Medical companies may now send faxes to California customers so long as they are compliant with the federal law and send those faxes from outside of California.

A federal judged ruled on February 27 that California cannot regulate interstate commercial faxes under its new state law. In a 20-page opinion, Judge Morrison C. England of the U.S. District Court for the Eastern District of California said the Junk Fax Prevention Act (JFPA), signed by President Bush in July, 2005, preempts the newly enacted California state law. The judge said he may rule on the question of whether the state law can apply to faxes inside California after he conducts a full hearing on the merits of the issue.

"Judge England applied common sense to the California fax ban, enabling businesses to fax their customers and supporting a more unified federal rule," said John Kamp, Executive Director of the Coalition for Healthcare Communication. The Coalition has supported the right of businesses to fax to their regular customers since the FCC first announced in 2004 that it would enforce a ban on all faxes unless the sender had signed permission from recipients. This controversy lead to the enactment of federal fax regulation in 2005 that enabled business to business faxes to existing customers.

California's S.B. 833, passed by the state legislature in October, 2005, prohibited all unsolicited commercial faxes without prior consent from the recipient, and did not contain an exception permitting faxes if sender and recipient have an established business relationship. The federal Junk Fax Prevention Act does contain an established business relationship exception.

The California law was to take effect January 1, but the U.S. Chamber of Commerce filed suit in November, seeking an injunction to bar enforcement of the new law. In December the federal court issued a provisional stay of the California law and Jan. 23 extended the stay until the court issued its current ruling.

Victory for Chamber and Marketers

The Chamber considered the ruling as a victory for businesses. "Because of this victory, businesses nationwide will be spared the unnecessary cost and bureaucracy of navigating what would have been grossly conflicting federal and state laws," Stephen A. Bokat, executive vice president of the National Chamber Litigation Center, said Feb. 27.

"The federal law was enacted for good reason after careful consideration of the competing values at stake," Bokat said.

The Direct Marketing Association said it was pleased with the ruling.

"For small businesses especially, and those involved in business-to-business marketing, faxes remain a vital channel for communication with customers," DMA Senior Vice President Jerry Cerasale said.

"We have been following the California lawsuit closely and think the court's decision represents a significant victory in our fight to keep this important line of communication open for legitimate commerce." Cerasale said.

Attorney General Reviews Ruling

Tom Dresslar, a spokesman for California Attorney General Bill Lockyer (D), said Feb. 28 that the AG is reviewing the decision. Until the judge rules on the question of intrastate faxes, it is unclear whether the state can enforce the law, and a decision about appealing the ruling cannot be made. Lockyer will continue to argue that the state law is not preempted, and that the federal junk fax act gives states the authority to enact laws that are more restrictive, Dresslar said.

"We will wage this fight as aggressively as we can," he said. "The attorney general intends to ensure that the [law] is preserved to the maximum extent possible."

Sen. Debra Bowen (D), who authored the California law, said in a Feb. 28 statement that she was "amazed" by the ruling.

"The court missed the core of the issue because it doesn't matter what state or country the junk faxer is sitting in when he tries to hijack your fax machine," Bowen said.

"What matters is the fact that he's trying to do business in your California home or business, and if he's doing business here, then he has to abide by the California ban on junk faxing. The court's attempt to draw a distinction between in-state and out-of-state junk faxers makes no sense because the effect on the person who's getting bombarded with junk faxes is identical," she said.

Judge Cites Constitution's Supremacy Clause

In the ruling, the court said California's law is contrary to the intent of Congress in adopting the federal junk fax act, and is in violation of the Supremacy Clause of the Constitution. "S.B. 833 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' scheme," the court wrote.

"Consequently, the court finds that, to the extent California attempts to regulate the interstate transmission of unsolicited facsimile advertisements through S.B. 833, it has exceeded its jurisdiction rendering that portion of the statute violative of the Supremacy Clause and, therefore, constitutionally infirm," the court ruled.

The court said it was mindful of the burden created by unsolicited commercial faxes. "Despite these realities, the court cannot unilaterally raze the legal landscape carefully cultivated by Congress," the judge wrote.

Richard A. Jones of Covington & Burling, San Francisco, and David H. Remes, Robert M. Sherman and Timothy L. Jucovy of Covington's Washington office represented the U.S. Chamber of Commerce.

Joshu A. Room and Kathrin E. Spears of the state attorney general's office, Sacramento, Calif., and Ronald A. Reiter of the AG's office in San Francisco represented the state.

Read the full text of Judge England's opinion.
See previous material on this site for an explanation of the new federal law and the California fax ban.

JUNK FAX PROTECTION ACT
PASSES BOTH SENATE & HOUSE;
PRESIDENTIAL SIGNATURE EXPECTED SOON

FAXES TO CALIFORNIANS VIOLATE NEW LAW
DESPITE NEW PERMISSIVE FEDERAL STATUTE