Assemblyman Chau has released an amended version of AB 2546 (which amends California’s existing commercial email law) that reflects changes won during the hearing before the Senate Business, Professions and Economic Development Committee (a copy of which is below).
The bill, whose primary proponent appears to be plaintiff’s lawyer Dan Balsam (who also would be the bill’s main beneficiary), still is problematic even with the changes.
The Fundamental Premise of the Bill is Improper
The federal CAN-SPAM Act preempts state laws “that expressly regulates the use of electronic mail to send commercial messages,” but contains a limited exception to preemption for state laws only “to the extent [the state law] prohibits falsity or deception in any portion of a commercial electronic mail message”. AB 2546 as amended, however, still states that it is premised on the “need to regulate the advertisers who use spam because they may obtain an unfair advantage over their competitors who engage in legitimate and lawful advertising practices.” There are two problems with this premise: (i) unsolicited commercial email is a “legitimate and lawful advertising practice” under the CAN-SPAM Act and protected by the First Amendment; and (ii) regulating the use of unsolicited commercial email is expressly preempted by the CAN-SPAM Act.
The Definition of Commercial Email is Still Problematic
While Assemblyman Chau agreed to clarify that the expanded definition did not apply to charitable and political solicitations as I pointed out, the current bill still expands the definition to include securities and financial solicitations that likely are preempted by federal law.
It Creates A Separate Liability Standard for Email Advertisements
Assemblyman Chau’s amendment did not address my objection to the expansion of the bill to include falsity in the email itself. This expansion is unnecessary since email recipients already have a remedy for “untrue or misleading” statements under existing false advertising law (B&P Code § 17500). This amendment, however, would circumvent (i) the requirements under § 17500 that a plaintiff demonstrate either intent or a reckless disregard for the truth and (ii) the requirement under Proposition 64 that a plaintiff have “suffered injury in fact and has lost money or property as a result”.
It is important to remember that Proposition 64 was enacted overwhelmingly by the voters of California in response to abusive lawsuits in which no one was injured. This change would create a separate strict liability standard solely for email advertisements and subject them to the abuses of vexatious litigants that Proposition 64 sought to eliminate. There is no rational basis for making such a distinction other than to benefit the proponents of this bill.
This likely would lead to businesses moving away from email marketing and likely would result in reduced sales and jobs losses for e-commerce businesses that rely on email.
It Improperly Seeks to Reverse Rosolowski v. Guthy-Renker
In Rosolowski v. Guthy-Renker, LLC, 230 Cal.App.4th 1403 (2014), the California Court of Appeal held that a from line that does not specifically identify the name of the advertiser is not misleading if the identity of the sender is readily ascertainable from the body of the email. This is consistent with federal case law that requires that state regulation must address only that which is materially false in order to avoid preemption. This change will only invite unnecessary litigation until it is eventually invalidated in court.
The Bill Still Seeks to Restrict the Limitation on Damages
Under current law, the court may reduce the civil penalty from $1000 to $100 per violation if a defendant has “established and implemented, with due care, practices and procedures reasonably designed to effectively prevent [solicitations] that are in violation of this section.” AB 2546 negates the effectiveness of this limitation of liability by imposing burdensome recordkeeping and training obligations to a party invoking this provision.
Dan Balsam testified that he is doing marketers a favor by clarifying their obligations under this provision, but the language suggests that his real intention is to gut the provision by making it more difficult to qualify.
The bill will be heard by the Senate Judiciary Committee on Tuesday, June 26th. Please contact the members to let them know how you feel. (Click here to find out who is your State Senators.) The Committee has until the end of the week to pass the bill.
If approved by the Senate Judiciary Committee, the bill would need to be approved by the Senate and then again by the Assembly by August 31st. The passage in either body is not certain.
Senator Bill Monning
AB 2546 as amended
(Changes reflect amendments since Assembly-passed version)
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