The California Junk Fax Act Has Been Partially Invalidated by the Courts However, It Could Still Impact Your Business

The California "Junk Fax" Act (SB 833) which was enacted by the California legislature in 2005 and scheduled to take effect on January 1, 2006, has been partially invalidated by the U.S. District Court for the Eastern District of California on the basis of federal preemption.  Federal preemption is the doctrine that provides that federal legislation overrides state legislation when both deal with the same subject matter.  As a result of the court's ruling, the more stringent requirements of the new California law only apply to faxes that are sent from and are received within the State of California.  The existing federal statute, the Telephone Consumer Protection Act (TCPA) continues to govern faxes that cross state lines.

The U.S. District Court reviewed the Junk Fax Act as a result of a lawsuit filed by the U.S. Chamber of Commerce and Xpedite Systems, a broadcast fax company.  The lawsuit was filed on the grounds that the TCPA should preempt the California Junk Fax Act in relation to interstate faxes because of the potential for inconsistent application of the TCPA and the Junk Fax Act by the courts.  In February 2006, the court ruled in favor of the opponents to the Junk Fax Act with regard to interstate faxes and upheld its regulation of intrastate faxes.  The court held:

"…SB 833 stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress . . . The Court recognizes that unsolicited advertisements transmitted via facsimile machines cost recipients untold resources in the form of time and money.  Despite these realities, the Court cannot unilaterally raze the legal landscape carefully cultivated by Congress . . . Indeed, while SB 833 suffers from constitutional infirmity with respect to interstate reach, the protections afforded California consumers for intrastate facsimile transmissions remain inviolate."

The remaining viable portion of the 2005 California law makes it unlawful for a person or entity located in California to use any device to send, or cause any other person or entity to use a device to send, an unsolicited advertisement to a telephone fax machine also located in California.  An "unsolicited advertisement" means any material advertising of the commercial availability or quality of any product, goods, or services that are transmitted to any person or entity without the person's or entity's prior express invitation or permission.  This requirement of prior permission is commonly referred to as an "opt-in".

The California Junk Fax Act was enacted to overcome a perceived weakness in the federal TCPA.  The TCPA contains an exception allowing the sending of unsolicited faxes to persons with whom the sender has an "established business relationship."  The California bill sponsors argued the "established business relationship" exception amounted to an "opt-out" standard, rather than the perceived more consumer-friendly opt-in standard, because virtually any previous contact of any level can be considered an "established business relationship."  It is the opt-out standard that led the California legislature to adopt the opt-in standard in the Junk Fax Act. 

Impact on Businesses

Businesses involved in advertising their services by fax should evaluate their procedures to determine whether they comply with the lower, opt-out, "established business relationship" standard of the TCPA for faxes that are being sent across state lines.  Businesses sending faxes within California, if they have not already done so, should immediately adopt procedures that include obtaining an opt-in from each fax recipient located in California that expressly grants permission to send future faxes.  We recommend annotating existing fax distribution lists to reference the nature of the existing relationship, such as "registered warranty" or "newsletter subscriber" or other typical circumstances.  These permissions should be integrated with the fax distribution lists so that your California bound faxes will only be sent to those who have opted-in.

Additional "Header" Requirements

It is also worth noting that the California Junk Fax Act requires that fax senders clearly mark in a margin at the top or bottom of each fax page, the date and time sent, an identification of the business, entity or person sending the fax, and the sender’s telephone number. 

Penalties

Both the California law and the TCPA allow recipients of illegal faxes to sue the sender.   If a court finds that a sender willfully or knowingly violated the California law, it can award a recipient up to $1,500 per violation.

Our Experience

Allen Matkins has experienced attorneys who have already advised clients on compliance with the California Junk Fax Act, and who can assist you in complying with other related laws affecting your business, such as anti-spam laws, internet advertising, electronic commerce and privacy disclosures.  If you have questions about the California Junk Fax Act or other related federal or state laws, contact your attorney at Allen Matkins, who can direct you to the appropriate attorney, or you can call or email Randy Broberg in San Diego (619-235-1566 / rbroberg@allenmatkins.com), Matthew Ertman in Los Angeles (213-955-5579 / mertman@allenmatkins.com) or Roger Mertz in San Francisco (415-273-7441 / rmertz@allenmatkins.com) directly.