• Antispam Laws Coming of Age
  • April 29, 2003 | Author: Devin P. Gensch
  • Law Firm: Fenwick & West LLP - Mountain View Office
  • In 1998, the California legislature amended Business and Professions Code Section 17538.4 to regulate the sending of unsolicited e-mail advertisements (also known as "spam"). Section 17538.4 had previously regulated the transmission of unsolicited facsimile documents only. The statute, as amended, defines "unsolicited electronic mail advertisements" as including any advertising that is addressed to recipients with whom the sender does not have an existing business or personal relationship or that was not requested by the recipient.

    This statute requires any entity sending such spam to: (1) include in the subject line of each e-mail "ADV:" as the first four characters to identify the message as advertising, or "ADV:ADLT" if the advertising pertains to adult materials; (2) not send any further Spam to recipients who choose to opt-out; (3) establish a toll-free telephone number or valid sender-operated return e-mail address that recipients may use to opt-out of future emailings; and (4) include the toll-free telephone number or valid return address as the first text in the e-mail.

    On behalf of other recipients of unsolicited e-mail allegedly from the defendants, California resident Mark Ferguson sued Friendfinders, Inc., Conru Interactive, Inc., Andrew B. Conru and 50 "John Doe" defendants in a class action lawsuit. Originally filed in October 1999 and amended in January 2000, Ferguson's complaint alleged negligence, trespass, unfair business practices and unlawful advertising practices.

    In March 2000, however, the defendants demurred, essentially arguing that even if all the factual allegations the plaintiff asserted were true, the facts would still not violate the law. Among other reasons, the defendants argued in their demurrer that the relief sought by Ferguson would, in part, constitute an unconstitutional interference with interstate commerce. Generally speaking, states cannot pass laws that restrain or unduly burden interstate commerce. The defendants argued that Section 17538.4 violated this "Dormant Commerce Clause" of the United States Constitution because it would affect behavior both in-state and out-of-state, as well as subject senders of e-mail advertising to multiple and conflicting state standards.

    In June 2000, a state court in San Francisco agreed with the defendants and held that Section 17538.4 was unconstitutional under the United States Constitution. However, this ruling was challenged, and on January 2, 2002, a California Court of Appeal overturned the lower court ruling. In so doing, the court determined that the antispam law did not violate the U.S. Constitution and found that the lower court should not have dismissed plaintiff's claims for trespass, unfair business practices and false or deceptive advertising. The Court of Appeal therefore allowed plaintiff to proceed to trial seeking damages on these grounds.

    In this appeal, Ferguson argued that Section 17538.4 was not unconstitutional, and that his claims were viable without Section 17538.4. The Attorney General of California filed a separate brief also arguing for the constitutionality of Section 17538.4. In response, the defendants argued that the statute would require senders of e-mail to determine where recipients resided - an impossible task, they contended, given the nature of the Internet. The Court of Appeal disagreed, noting that the statute, by its very terms, applies only when spam is sent via equipment located in California. The Court of Appeal noted that both Ferguson and the Attorney General argued that lists of e-mail addresses sorted by geographic residence already exist or can be readily created by senders of e-mail advertising based upon demographic and personal information that often includes both e-mail and physical addresses in the same user profile, while the defendants offered no evidence to the contrary. The Court of Appeal added that merely because the defendants may "consider section 17538.4's requirements inconvenient and even impractical does not mean that the statute violates the Commerce Clause." See Ferguson v. Friendfinders, Inc., No. A092653, (CA 1st Dist.) (Jan. 2, 2002) at 10.

    The Court of Appeal stated that Section 17538.4 applies to both in-state and out-of-state actors who "(a) do business in California and (b) transmit unsolicited commercial e-mail (UCE) to a California resident, (c) via equipment located in California." Id. at 7. The Court of Appeal found that the State of California had an interest in protecting its residents from the costs associated with spam, which it found included the costs to Internet service providers of accommodating bulk e-mail advertising, and higher access fees to users due to the time required to sort, read, discard and prevent future sending of spam, as well as the difficulty in handling and eliminating the sheer volume of spam that recipients typically receive on a daily basis. The Court of Appeal also found that California had an interest in protecting residents from spammers who use deceptive tactics to hide the origin of messages. In the end, the court identified the only burden on interstate commerce to be the requirements that senders identify messages as advertising in the subject line and honor opt-out requests, which the court found to be a minimal imposition on spammers given the benefits provided to the public at large.

    This opinion is a significant development for any company that uses e-mail as a marketing tool or operates server or routing equipment in California, such as ISPs. Failure to comply with the requirements of Section 17538.4 outlined above could subject companies to liability. This most recent ruling opens the door to more private lawsuits, on grounds similar to those raised by the plaintiff in Friendfinder, against senders of unsolicited commercial e-mail.

    Numerous other states also have statutes that directly or indirectly regulate spam, and the FriendFinder decision merely underscores the growing sentiment of state legislatures that want to protect their constituents from spam, regardless of other states' laws. The Washington Supreme Court, for example, recently upheld the constitutionality of a Washington statute regulating spam, which was challenged on grounds similar to those argued in the California case.

    Similar to California's antispam law, Pennsylvania requires unsolicited adult advertising to contain a warning, beginning the subject line with "ADV-ADULT," and including an accurate return address to facilitate opt-out requests. Conversely, the State of Delaware makes it flatly illegal to, without authorization, intentionally or recklessly distribute any commercial e-mail to any receiving address or account under the control of any authorized user of a computer system, except where an organization is merely contacting its members or there is a pre-existing business relationship. Companies that use e-mail as a marketing tool and have mailing lists that may contain residents in other states may wish to investigate whether relevant state laws require specific header information or particular opt-out procedures. Fenwick & West regularly monitors the status of antispam legislation nationwide and can provide you with the status of antispam legislation at the federal or state level.