Bennet G.

Kelley
(310) 452-0401
bkelley@InternetLawCenter.net

June 15, 2018

BY FACSIMILE
(916) 266-9343
Members of the Senate Business, Professions
and Economic Development Committee
State Capitol, Room 2053
Sacramento, CA 95814

Re: AB 2546 (Chau)

OPPOSE AS AMENDED May 29, 2018
SCHEDULED FOR HEARING – June 18, 2018

Dear Senators:

I am the founder of the Internet Law Center in Santa Monica and host of Cyber Law & Business
Report on WebmasterRadio.fm, as well as a past Co-Chair of the California Lawyer’s
Association’s Cyberspace Law Committee and current Chair of the Intellectual Property
Committee’s Technology, Internet and Privacy Subcommittee. I have represented e-commerce
and online marketing companies for nearly twenty years. The views I offer herein, however, are
strictly my own.

I am writing to oppose AB 2546 which radically amends California’s anti-spam act (“CASA”) to
benefit a few anti-spam lawyers at the expense of e-commerce and non-profit entities
nationwide.

1. The Fundamental Premise of the Bill is Improper

In passing CASA in 2003, California declared that “it is necessary that spam be prohibited and
that commercial advertising e-mails be regulated.”1 Congress, however, disagreed, passing the
Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-

1
Business & Professions Code § 17529(m).

100 Wilshire Blvd., Suite 700

Santa Monica, California 90401
www.InternetLawCenter.net
Senate BP&ED Committee
June 15, 2018
Page 2

SPAM”) eighty-four days later preempting CASA.2 While CAN-SPAM preempts state laws
“that expressly regulates the use of electronic mail to send commercial messages,” it 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”.3

AB 2546, however, 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.”4 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.

This legislation is broadside attack on CAN-SPAM preemption, with few of its provisions
having anything to do with falsity or deception.

2. Email Filters Have Nothing To Do With Lawfulness

The other main premise of the bill is that it is somehow against public policy to try to circumvent
or avoid the reach of email filters. AB 2546 adds multiple provisions to make actions that are
designed to “bypass spam filters” a misdemeanor that may also be punished by civil penalties of
$1,000 per email.

The proponents of the bill fail to mention that this argument was soundly rejected by the
California Supreme Court in a unanimous ruling in Kleffman v. Vonage Holdings Corp., 49
Cal.4th 334, 345-49 (2010). In that decision, the court refused to contort “the meaning of
‘misrepresented ... header information’ in the statute to prohibit every practice that might
decrease the effectiveness of spam filters.”

In effect, AB 2546 asks that the California legislature delegate the decision of what is a
deceptive email practice to third party software providers that filter email content for a myriad of
reasons unrelated to deception. For example, a review of my junk mail folder reveals sales
confirmations, newsletters that I subscribe to (including press releases from Attorney General
Becerra), bill tracking updates from the California legislature, legitimate emails to me that have
multiple recipients as well as the garden variety of unsolicited email.

2
15 U.S.C. §§ 7701 et seq. Senator Ron Wyden, who co-authored the CAN-SPAM Act, explained that the
legislation struck a careful balance between a marketer’s First Amendment rights and the interest of consumers,
which essentially “says that if you want to send unsolicited marketing e-mail, you’ve got to play by a set of rules.”
149 Cong. Rec. S. 5,208 (2003) (statement of Sen. Wyden).
3
15 U.S.C. §§ 7701(b) (1), 7704(5), 7707(b)(1).
4
AB 2546 proposed new section 17529(k).
Senate BP&ED Committee
June 15, 2018
Page 3

AB 2546 assumes that each and every one of these emails must be unlawful in some way
because a programmer at Microsoft, Google or Symantec decided to filter this content. Under
AB 2546, should a sender take any steps to avoid this result, including something as benign as
using source code unseen by the recipient, they will now be subject to a penalty of $1,000 per
email.5

One practice singled out by AB 2546 is the use of multiple domains to send email. New section
17529.5(b)(4) makes it unlawful to transmit

email advertisements from multiple domain names for no legitimate business

reason other than to bypass spam filters. The defendant shall have the burden of
proof to demonstrate legitimate business reasons for transmitting email
advertisements from multiple domain names.

This rebuttable presumption will only invite litigation which appears to be precisely the point.

The use of multiple domains for email, however, is a common practice used by legitimate
emailers to manage their lists and avoid being blocked by filters. A quick review of my inbox
revealed it was used by organizations such as the California Lawyers Association, the Clinton
Foundation, Lyft and others. That is who this bill will punish, not the nefarious spammers touted
by the drafters who often are beyond the reach of the law.

In Kleffman, the Supreme Court rejected an invitation to find that the use of multiple domains
was deceptive and the California Senate should also decline to make such an unfounded
conclusion.

3. AB 2546 Radically Expands the Scope of CASA

An extremely troubling aspect of AB 2546 is the radical expansion of the reach of CASA. The
bill redefines commercial email to include:

any electronic mail message initiated for the purpose of advertising or promoting
the lease, sale, rental, gift offer, promotion, or other disposition of any property,
goods, services, credit, stocks, bonds, sweepstakes, insurance, employment
opportunities, extension of credit, or any other solicitation.

The final clause will extend the reach of CASA to any solicitation whatsoever, including
charitable and political solicitations. Do we really want to impede charitable fundraising by
email or force charities to divert resources to pay off anti-spam lawyers? Do we want to enable
opponents of political groups and candidates to tie up their limited resources with lawsuits over
whether their claims are misleading?

5
For example, I also represent victims of revenge porn and send email newsletters to my clients on updates in the
law. The term “porn,” however, is a frequent trigger for email filters. Under this bill, should I vary the spelling of
porn to “p*rn” to ensure the email reaches my clients, I potentially could be subject to a $1,000 per email civil
penalty.
Senate BP&ED Committee
June 15, 2018
Page 4

In addition, while CASA currently prohibits “falsified, misrepresented or forged information” in

the header of an email, AB 2546 would extend its reach to the body of the email itself. This will
supplant existing false advertising laws by removing requirements of intent and circumvent
Proposition 64’s requirement that a plaintiff have suffered actual harm.6

4. AB 2546 Penalizes Lawful Marketers

Currently, CASA is mainly enforced by a half dozen or so anti-spam lawyers, including the
drafters of AB 2546. They collect emails on behalf of their clients and then send demand letters
based on thousands of emails (and often specious claims of violations), that offer the Hobson’s
choice of settling at a discounted rate below the $1,000 per email set by CASA or incur the cost
of litigation and risk substantial liability.7

For lawful marketers faced with that choice, one protection they have under the law is Section
17529.5(d)(2) that allows the court to reduce damages 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.

5. The Costs and Benefits of AB 2546

In speaking with my colleagues as well as marketers and e-commerce companies about AB
2546, it is clear that the legislature may not be aware of the drastic impact its passage will have
on the California economy and beyond. It is expected that passage of this legislation will force
e-commerce companies to severely curtail or abandon email solicitations altogether to avoid
potential liability, resulting in a dramatic loss in sales and substantial layoffs. Similar effects can
be expected in the nonprofit sector which will suffer a serious decline in fundraising that will
hamper its ability to serve our communities.

We are not talking about small marginal losses. I have spoken with e-commerce companies in
California that may lay off up to 80 percent of their workforce should this legislation pass.
Since the law applies to emails to or from California, the impact of this legislation will be
national. As a result, this legislation would put at risk a sector that has generated over 355,000
well-paying jobs since 2007.

In addition, since email marketing offers an inexpensive way for new products to find a market,
this legislation would impair the growth of potentially innovative products and services.

AB 2546 will not benefit consumers one bit and instead will lead to a significant decline in tax
revenue, thousands of lost jobs and a disruption in social services. All this, primarily just to

6
See Business & Professions Code § 17500.
7
Even worse, should a CASA defendant elect to fight the claim and prevail, the law only awards attorneys’ fees to
prevailing plaintiffs.
Senate BP&ED Committee
June 15, 2018
Page 5

benefit a few anti-spam lawyers who already have profited handsomely under the existing law
and are seeking to reverse valid court decisions rendered against them.

It is worth noting that one of the drafters of this bill was behind another failed attempt to rig the
system in 2008 (AB 2950), which Governor Schwarzenegger wisely vetoed as unnecessary and
inviting “excessive litigation for a nuisance that does not result in any damages or losses.” This
bill is far broader than the one a decade before and should be rejected for the very same reason.

Sincerely,

INTERNET LAW CENTER

Bennet G. Kelley

Cc:

Assemblyman Ed Chau
assemblymember.chau@assembly.ca.gov

Bill Gage
Senate Business Professions, and Economic Development Committee
bill.gage@sen.ca.gov

Jeff Gozzo
Senate Democratic Caucus
jeff.gozzo@sen.ca.gov

Kevin Bassett
Senate Republican Caucus
kevin.bassett@sen.ca.gov

Allison Towle
Office of Senator Ben Allen
Allison.Towle@sen.ca.gov