BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2007-2008 Regular Session
AB 2950 A
Assembly Member Huffman B
As Amended June 11, 2008
Hearing Date: June 24, 2008 2
Business and Professions Code 9
BCP:jd 5
0
SUBJECT
Commercial e-mail messages: Falsity and Deception
DESCRIPTION
Current law provides that it is unlawful for any person or
entity to advertise in a commercial e-mail advertisement
either sent from California or sent to a California e-mail
address if the e-mail contains or is accompanied by a
third-party's domain name without permission. This bill
would add third party e-mail addresses to the prohibition,
and state that nothing may be construed to affect
comparative advertising that references domain names.
This bill would also:
define header information;
provide that venue is appropriate in any county in
which the recipient of the commercial e-mail message
resides;
allow a district attorney or a city attorney to
bring an action under California's spam law, and allow
the district attorney or city attorney, if the
prevailing plaintiff, to recover reasonable attorney's
fees and costs;
specify a three-year statute of limitations; and
codify the intent of the Legislature that the
section, which prohibits falsity and deceptions in
commercial e-mail messages, shall operate within the
exception to federal preemption to the full extent
permitted by the CAN-SPAM Act of 2003.
(more)
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BACKGROUND
In 2003, SB 186 (Murray, Ch. 487, Stats. 2003) banned the
sending of spam (unsolicited commercial e-mail) in
California, and created a private right of action that
allowed the recipient or service provider to bring an
action against violators for actual and liquidated damages.
Before SB 186 could take effect, Congress enacted the
CAN-SPAM Act of 2003 that allowed for the sending of spam
as long as the sender was identified and the recipient was
able to opt-out, as specified. CAN-SPAM's pre-emption
clause further stated:
This Act supersedes any statute, regulation, or rule of
a State or political subdivision of a State that
expressly regulates the use of electronic mail to send
commercial messages, except to the extent that any such
statute, regulation, or rule prohibits falsity or
deception in any portion of a commercial electronic
mail message or information attached thereto.
Thus, while most of SB 186 was pre-empted, the provisions
that regulated falsity or deception in commercial e-mails
were retained. In response to the partial pre-emption of
California's anti-spam law, Senator Murray authored SB 1457
(Ch. 571, Stats. 2004), which sought to modify California's
anti-spam law to conform to the federal CAN-SPAM exemption.
The Senate Floor Analysis for SB 1457 notes that the bill
sought to "create[] a 'stand-alone' code section for
falsified e-mails, including penalties, to avoid confusion
as to what parts of existing state law are preempted by
federal law and what parts remain viable." That
stand-alone section, Businesses and Professions Code
Section 17529.5, sought to regulate false and deceptive
e-mail and specifically allowed the attorney general,
e-mail service provider, or recipient to bring an action
for violation of the section and recover attorney's fees
and costs.
This bill would expand that section by allowing a district
attorney or city attorney to bring an action for violation,
allow those parties to receive reasonable attorney's fees
and costs, specify that venue is appropriate in any county
in which the recipient of an e-mail message resides or
where appropriate under existing law, define header
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information, and prohibit the sending of a commercial
e-mail containing a third party's e-mail address without
their permission.
CHANGES TO EXISTING LAW
1. Existing law provides that it is unlawful for any
person or entity to advertise in a commercial e-mail
advertisement either sent from California or sent to a
California e-mail address if: (1) the e-mail contains or
is accompanied by a third-party's domain name without
permission; (2) the e-mail contains or is accompanied by
falsified, misrepresented, or forged header information,
as specified; or (3) the e-mail has a subject line that a
person knows would be likely to mislead a recipient,
acting reasonably under the circumstances, about a
material fact regarding the contents or subject matter of
the message. (Bus. & Prof. Code 17529.5(a).)
This bill would revise the first prohibition to instead
apply to e-mails that contain or are accompanied by a
third-party's domain name or e-mail address without the
permission of the third party. This bill would also
state that nothing in the section may be construed to
affect comparative advertising that references domain
names.
This bill would define "header information" as the
source, destination, and routing information attached to
an electronic mail message, including the originating
domain name and originating electronic mail address, and
any other information that appears in the line
identifying, or purporting to identify, a person
initiating the message.
This bill would additionally allow a district attorney or
a city attorney to bring an action under the above
provision, and allow the district attorney or city
attorney, if the prevailing plaintiff, to recover
reasonable attorney's fees and costs.
2. Existing law specifically permits the attorney
general, an electronic mail service provider, or a
recipient of an unsolicited commercial e-mail
advertisement to bring an action for violation of the
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above prohibition, and provides that those parties, if
the prevailing plaintiff, may recover reasonable
attorney's fees and costs. (Bus. & Prof. Code
17529.5(b)(1)(A), (C).)
Existing law authorizes the recovery of actual damages,
liquidated damages of $1,000 for each unsolicited
commercial e-mail up to $1,000,000, or both. (Bus. &
Prof. Code 17529.5(b)(1)(B).)
This bill would provide that venue is appropriate in any
county in which the recipient of the commercial e-mail
message resides or in any county appropriate under
current law (Code Civ. Proc 392 et seq.).
This bill would provide that any action to enforce a
cause of action pursuant to this section shall be
commenced within three years after the cause of action
accrued. No cause of action barred under existing law on
the effective date of this section shall be revived by
its enactment.
This bill would codify the intent of the Legislature that
the section, which prohibits falsity and deceptions in
commercial e-mail messages, shall operate within the
exception to federal preemption to the full extent
permitted by the CAN-SPAM Act of 2003 (17 U.S.C.
7707(b).) and any other provision of federal law.
COMMENT
1. Stated need for the bill
According to the author,
[E]xisting laws have not stopped unlawful spam; in
fact, the volume of spam has increased since
CAN-SPAM. Filters have not proven effective, in no
small part because spammers use fraudulent and
deceptive means to bypass filters and hide their
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identity. A significant amount of spam is false, or
deceptive, either technically or in terms of the
advertised content. Advertisers benefit from, but
deny liability for, their advertising agents'
unlawful activities. And recipients bear the costs
of spam, not the spammers/advertisers.
There has been litigation in California and federal
courts under 17529.5, but ambiguities and
loopholes in the law make it too easy for
spammers/advertisers to evade their liability,
particularly when defendants lie under oath and
judges do not fully understand the technological
issues.
2. Expanding and clarifying prohibition on e-mail
advertising that contains or is accompanied by a
third-party's domain name without their permission
Under existing law, it is unlawful for any person or
entity to advertise in a commercial e-mail advertisement
either sent from California or sent to a California
e-mail address if the e-mail address contains or is
accompanied by a third-party's domain name without the
permission of the third party. This bill would
additionally apply that prohibition to e-mails that
contain an e-mail address without the permission of the
third party. As e-mail addresses must include a domain
name, this addition provides a more specific example of
the current prohibition as it relates to domain names and
has the effect of requiring consent of a third party
before including their e-mail address in an e-mail
advertisement (provided that the new prohibition is not
preempted by CAN-SPAM). As with the prohibition on
including domain names, the new prohibition on e-mail
addresses would apply to the text included in the body of
an e-mail, thus, an advertiser would arguably have to
receive the consent of the holder of each included third
party e-mail address prior to including that address.
To ensure that the prohibition does not interfere with
legitimate comparative advertising, the bill would add
that nothing in the section may be construed to affect
comparative advertising that references domain names.
That clarification is important as the domain name of a
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competitor may be used for purposes of comparative
advertising - a valid use that may not be false and
deceptive. To conform to recent amendments, that
exemption should also include e-mail addresses used for
purposes of comparative advertising:
Suggested amendment :
On page 5, line 20 after names insert:
or e-mail addresses
The author should consider other situations in which an
e-mail address may be included in an advertising e-mail
(such as the address of the local Better Business Bureau
or organizations that allow a consumer to report fraud),
and explore whether other exemptions are required. Those
same issues could arise under existing law if the
advertisement provides a link to those organizations.
3. Venue provision would ensure that an action may be
brought in the place where the recipient of the e-mail
message resides
Under existing law, venue (the location in which a case
may be heard) is proper in the county in which the cause
or some part of the cause arose for actions for recovery
of a penalty or forfeiture imposed by statute, in the
county in which an injury to person or personal property
occurs, where the defendants reside, or in other counties
authorized under the Code of Civil Procedure. (Code Civ.
Proc. 393; 395.)
This bill would augment existing venue provisions by
providing that venue is also appropriate in any county in
which the recipient of a commercial e-mail message
resides. Thus, if a company sends a false or misleading
e-mail in violation of California's spam law, this bill
would allow the recipient, electronic mail servicer
provider, Attorney General, district attorney, or city
attorney to bring an action in the county in which the
recipient resides. While this provision clarifies the
question of where, under the existing venue statutes, a
cause of action arises when the violation is the sending
of an e-mail over the internet, the result would be to
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subject an advertiser to civil actions (some brought in
small claims court) in potentially remote counties.
Considering the volume of commercial e-mails that could
be sent out by an e-mail advertising firm hired by a
company, this provision could subject that company to
venue throughout the State of California. This result is
unavoidable if the company chooses to advertise through
random spam.
4. Provision adding a three year statute of limitations
would codify the current statute of limitations under
existing law
Under existing law, a four-year statute of limitations
applies if an action is brought for unfair competition
under Business and Professions Code Section 17200 (which
includes any act prohibited by the chapter containing
California's spam law). Alternatively, an action
specifically commenced under Section 17529.5 is subject
to the three year default statute of limitations
contained in Section 338(a) of the Code of Civil
Procedure. (The four year statute of limitations
contained in Section 17208 does not apply to actions
brought pursuant to 17529.5 as that limitations period
only applies for violations of the chapter including
17200.)
To clarify and restate the existing statute of
limitations for violations of California's spam law, this
bill would specifically codify a three-year statute of
limitations for violations of Section 17529.5. That
three-year period is consistent with the statute of
limitations currently required under Code of Civil
Procedure Section 338(a).
5. Allowing a district attorney or city attorney to bring
an action would expand the parties that may bring an
action for violation
Current law limits the parties that may bring an action
for a violation of California's spam law to the Attorney
General, an electronic mail service provider, or the
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actual recipient of an unsolicited commercial e-mail
advertisement. Those individuals may seek actual or
liquidated damages in the amount of $1,000 for each
unsolicited commercial e-mail sent in violation of the
section.
This bill would additionally allow a district attorney or
city attorney to bring an action for violations, and
authorize those individuals (if prevailing plaintiffs) to
recover reasonable attorney's fees and costs. As those
individuals could bring actions for enforcement when the
recipient or service provider is unable or cannot afford
to do so, these provisions would arguably further deter
the sending of unlawful spam.
6. Clarifying the definition of header information
In the context of e-mail, header information is generally
the information that precedes the actual body of the
e-mail itself that indicates the sender, recipient, and
other information about the source of the e-mail. Under
existing state law, it is unlawful to advertise in a
commercial e-mail either sent from California or sent to
a California e-mail address if the e-mail advertisement
contains or is accompanied by falsified, misrepresented,
or forged header information, as specified.
To clarify what exactly constitutes an e-mail header,
this bill would codify the definition of "header
information" from the federal CAN-SPAM Act, thus defining
header information as the source, destination, and
routing information attached to an electronic mail
message, including the originating domain name and
originating electronic mail address, and any other
information that appears in the line identifying, or
purporting to identify, a person initiating the message.
That definition provides uniformity with federal law, and
reflects the components of an e-mail message that are
generally considered to be the header of the e-mail.
7. Opposition's arguments
ValueClick, Inc., Hydra LLC, and Connexus Corporation, in
opposition, suggests three amendments to provide
consistency with federal law regarding spam e-mails.
Although none of the amendments address language added by
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the bill, the opposition maintains that the suggested
amendments are germane because the bill expands the
provisions under which there is liability (for example,
expanding venue increases the location in which an action
may be brought). The suggested amendments are as
follows:
(1) Defining
materially false or misleading (in the context of
e-mail headers) as the definition under federal law
(CAN-SPAM).
(2) Stating that a person may not recover damages if
they engaged in conduct that induced the sending of
the commercial e-mail advertisement or otherwise
increased the quantity of commercial e-mail received
by that person.
(3) State that in alleging a violation under this
section, a party must state with particularity the
circumstances concerning the materially false or
misleading information.
While those amendments may provide greater uniformity
with federal law, they also provide less protection than
current law, and less potential liability for e-mail
advertisers.
Support: Privacy Rights Clearinghouse; California Alliance
for Consumer Protection; one individual
Opposition: ValueClick, Inc.; Hydra LLC; Connexus
Corporation
HISTORY
Source: Author
Related Pending Legislation: None Known
Prior Legislation: SB 186 (Murray, Ch. 487, Stats. 2003),
banned the sending of spam in California,
and created a private right of action that
allowed the recipient or service provider to
bring an action against violators for actual
and liquidated damages.
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SB 1457 (Murray, Ch. 571, Stats. 2004),
modified SB 186 to conform to recently
enacted federal law.
Prior Vote: Assembly Business & Professions Committee
(Ayes 6, Noes 2)
Assembly Judiciary Committee (Ayes 7, Noes 2)
Assembly Floor (Ayes 47, Noes 20)
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