A California appellate has considered whether the state's "anti-spam" law violated the dormant Commerce Clause of the Constitution of the United States.
Mark Ferguson ("Consumer"), a resident of California, brought a lawsuit against Friendfinders, Inc. ("Advertiser") for sending him unsolicited advertising emails, commonly referred to as "spam." The Consumer brought his lawsuit pursuant to a California statute which regulates those conducting business in California who transmit unsolicited advertising materials ("Statute"). The law originally applied to facsimile communications, but the law was expanded in 1998 to cover electronic communications like email as well. The Advertiser argued that the Consumer could not proceed with his lawsuit because the Statute was an unconstitutional restraint on interstate commerce. The trial court ruled that the Statute was unconstitutional, and the Consumer appealed.
The Statute defines "unsolicited e-mail documents" as an email which consists of "advertising material for the lease, sale, rental, gift offer, or other disposition of any realty, goods, services, or extension of credit" when the email is addressed to a party with whom the business has no relationship and the email was not sent at the request of, or with permission from, the addressee. Nineteen other states have similar restrictions on unsolicited electronic communications. The Statute applies to unsolicited emails that are received by a California resident when the email transmission process uses computer equipment (like servers or PCs) based in California. The Statute requires that a "person or entity conducting business in this state" who sends an unsolicited email must: first, establish a toll-free telephone number or provide a valid email address where the recipient can request not to receive any other unsolicited email documents; second, the first text in the unsolicited email informs the recipient of the toll-free number or email address where the consumer can contact the sender to inform them that they do not want to receive any further emails from the advertiser; and finally, must include in the subject line "ADV:" as the first four characters or "ADV:ADLT" if the advertisement is for adult materials.
The Court of Appeal of the State of California, First Appellate District, reversed the trial court and ruled that the Statute was constitutional. The court found that the Advertiser's challenge to the Statute was a facial challenge, meaning that the court had to look no farther than the language of the Statute to determine whether the Statute was constitutional (as opposed to looking at how the statute was applied by the state regulators). The Commerce Clause contained in the Constitution of the United States provides that "Congress...shall have the power [t]o regulate commerce...among the several states..." Based on this language, courts have created the "dormant Commerce Clause" doctrine, which prohibits states from enacting legislation which interferes with interstate commerce in instances where Congress has not exercised its Commerce Clause power. Since the Congress has not enacted any legislation regulating email "spam," any Commerce Clause challenge raised by the Advertiser would have to be based on the dormant Commerce Clause.
Under the dormant Commerce Clause doctrine, courts will scrutinize legislation in one of two ways. The first level of scrutiny is when the legislation discriminates against interstate commerce, such as legislation which discriminates against out-of-state companies in order to benefit local companies. This type of legislation is subject to "strict scrutiny," with the legislation in question rarely surviving this type of judicial review. The second level of scrutiny is for legislation which does not discriminate against interstate commerce. Courts will use a balancing test, weighing the state's interest served by the legislation against the burden imposed upon interstate commerce by the state's regulations.
Applying these tests, the court found that the Statute was subject to the balancing test because the Statute did not discriminate against interstate commerce, since the Statute's terms applied equally to both interstate advertisers as well as intrastate advertisers. The Advertiser argued that the Statute discriminated against interstate commerce because it was required to tailor all of its email solicitations, even those to recipients outside of California, to meet the Statute's terms, since the Advertiser did not know the physical location of any of the addresses to which it sent its solicitations. The court rejected this argument, ruling that it was a business decision made by the Advertiser to not attempt to determine the physical location of its email recipients. The court also found that the Advertiser could determine the physical location of recipients if it had chosen to do so. Since the Statute did not discriminate against interstate commerce, the court would next balance the interests of the state against the potential harm to interstate commerce.
Applying the balancing test, the court found that unsolicited advertising emails cost nothing to send but impose financial burdens on its recipients, due to the costs associated with storing/receiving such emails that internet service providers incur and which they pass onto their clients. Based on this information, the court found that California had an interest in protecting its citizens from incurring such additional costs, if they so choose. The court also found it was in agreement with the Supreme Court of Washington on this issue (see State v. Heckel, 24 P.3d 404 (Wash. 2001)), the only other court to consider a similar challenge to that state's anti-spam legislation. The court found that the Statute furthered the state's interest in protecting its citizens from the costs incurred by spam, and the Statute did not impose a burden on interstate commerce. Thus, the court found the Statute constitutional, reversing the trial court's ruling and sending the case back to the trial court to conduct additional proceedings.
Ferguson v. Friendfinders, Inc., 115 Cal. Rptr. 2d 258 (Cal. Ct. App. 2002).