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InternetLitigators By Jeffrey A. Cohen
CHAPMAN, GLUCKSMAN & DEAN
January, 24, 2007
In 2003 certain members of the Trevor Law Group were infamously investigated to the point of resignation under charges by the State Bar of California for their role in what amounted to an alleged "shake down" scam involving threatened and actual lawsuits under the former version of California's Business and Professions Code section 17200 for what amounted to minor code violations. They preyed upon small businesses, many of which were minority owned.
In 2007 the players and statute have changed but the game is essentially the same. In this round, the name of the game is 17529.5 or more specifically, California Business and Professions Code Section 17529.5 (Restrictions on Unsolicited Commercial E-Mail Advertisers) CA B&P Division 7, Part 3, Chapter 1, Article 1.8 effective January 1, 2004. This statute essentially constitutes the remainder of the California Anti-Spam efforts after they were largely annihilated via Federal Preemption by the passing of the acronym driven Federal Act known as the "Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003" or CAN-SPAM ACT of 2003.
Certain individuals including some opportunist lawyers have taken up the purported cause against SPAM as our "Heroes in Arms" under the mantra "something must be done". However, in reality many of these individuals are interested in nothing more than lining their own pockets by extorting money from well intended small business web site owners while they accomplish nothing in the war on SPAM whatsoever.
If you should receive a threat letter from one of these individuals do not take it lightly. They can and will proceed to court - generally small claims court since there are no lawyers allowed - to attempt to secure a judgment against you. Technically, 17529.5 does allow for such suits so prudent web site owners must know the rules of the game in which they are ever increasingly being forced to play. Until it was amended, B&P 17200 also permitted such suits even without any "real injury". The amendment to 17200 by Proposition 64 added the requirement that there be some real injury before such suits could be maintained. Until such time as a similar amendment is made to 17529.5 or it is found to be pre-empted by Federal Law these opportunist lawyers and others will continue to make these demands, file suits and even likely prevail against those that are not prepared to defend them.
COMPLIANCE WITH 17529.5
It is often said regarding football that "the best offense is a good defense". This applies no less to the 17529.5 game as well. Therefore, we recommend that you start by ensuring that you comply with the statute - yes, even if you are not in California. Compliance with the statute is not particularly arduous and to the extent that compliance does give all of our SPAM filters a break it is a good thing anyway.
The basic requirements are that you make sure that your email does not do a few things:
1) The e-mail advertisement contains or is accompanied by a third-party's domain name without the permission of the third party.
(2) The e-mail advertisement contains or is accompanied by falsified, misrepresented, or forged header information. This paragraph does not apply to truthful information used by a third party who has been lawfully authorized by the advertiser to use that information.
(3) The e-mail advertisement 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.
That's it. If you do that, the opportunists can still sue you under the theory that "you can sue anyone for anything" but you will likely win and at a minimum you or your lawyer can write a strong letter in reply to the initial demand and send the opportunist packing.
WHY THEY DO IT
The remainder of the section talks about how the opportunists get rich demanding money from you. Specifically, either the Attorney General can come after you, an e-Mail service provider can come after you (yes that's Web Hosting Companies) or - and here is the rub - "a recipient of an unsolicited e-mail advertisement". Therefore, essentially anyone that receives a SPAM message that violates 17529.5 can file a lawsuit in California in a real court with real judges and real lawyers (and real budget problems) against anyone that "advertise[s] in a commercial e-mail advertisement either sent from California or to a California electronic mail address (which is what exactly?)"
For their efforts, if they are successful they get either their actual damages (the cost of hitting delete?) or, and this is the rub again, $1,000.00 per email advertisement in addition to attorneys fees and costs - which the opportunist lawyers will claim they are entitled to for their own time.
What you need to know is that as of the date of this article there are exactly NO cases in California that deal in any significant way with the language of this section. The opportunists will expound on the definitions that they believe are most convenient to them but the reality is until the Appellate court defines some of the elements of this statute interpretation remains in the eye of the beholder.
I GOT A LETTER - WHAT NOW?
If you should find yourself on the wrong end of a vicious threat letter and in possible violation of the above sections there are a few things that you should consider before you get out the checkbook.
Ask these questions as each may lead you to a defense:
1.
Is the e-mail a "commercial e-mail advertisement" as defined in B&P section 17529.1? (see §(b)(1)(A)(iii)
2.
Was a domain name used "without permission"? (see §(a)(1))
3.
Is the header information accurate? (see §(a)(2))
4.
Is the subject line misleading? (see §(a)(3))
5.
Was the email sent over your "own network" - again there has been no interpretation of this to guide us. (see §(b)(1)(D))
6.
Do you have in place practices and procedures designed to prevent SPAM. If so under section (b)(2) the penalty is reduced to $100.00 per advertisement.
7.
Note the language that says 1000.00 or 100.00 "per email advertisement" - it does not say per email therefore copies of the same email should only count as one.
If you are in small claims court make sure that you file all of the appropriate response forms and comply with all appropriate deadlines. If the trial date is not convenient most jurisdictions allow for a continuance upon written request in writing. Most jurisdictions also provide a public service line to assist you with the requirements and many forms can be found on line on sites such as www.findlaw.com.
On the day of trial, come prepared to show how your advertisements comply with the statute. Come with proof of your policies and procedures to eliminate non-compliant emails. Bring witnesses that have this information if you do not directly. Know your facts, dates, times and content of headers. Be able to prove that the email was not yours if indeed that is the case.
Consider hiring a lawyer and having the matter transferred out of small claims court into Superior court in order to allow the use of counsel.
AFFILIATES AND INDEMNITY
Your lawyer should have included in your affiliate agreement language that protects you against these claims and obligates your affiliate to defend and indemnify you against any such claims that you receive as the result of your affiliates actions. Mention this at your next annual document review.
While not entirely clear from the statute the opportunists will claim that you are responsible for the actions of your affiliates however there is room in the statute to assert in defense that it is only the person that sends the email that can be held responsible for any violation of the statute. The language "advertises" is vague and requires clarification however since you as the affiliate program manager cannot control and likely had no knowledge of the violation of this statute by your affiliates there is an argument that it is not intended to apply to you.
SUMMARY
This statute is not about sending someone an email they didn't want. It is STRICTLY about preventing e-mail that either uses a domain name without permission, contains false, misrepresented or forged header information or contains misleading subject information. Without one of those elements there is no violation of this section.
Even if you have an email that arguably contains a violation of this statute depending upon your policies and procedures your damages can be significantly reduced. Speak with your lawyer as to how this may be accomplished.
Finally, as always, we recommend that you hire knowledgeable California counsel familiar with the issues surrounding these claims both to review your email campaigns and to assist you in response to any claims or demands that should arise.
The California State Bar is likely examining these issues now under the same light that they viewed claims under 17200. Certainly SPAM is bad but unscrupulous lawyers and other individuals that clog the courts with minor concerns with relatively no public interest primarily for the pecuniary gain of the lawyers and plaintiffs is far more costly and of greater concern.
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