Actually, overstock.com does have legal grounds to sue. Here's the prohibited conduct part of the law:
13-39-201. Prohibited conduct.
(1) A person may not:
(a) install spyware on another person's computer;
(b) cause spyware to be installed on another person's computer; or
(c) use a context based triggering mechanism to display an advertisement that partially or wholly covers or obscures paid advertising or other content on an Internet website in a way that interferes with a user's ability to view the Internet website.
(2) It is not a defense to a violation of this section that a user may remove or hide an advertisement.
What overstock.com is sueing over is section 1.C & 2. We're talking about adds that goto a compeditor from their site. The thing with these pop-ups, is that they present a deal that looks like it could be from overstock.com and when the user click on it, they goto SmartBargains instead.
Think of this along the lines of Wal*Mart paying someone to put a posterboard with Wal*Mart advertisements on it, and go into near by Target stores and tell Target's customers to goto Wal*Mart instead. Who's the one doing the unethical advertisement?