RealTime IT News

Class Action Suit May Derail Concentric, 9 Net Ave. Deal

Thousands of people that trusted their Web site hosting services to 9 Net Avenue Inc. are about to get their day in court for an alleged junk fax incident that took place this past summer.

A class-action lawsuit has been filed against 9 Net Avenue and Concentric Network Corp. for allegedly sending unsolicited facsimile advertisements between June 9 and June 11.

Giordano, Halleran & Ciesla, P.C. opened the suit, brought on behalf of John R. Levine earlier this week, before the Superior Court of New Jersey. The two companies have been ordered to show cause as to why financial relief should not be granted to the plaintiffs by the court.

A court date scheduled for mid-November may determine whether the proceeds from the sale of 9 Net Ave. to Concentric (CNCX), are at risk as a result of the suit. p> Kurt Anderson, Giordano, Halleran & Ciesla attorney representing Levine, said that more people are likely to join the suite against 9 Net Avenue because they knowingly violated the law.

"We believe that there are hundreds if not thousands of recipients of these faxes. We believe that 9 Net Avenue did this knowingly and that they intended to violate the law," Anderson said.

Under U.S. law, it is illegal to use any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to any equipment that has the capacity to transcribe the text or images from an electronic signal received over a regular telephone line onto paper.

Anderson said the law allows individuals to sue the sender of such illegal "junk fax mail" for $500 per copy.

"This law is a consumer protections privacy protections law designed to stop companies from essentially transferring their advertising costs to the recipients of the faxes," Anderson said." We are representing people who did not give their permission to receive these advertisements from 9 Net Avenue, these faxes were unsolicited."

Informal reports concerning the 9 Net Avenue suite said that the total damages could run into the millions for the recently acquired Web hosting company. Representatives for 9 Net Avenue have offered no comments on the case at this time.

Concentric is named as a defendant in the suit because the e-business solution provider acquired New-Jersey-based 9 Net Avenue on October 18, 1999.

Concentric purchased 9 Net Avenue's assets and certain liabilities, but the company contends it did not assume liabilities of this nature in the transaction. In a statement regarding the lawsuit, Concentric said they believe that the lawsuit naming Concentric as a defendant is without merit.

"Concentric has a well-deserved reputation of strongly opposing any sort of unsolicited electronic advertising or spamming," the statement read. "It obtained the first ever injunction prohibiting a company from sending junk email to its subscribers, and its user agreement is among the strongest in the nation with regard to prohibiting abusive email marketing practices."

Concentric paid approximately $51.8 million dollars in stock and cash for the assets of 9 Net Avenue and assumed approximately $9.9 million in liabilities in the acquisition. With the deal complete, Concentric has more than 188,000 registered domains and over 104,000 hosted Web sites, making it the second largest Web hosting and e-commerce solution provider in the U.S.

Levine, Internet for Dummies co-author, writes, lectures, and consults on the Internet and related computer topics. Since 1997 Levine has been a board member of the Coalition Against Unsolicited Commercial E-mail, a anti-spam Internet advocacy group. He also operates the Network Abuse Clearinghouse, a free service that helps Internet users report and abusive online behavior.