California’s Dangerous Spam Lawyer Relief Bill

When it comes to regulating commercial email, California has a checkered history at best.

2003 – California Almost Shuts Down Commercial Email

In 2003, California almost shut down all commercial email in the United States when it passed the poorly drafted California Anti-Spam Act (“CASA”) banning the sending of unsolicited commercial email.  I testified against the bill, but industry voices were ignored.  A mere 84-days later, Congress stepped in and passed the CAN-SPAM Act, which regulated commercial email by requiring opt-out mechanisms and disclosure of the advertiser’s address while prohibiting deceptive from and subject lines.

CAN-SPAM made clear that unsolicited commercial email was protected by the First Amendment as commercial speech and preempted any state law that “expressly regulates the use of electronic mail to send commercial messages.”  It did, however,  permit state regulation addressing falsity and deception in commercial email.

Current State Law

In 2004, California amended CASA to prohibit sending email using a third-party domain without permission, using falsified header information or using a knowingly deceptive subject line and adding a $1,000 per email penalty for violations plus attorneys’ fees (but only for plaintiffs).  It is a strict liability standard applied regardless of whether the recipient has suffered any harm whatsoever. Since then the law has primarily been used by less than dozen lawyers who collect thousands of emails, find plaintiffs (sometimes their own family) and then negotiate sizable nuisance settlements.

I have defended a number of such claims, some of which have bordered on the ridiculous.  Now, after a serious of setbacks in the courts, California’s “spambulance chaser” in chief is pushing a bill in Sacramento to reverse those setbacks and once again jeopardize all commercial email traffic in the U.S.

The Spambulance Chaser Relief Act

Assemblyman Ed Chau (D-San Gabriel Valley) has introduced Assembly Bill 2546 which is a wishlist of giveaways to plaintiffs lawyers (see text below).  Before addressing the problematic provisions, let us address what this bill WILL NOT do.  Nothing in this bill will reduce the level of spam in the slightest, benefit a single California consumer or create a single job (other than for lawyers).

California’s Supreme Court had previously held that CASA should not be interpreted “to prohibit every practice that might decrease the effectiveness of spam filters.” Kleffman v Vonage, 49 CAL. 4th 334, 349 (2010).  Reversing this ruling is the raison d‘être of this legislation.

For example, the sending of commercial email from multiple domain names (a standard practice) is made presumptively illegal unless the sender can demonstrate a “legitimate business reason” for doing so.  Similarly, it seeks to require that senders use only certain types of names in the from line.

Other significant changes include

• eliminating the intent requirement as to misleading subject lines;
• expanding the scope of the strict liability to include any falsity in any part of the email without regard to consumer harm; and
• expanding liability to any party who initiates, enables or advertises in the email.

The coup de gras, however, is that the proposed legislation alters CASA’s saving clause which allows a judge to reduce damages to only $100 per violation to a defendant who has established and implemented practices and procedures designed to prevent violations, by imposing burdensome training and recordkeeping requirements.

This Bill is a Threat to US E-Commerce

While many of these changes are impermissible express regulations of commercial email and therefore preempted under the federal CAN-SPAM Act, that will take years to resolve in the courts if passed.

In the meantime, the multiple domain prohibitions, burdensome training and recordkeeping requirements and expansion of liability will bring commercial email to an immediate halt and would be a crushing blow to e-commerce nationwide.  The bill would put at risk a sector that has generated over 355,000 well-paying jobs since 2007, all to benefit a handful of lawyers who want another million-dollar home.

The same lawyer was behind another failed attempt to rig the system in 2008 (AB 2950), which Governor Schwarzenegger wisely vetoed as unnecessary and inviting “excessive litigation for a nuisance that does not result in any damages or losses.”

Assembly Passage is Imminent, Act Now

This bill has been approved by two Assembly Committees with a vote of the full Assembly expected shortly.  Please contact your elected officials (click here to find out who your California representatives are) to tell them to preserve e-commerce jobs in California and not vacation homes for spam lawyers.

Cover Photo:  unsplash-logoTom Pumford