According to the 2000 census, there were 209,128,094 adult Americans and 115,904,641 American "housing units." Word has it that, roughly speaking, sending an item of junk mail costs about 100 times as much as sending an email. So, if it's a good deal, it might cost about $30 million to send a piece of junk mail to every "housing unit" in the United States. Assuming every adult American has an email address, it might cost as little as $600,000 to send an email to every American adult. Postage is going up, as are the costs of paper, ink, and printing; the cost of sending emails is going down. You can see what's coming.
This month's topic involves the clash between, on the one hand, the limited First Amendment right to advertise and, on the other, government's reaction - perhaps overreaction - to its constituency's irritation with being bombarded with sales pitches from everywhere. So, who is impacted by this month's topic? If you either send or receive bulk advertising - that covers pretty much everyone, doesn't it? - you have an interest here.
Significant court decisions on this issue have been handed down within a month or two of this article going to press, including a decision by the United States Supreme Court. Such a flurry of activity is expected to continue, so you should not figure that this will be the last article on this subject.
This is a controversial topic, not just legally, but also politically. For example, the Supreme Court upheld significant billboard regulations in Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 101 S.Ct. 2882, 69 L.Ed.2d 800 (1981). Twenty years later, motorists navigating San Diego's freeways have no hope of finding out where to exit in order to refuel or have lunch. One faction wants beautiful freeways (an oxymoron), while the other wants to give motorists a fighting chance to find a place to get a hamburger or a tank of gas. San Diego, by the way, is second only to Orange County, Calif., as an example of urban planning run amok (Orange County is the home of Disneyland, the Happiest Place on Earth, but, as a result of the over-planning, it's also the most inconvenient place on Earth, the most congested place on Earth, and the most monotonous place on Earth).
Starting with the basics, "commercial speech" in Supreme Court parlance is a communication that proposes a commercial transaction: an advertisement. Simply because a fee is imposed for speech (e.g., 50� for the newspaper) does not make it commercial speech. In fact, commercial speech is almost always free (billboards, leaflets, junk mail, spam, boiler-room phone calls, etc.), while there is generally a charge for the varieties of speech for which there is greater constitutional protection (motion pictures, newspapers, books, etc.).
So long as it is not misleading and concerns lawful activity, regulation of commercial speech is constrained by the First Amendment. As explained by the Supreme Court:
"The commercial marketplace, like other spheres of our social and cultural life, provides a forum where ideas and information flourish. Some of the ideas and information are vital, some of slight worth. But the general rule is that the speaker and the audience, not the government, assess the value of the information presented. Thus, even a communication that does no more than propose a commercial transaction is entitled to the coverage of the First Amendment."
A regulation of commercial speech is unconstitutional unless it directly advances a substantial governmental interest and is not more extensive than necessary to further that interest. That is called the "Central Hudson test," Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n. of New York, 447 U.S. 557 (1980). Thus, commercial speech is protected to a lesser degree than other free speech, which can be directly regulated only to the extent that it advances a compelling governmental interest by the least restrictive means for doing so. Notably, there is some debate about the above; there is a loud voice suggesting that commercial speech should not be relegated to second-class status. The Court recently applied the Central Hudson test in dismantling a convoluted FDA regulation prohibiting pharmacists from advertising compounding of particular drugs, Thompson v. Western States Medical Center, ___ U.S. ___, No. 01-344 (April 29, 2002).
Technological advances have dramatically increased the ability of advertisers to disseminate cheap, large-scale advertising. It is no surprise that there has been a corresponding increase in the extent to which this deluge of advertising has become a source of irritation to consumers. Moreover, the monetary and time costs to the recipient of advertising have become appreciable. Junk mail implicated only the cost of trash removal; telemarketing had some impact on tying up consumers' phone lines and occupying their time; junk faxes inflicted significant costs in terms of ink and paper; and spam ties up bandwidth and is a source of considerable irritation. Needless to say, Congress and state legislatures have stepped in to regulate all of this.
An important early foray into regulation of unsolicited advertising was the regulation of sexually oriented advertising by mail. In 1970, Congress enacted limitations on the mailing of "sexually oriented advertisements," 39 USC �3010, enabling the Post Office to promulgate regulations requiring disclosures on the face of such mailings and creating the "prohibitory list," a list of addresses where residents have asked the post office not to deliver sexy ads. The statute and the regulations promulgated thereunder were upheld, despite complaints by advertisers about the dizzying cost of purchasing the prohibitory list from the Post Office.
As computer technology facilitated automatic dialing machines, Congress stepped in again with the Telephone Consumer Protection Act of 1991. Congress found that more than 300,000 solicitors were calling more than 18,000,000 Americans per day generating $435 billion in sales, a four-fold increase in eight years. This law, 47 USC �227, outright prohibited "junk faxes" and automatic dialers that sent prerecorded messages to residential lines and other places. It also insulated cellular phones and pagers from harassment by automatic dialers. The prohibitions on both junk faxes and automated phone solicitations have been upheld: Destination Ventures, Ltd. v. F.C.C., 844 F.Supp. 632 (D. Ore. 1992), aff'd. 46 F.3d 54 (9th Cir. 1995); Moser v. F.C.C., 46 F.3d 970 (9th Cir. 1995).
Spam is the next topic but, believe it or not, Congress has yet to act on it. In the meantime, however, states have done so, most notably - as you might expect - in this magazine's home state. California started with 1992 legislation requiring that junk faxes display a toll-free number which the recipient could call to stop further faxes, Cal. Bus. & Prof. Code �17538.4. The statute was amended in 1998 to add email and require either a toll-free number or an email address where the recipient could direct a shut-off notice. It also imposed the requirement that the first characters of a spam subject line be "ADV:" or, in the case of adults-only spam, "ADV: ADLT". Those requirements apply only "when the unsolicited emailed documents are delivered to a California resident via an electronic mail service provider's service or equipment located in" California. That, of course, is of little consequence; just try to send out bulk email without reaching any of the 33 million Californians, or figure out which ones do not use a California service provider (defined as "any business or organization qualified to do business in [California] that provides individuals, corporations, or other entities the ability to send or receive electronic mail through equipment located in [California] and that is an intermediary in sending or receiving electronic mail").
In response to a putative class action suit against a spamming company, the company challenged California's anti-spam law, claiming that it violates the "dormant Commerce Clause" - which essentially is a constitutional principle that prohibits states from enacting regulations that unreasonably discriminate against interstate commerce. The trial court agreed, tossing out the action, but the court of appeal reversed. While California courts have generally disagreed with cases from other jurisdictions holding that states are very limited in their ability to regulate the Internet, the court nonetheless distinguished California's law from the ones disapproved in those cases because its coverage is limited to California residents receiving email through California equipment. While this certainly is a hot topic, perhaps meriting review by the United States Supreme Court, the refusal of the California Supreme Court to review the case means that this burden could apply for some time: Ferguson v. Friendfinders, Inc., 94 Cal.App.4th 1255, 115 Cal.Rptr.2d 258 (1st Dist. 2002), review denied (April 10, 2002).
The other significant development in the fight against unsolicited advertising is the enactment of privacy regulations. That one is for next month.
Clyde DeWitt is a partner in the Los Angeles, California-based national law firm of Weston, Garrou & DeWitt. He can be reached through AVN Online's offices, at his office at 12121 Wilshire Boulevard, Suite 900 Los Angeles, CA 90025 or over the Internet at [email protected]. Readers are considered a valuable source of court decisions, legal gossip and information from around the country, all of which is received with interest. Books, pro and con, are encouraged to be submitted for review, but they will not be returned. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases and editorial comment about legal developments and trends. Readers who believe anything reported in this column might impact them should contact their personal attorneys.
