Friday, January 4, 2002
C.A. Rules State’s Anti-Spam Law Not Commerce Clause Violation
By KENNETH OFGANG, Staff Writer/Appellate Courts
California’s law banning businesses operating in this state from sending unsolicited commercial e-mail to recipients who don’t want it has been upheld by the First District Court of Appeal.
“That respondents consider [Business and Professions Code] section 17538.4’s requirements inconvenient and even impractical does not mean that statute violates the Commerce Clause,” Justice Paul Haerle wrote Wednesday for Div. Two.
The panel reinstated Mark Ferguson’s suit against two Palo Alto companies. It overturned San Francisco Superior Court Judge David Garcia’s ruling that the statute contravenes the “dormant” Commerce Clause by subjecting Internet users to inconsistent burdens as they do business in different states and countries.
The statute, which was originally enacted as a ban on “junk faxing,” was amended in 1998 to address unsolicited commercial e-mail, commonly referred to as “spam.” It applies to businesses that send e-mail to recipients with whom the sender has no prior personal or professional relationship and who have not requested information from the sender.
The law requires such businesses to establish a toll-free number or return e-mail address—which must appear before any other text—that recipients may use to notify the sender not to send any more spam, prohibits the sending of spam to anyone who has told the sender to stop; and to begin the subject line of each e-mail with “ADV:” or “ADV:ADLT” if the advertisement pertains to adult material.
For the law to apply, the sender must do business in California, California-located equipment must be used to transmit the message, and the recipient must be a California resident. Violation of the law may be classified as an unfair business practice or unfair advertising practice, subjecting the sender to damages, penalties, and/or injunctive relief.
California is one of about 18 states to enact such laws; attempts to enact a federal law have stalled in committee.
Ferguson alleged that the defendants, Friendfinders, Inc. and Conru Interactive, Inc. violated the “ADV:” provision and provided no return address or other information on how to stop the spamming. Friendfinders runs an on-line matchmaking service and Conru Interactive describes itself as a “Web incubator.”
Both companies were founded by software engineer/web entrepreneur Andrew Conru.
Internet Not Regulated
In concluding that the trial judge was wrong in dismissing, Haerle reasoned that the statute “does not regulate the Internet or Internet use per se,” but “regulates individuals and entities who (1) do business in California, (2) utilize equipment located in California and (3) send [unsolicited commercial e-mail] to California residents.”
The justice distinguished a recent ruling by a federal judge in New York, striking down that state’s ban on using a computer to disseminate obscene materials to a minor. That law, Haerle explained, broadly applied to all Internet activity and did not limit its scope to New York-based recipients or require that equipment located in New York be used to transmit the proscribed material.
California’s law, Haerle went on to say, does not conflict with other state statutes. While there may be minor differences from one state to another—Pennsylvania, for example, requires that the subject line of a solicitation for sexually explicit material begin “ADV-ADULT” rather than “ADV:ADLT”—the geographic limitation on the law’s scope means that no sender will face conflicting requirements from state to state, the justice wrote.
Because the state law does not discriminate against or directly regulate or control interstate commerce, Haerle went on to explain, it does not violate the dormant Commerce Clause unless its burdens on commerce outweigh its beneficial effects.
That is not the case, he concluded. The law, he reasoned, protects potential recipients from annoyance and waste of time, spares internet service providers from undue expense, and protects innocent third parties from having responses to commercial e-mail misdirected to them as a result of bulk e-mailers misuse of phony domain names.
As for the burdens imposed on interstate commerce by the law, Haerle agreed with the attorney general—who filed an amicus brief in support of the plaintiff—that the cost of compliance is “appreciably zero in term of time and expense.”
The case is Ferguson v. Friendfinders, Inc., 02 S.O.S. 31.
Copyright 2002, Metropolitan News Company