEMORANDUM OPINIONThis matter is before the Court on plaintiff’s Motion for Summary Judgment as to each of the seven counts in the complaint. Plaintiff America Online, Inc. (AOL) complains that defendants sent large numbers of unauthorized and unsolicited bulk e-mail advertisements ("spam") to its members (AOL members).(10 AOL’s complaint has seven counts: Count I (False Designation of Origin under the Lanham Act); Count II (Dilution of Interest in Service Marks under the Lanham Act); Count III (Exceeding Authorized Access in Violation of the Computer Fraud and Abuse Act); Count IV (Impairing Computer Facilities in Violation of the Computer Fraud and Abuse Act); Count V (Violations of the Virginia Computer Crimes Act); Count VI (Trespass to Chattels under the Common Law of Virginia); and Count VII (Common Law Conspiracy to Commit Trespass to Chattels and Violate Federal and Virginia Statutes). Plaintiff seeks compensatory and punitive damages, attorney’s fees, costs, and permanent injunctive relief. After reviewing the evidence appropriately before this Court, the Court concludes that there are no genuine issues of material fact in regard to Counts I, II, III, IV, V, and VI, but that such issues remain as to Count VII as well as the issue of damages. Therefore, the Court grants summary judgment in favor of plaintiff on Counts I through VI and denies plaintiff’s motion on Count VII and on the issue of damages for the reasons that follow. I. Summary Judgment Standard and Application in the Instant Case Summary judgment is proper when the record conclusively demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Where the evidence of the parties is at issue, that evidence of the nonmoving party is to be believed. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). For the nonmoving party to avoid summary judgment, the evidence, when viewed in the light most favorable to that party, must be sufficient for a reasonable jury to find in its favor. Id. at 252. The summary judgment standard is satisfied when the nonmoving party "fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) "When a motion for summary judgment is made and supported. . .an adverse party may not rest upon the mere allegations or denials of his pleading, but his response. . . . must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him." Fed. R. Civ. P. 56(e). The scope of submissions examined under the summary judgment standard is limited in the instant case by an order by Judge Poretz, filed August 24, 1998. In that order, Judge Poretz granted in part and denied in part plaintiff's Motion for Terminating Sanctions Based onDefendants’ History of Discovery Abuses. In a hearing held that same day, Judge Poretz found that defendants "have failed to make [d]iscovery"without substantial justification. Transcript from Hearing before Judge Poretz at 21, Civil Action No. 98-102-A, August 14, 1398. Defendants had already been sanctioned more than once for their discovery abuses. In the hearing before Judge Poretz, plaintiff argued that defendants should be sanctioned because defendants Sharrak and Drakos made a blanket assertion of their Fifth Amendment rights during their depositions and refused to answer any questions concerning the identity of the corporate defendants’ 30(b)6) representatives. Judge Poretz found that defendants had not been substantially justified in failing to make discovery because there are no criminal charges against the personal or corporate Defendants; the personal or corporate Defendants have not been advised that they are the targets of a criminal investigation. All I have before me is a representation that Defendants, corporate and personal, have an inchoate fear or expectation that some authority, in some jurisdiction, at some time, may make some charge against them. It is because of that ambiguous nature--- and that’s all I have on the record before me--that I find that they are not substantially justified in refusing to make [d]iscovery. Id. at 22. Judge Poretz imposed several sanctions under Fed. R. Civ. P. 37(b), including the sanction that "defendants are not permitted to oppose plaintiff’s claims or raise defenses," pursuant to Fed. R. Civ. P. 37(b) (2) (B). Judge Poretz’s order precludes defendants from raising claims or defenses in response to plaintiff’s Motion for Summary Judgment. Thus, only those claims and defenses raised by defendants before August 14, 1998 can be considered by the Court in determining whether defendants have satisfied their burden under Rule 56. II. Findings of Fact and Conclusions of Law AOL, an Internet service provider located in the Eastern District of Virginia, provides a proprietary, content-based online service that provides its members (AOL members) access to the Internet and the capability to receive as well as send e-mail messages. AOL registered "AOL" as a trademark and service mark in 1996 and has registered its domain name "aol.com" with the InterNIC. At the time this cause of action arose, defendant LCGM, Inc. was a Michigan corporation which operated and transacted business from Internet domains offering pornographic web sites. Plaintiff alleges that defendant Web Promo is a d/b/a designation for FSJD, Inc., a Michigan corporation that operates Internet domains offering pornographic web sites. Defendant Francis Sharrak was the vice-president of Web Promo and the sole shareholder and president of LCGM. Defendant James Drakos was the president of Web Promo. Defendants Francis Sharrak and James Drakos have participated in the transmission of the bulk e-mails. See LCGM and Web Promo’s Response to Interrogatory 22. AOL alleges that defendants, in concert, sent unauthorized and unsolicited bulk e-mail advertisements ("spam") to AOL customers. AOL’s Unsolicited Bulk E-mail Policy and its Terms of Service bar both members and nonmembers from sending bulk
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