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CAN-SPAM preemption – broad yet narrow

Posted by Philip Kay on September 25, 2009

The California Court of Appeals for the Fourth District recently addressed the preemptive scope of the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003 (“CAN-SPAM,” 15 USC § 7701 et seq) in Powers v. Pottery Barn, Inc., 2009 WL 2991358 (Cal.App. 4 Dist., Sept. 21, 2009), a consumer class action filed against Pottery Barn in California state court.

Powers alleged she visited a Pottery Barn store, selected an item to buy and, when she used her credit card to buy it, was asked to provide an e-mail address. Powers gave the sales clerk her e-mail address and saw the clerk enter the address into the store’s electronic cash register.  Powers then brought suit against Pottery Barn under California’s Song-Beverly Credit Card Act of 1971 (Song-Beverly) which limits the information that may be requested of a consumer when the consumer uses a credit card to transact business.  In particular, Song-Beverly prohibits businesses from requesting or requiring credit card customers to provide “personal identification information,” such as their addresses and telephone numbers.

Pottery Barn moved to dismiss the complaint, arguing that regulation of the collection of e-mail addresses was preempted by CAN-SPAM.

Some background:  CAN-SPAM was enacted in 2003. Under CAN-SPAM the sender of any unsolicited “commercial electronic mail message” is subject to civil liability unless the e-mail contains: a mechanism which permits the addressee to “opt-out” or unsubscribe from further e-mails, an accurate identification of the sender, an accurate subject line, a physical address of the sender and a warning label if the e-mail contains adult content. CAN-SPAM also makes it a crime to send e-mail through a computer without the permission of the owner of the computer (“open-relay”) or place false information in the e-mail header.

By its terms, CAN-SPAM pre-empts any state law that “specifically regulates the use of electronic mail to send commercial messages.”

The trial court agreed with Pottery Barn and dismissed Powers’ complaint, ruling that Powers’ claims were preempted by CAN-SPAM.  Powers appealed.

The California Court of Appeals reversed, finding that while CAN-SPAM pre-empts any state law that “specifically regulates the use of electronic mail to send commercial messages,” it does not pre-empt state laws that “are not specific to electronic mail” and have only incidental impact on e-mail use.  Because Song-Beverly’s regulation of what may be asked of credit card customers is not a regulation of what can be sent in commercial e-mails and is not in any manner specific to e-mail, Song-Beverly is not pre-empted by CAN-SPAM.

The Powers Court got this one right.  While CAN-SPAM’s preemption clause is broad in application – it preempts all state statutes and regulations that purport to regulate commercial e-mail and saves from preemption only those state statutes or regs that target “fraud or deception” – it is narrow in scope because a state statute or reg is only preempted in the first place if it specifically regulates the use of commercial e-mail.  As the Powers court pointed out, incidental effect on commercial e-mail is not enough to invoke CAN-SPAM preemption.  In fact, across the board, every attempt to expand CAN-SPAM’s preemption clause to state statutes which do not specifically regulate e-mail has failed.  See, e.g., Ferron v. SubscriberBase Holdings, Inc., 2009 WL 650731 (S.D.Ohio Mar 11, 2009) (“[b]ecause OCSPA is a consumer protection statute, not limited to matters of electronic mail, CAN-SPAM does not preempt Ohio Revised Code § 1345.02).

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