WHAT HATH THE JUNK FAX PREVENTION ACT OF 2005 WROUGHT
A federal court in California recently (June [correction: February]) held that federal law preempted the state’s junk fax law. [Access a .pdf copy of the order in Chamber of Commerce v. Lockyer, No. 2:05-cv-2257 MCEKJM, 2006 WL 462482 (E.D. Cal. Feb. 27, 2006) here.] I was unaware of the enactment of the aptly named “Junk Fax Prevention Act of 2005” (“JFPA”). This decision brought the scope of the JFPA into focus. The court’s interpretation of the statute is not easy to square with its language.
Background
The Federal Communications Act of 1934 (47 USC 152(a)) provides for federal government regulation of interstate telecommunications and state regulation of intrastate communications. In 1991, Congress passed the Telephone Consumer Protection Act of 1991 (adding section 227 to the FCA) (“TCPA”). The TCPA prohibited the transmission (via telephone, fax, or computer(*)) of unsolicited advertisements, unless a previous business relationship existed between the sender and recipient. In 1992 the FCC adopted rules implementing the TCPA. The 1992 rules implemented the established business relationship exception, explaining that where this relationship exists, the purposes of the TCPA were not furthered by prohibiting unsolicited faxes. (Under these rules, a person or entity was allowed to fax where an established business relationship existed.)
In 2003 the FCC planned on reversing the previous business relationship exception, instead proposing to require express consent in a signed writing. In 2005 Congress enacted the Junk Fax Prevention Act of 2005 (the JFPA), codifying the express business relationship exception – i.e., overriding the proposed 2003 rules. Meanwhile, in 2005, California enacted a blanket ban on unsolicited faxes where the sender or recipient was located within California. (SB 833). The Chamber of Commerce and a plaintiff challenged the California statute, arguing it was preempted by federal law. Judge England in the Eastern District of California ruled that SB 833 was preempted by the TCPA as modified by the JFPA.
Discussion
The decision is not that remarkable, except that it represents yet another attempt by California to impose stricter rules than those required by the feds . . . and it sort of illustrates the difference in treatment between junk email and other media such as fax. Preemption is less likely to be found when it comes to state email rules.
The ruling interprets the language of the TCPA in a manner that certainly was not obvious. Both parties argued about a preemption/savings clause in the TCPA which reads as follows:
There’s certainly a reasonable explanation for the language which would have supported California’s position. Imposing a regulation on an unsolicited fax is different from banning it altogether. In fact, one can argue that it is far easier to cope with an outright ban than it is to deal with “regulation” (such as a labeling requirement). In order to deal with a ban, one need only compile a list of area codes in the relevant states and cease faxing unsolicited faxes to these area codes altogether. Regulation, on the other hand, such as an additional labeling requirement, should only be imposed “intrastate” – i.e., on faxes coming from and going to within the state – because it may require the sender to take additional affirmative steps. Arguably, it makes perfect sense to include language in the TCPA which says that (1) states can impose additional “intrastate” regulations and (2) states can – whether interstate or intrastate – outright ban unsolicited faxes. The court also glosses over the fact the statute contained a qualifier – it stated: “except for the standards prescribed under subsection (d) of this section and subject to paragraph (2) of this subsection.” The court never analyzes the effect of the clause which limits the entire scope of preemption to the standards under “subsection (d)” and “paragraph (2)” of that subsection. Anything else should have been fair game.
The Court Falls Back on the Implied Preemption Analysis
According to the court, all of this is besides the point. Why? The court points to the fact that in enacting the JFPA, Congress’s purpose “was to retain the established business relationship exception for the transmission of unsolicited facsimile advertisements.” According to the court, it’s fairly obvious that given the history of the TCPA, the proposed rules, and the JFPA, that the California law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress because it eliminates the established business relationship exception that Congress expressly codified in the JFPA and nullifies Congress’ decision that unsolicited facsimile advertisements be governed by an ‘opt-out’ rather than an ‘opt-in.’” In other words, Congress enacted the JFPA in order to “protect” the consumer against junk faxes and allow companies to fax unsolicited faxes to individuals as long as they do not opt out, regardless of the efforts of states to enact more stringent requirements. The court’s arguments are not entirely convincing. For one thing, when the TCPA was initially enacted, there was an express consent requirement. So the original understanding of the TCPA supports the view that states can impose more stringent requirements. (A more lenient TCPA would point in the other direction.) Second, in enacting the JFPA, Congress chose to not address preemption, instead choosing to rely on the previously existing preemption clause. Congress should have been presumed to be aware of potential ambiguity in this section, as acknowledged by the FCC (68 Fed. Reg. 44144). Congress’s silence in the face of this expressed ambiguity should mean something. It certainly is not impossible for a person or entity to comply with both sets of rules – this sort of thing happens all of the time. Finally, the title of the JFPA, along with multiple savings clauses in the TCPA and JFPA mean that states are authorized to enact more stringent requirements, provided that compliance with both regimes is not impossible. It didn't seem like the court dug into this issue very much.
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Two quick points. First, I’m not sure if the decision illustrates the differences with which courts treat fax as opposed to email under preemption/commerce clause arguments. My instinct is that courts certainly do make this distinction and tend to more likely not find preemption in the email context. (*) Second, people are increasingly combining their email, telephone, and fax functions or at least being able to send and receive them from the same machine. The junk fax/email/telephone laws were all written at a time when this did not happen. Will the laws have to be re-written to address these issues? I guess this bears on the broader issue of the jurisdiction of agencies such as the FCC:
Background
The Federal Communications Act of 1934 (47 USC 152(a)) provides for federal government regulation of interstate telecommunications and state regulation of intrastate communications. In 1991, Congress passed the Telephone Consumer Protection Act of 1991 (adding section 227 to the FCA) (“TCPA”). The TCPA prohibited the transmission (via telephone, fax, or computer(*)) of unsolicited advertisements, unless a previous business relationship existed between the sender and recipient. In 1992 the FCC adopted rules implementing the TCPA. The 1992 rules implemented the established business relationship exception, explaining that where this relationship exists, the purposes of the TCPA were not furthered by prohibiting unsolicited faxes. (Under these rules, a person or entity was allowed to fax where an established business relationship existed.)
In 2003 the FCC planned on reversing the previous business relationship exception, instead proposing to require express consent in a signed writing. In 2005 Congress enacted the Junk Fax Prevention Act of 2005 (the JFPA), codifying the express business relationship exception – i.e., overriding the proposed 2003 rules. Meanwhile, in 2005, California enacted a blanket ban on unsolicited faxes where the sender or recipient was located within California. (SB 833). The Chamber of Commerce and a plaintiff challenged the California statute, arguing it was preempted by federal law. Judge England in the Eastern District of California ruled that SB 833 was preempted by the TCPA as modified by the JFPA.
Discussion
The decision is not that remarkable, except that it represents yet another attempt by California to impose stricter rules than those required by the feds . . . and it sort of illustrates the difference in treatment between junk email and other media such as fax. Preemption is less likely to be found when it comes to state email rules.
The ruling interprets the language of the TCPA in a manner that certainly was not obvious. Both parties argued about a preemption/savings clause in the TCPA which reads as follows:
[e]xcept for the standards prescribed under subsection (d) and paragraph (2) of this subsection, nothing in this section . . . shall preempt any State law that imposes more restrictive intrastate requirements or regulations on, or which prohibits–(A) the use of telephone facsimile machines or other electronic devices to send unsolicited electronic advertisements.Inclusion of the bolded comma certainly was a good way to indicate that the savings clause was disjunctive and that the word “intrastate” only modified the first clause – i.e., Congress intended states to have leeway to do either (impose more restrictive intrastate requirements or regulations, OR prohibit entirely, the use of . . . fax machines to send unsolicited faxes). Regardless, the court engages in some statutory construction gymnastics to try to salvage its reading of the statute. According to the court, California’s interpretation – which meant that the state was free to enact more restrictive intrastate regulations as well as interstate prohibitions, rendered extraneous the first portion of the clause which allowed the state to regulate intrastate communications. Because the court was reluctant to treat Congressional language “as surplusage” the court concluded that the entire phrase merely reaffirmed the states’ rights to enact or restrict intrastate unsolicited fax communication. [Talk about an odd definition of surplusage, it’s not like the states needed Congress’s permission to enact intrastate regulations in the first place.] It’s worth noting that this language was interpreted by the Supreme Court of North Dakota earlier this year in the exact opposite fashion: State ex rel. Stenehjem v. FreeEats.com, Inc., 2006 ND 84, 712 N.W.2d 828 (2006) (“Thus, read logically and grammatically, the statute states that nothing in the TCPA preempts any state law ‘that imposes more restrictive intrastate requirements or regulations on’ the enumerated classes of calls, and nothing in the TCPA preempts any state law ‘which prohibits’ calls within the enumerated list. ‘Intrastate’ unambiguously modifies only the first clause, not the second.”).
There’s certainly a reasonable explanation for the language which would have supported California’s position. Imposing a regulation on an unsolicited fax is different from banning it altogether. In fact, one can argue that it is far easier to cope with an outright ban than it is to deal with “regulation” (such as a labeling requirement). In order to deal with a ban, one need only compile a list of area codes in the relevant states and cease faxing unsolicited faxes to these area codes altogether. Regulation, on the other hand, such as an additional labeling requirement, should only be imposed “intrastate” – i.e., on faxes coming from and going to within the state – because it may require the sender to take additional affirmative steps. Arguably, it makes perfect sense to include language in the TCPA which says that (1) states can impose additional “intrastate” regulations and (2) states can – whether interstate or intrastate – outright ban unsolicited faxes. The court also glosses over the fact the statute contained a qualifier – it stated: “except for the standards prescribed under subsection (d) of this section and subject to paragraph (2) of this subsection.” The court never analyzes the effect of the clause which limits the entire scope of preemption to the standards under “subsection (d)” and “paragraph (2)” of that subsection. Anything else should have been fair game.
The Court Falls Back on the Implied Preemption Analysis
According to the court, all of this is besides the point. Why? The court points to the fact that in enacting the JFPA, Congress’s purpose “was to retain the established business relationship exception for the transmission of unsolicited facsimile advertisements.” According to the court, it’s fairly obvious that given the history of the TCPA, the proposed rules, and the JFPA, that the California law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress because it eliminates the established business relationship exception that Congress expressly codified in the JFPA and nullifies Congress’ decision that unsolicited facsimile advertisements be governed by an ‘opt-out’ rather than an ‘opt-in.’” In other words, Congress enacted the JFPA in order to “protect” the consumer against junk faxes and allow companies to fax unsolicited faxes to individuals as long as they do not opt out, regardless of the efforts of states to enact more stringent requirements. The court’s arguments are not entirely convincing. For one thing, when the TCPA was initially enacted, there was an express consent requirement. So the original understanding of the TCPA supports the view that states can impose more stringent requirements. (A more lenient TCPA would point in the other direction.) Second, in enacting the JFPA, Congress chose to not address preemption, instead choosing to rely on the previously existing preemption clause. Congress should have been presumed to be aware of potential ambiguity in this section, as acknowledged by the FCC (68 Fed. Reg. 44144). Congress’s silence in the face of this expressed ambiguity should mean something. It certainly is not impossible for a person or entity to comply with both sets of rules – this sort of thing happens all of the time. Finally, the title of the JFPA, along with multiple savings clauses in the TCPA and JFPA mean that states are authorized to enact more stringent requirements, provided that compliance with both regimes is not impossible. It didn't seem like the court dug into this issue very much.
* * *
Two quick points. First, I’m not sure if the decision illustrates the differences with which courts treat fax as opposed to email under preemption/commerce clause arguments. My instinct is that courts certainly do make this distinction and tend to more likely not find preemption in the email context. (*) Second, people are increasingly combining their email, telephone, and fax functions or at least being able to send and receive them from the same machine. The junk fax/email/telephone laws were all written at a time when this did not happen. Will the laws have to be re-written to address these issues? I guess this bears on the broader issue of the jurisdiction of agencies such as the FCC:
The FCC's brief, filed in response to PK's challenge to FCC's jurisdiction in the flag matter, is breathtaking. FCC's position is that its Act gives it regulatory power over all instrumentalities, facilities, and apparatus "associated with the overall circuit of messages sent and received" via all interstate radio and wire communication. That's quite a claim.I sense some possible spillover effects of this jurisdictional uncertainty in the junk fax/email arena. The statutes certainly do not clearly deliniate the boundaries.
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