Ferguson v. Friendfinders, Inc.

• Decision Date: 02 January 2002
• Docket Number: No. A092653.,A092653.
• Citation: 115 Cal.Rptr.2d 258,94 Cal.App.4th 1255
• Court: California Court of Appeals Court of Appeals
• Parties: Mark FERGUSON, Plaintiff and Appellant, v. FRIENDFINDERS, INC., et al., Defendants and Respondents.

115 Cal.Rptr.2d 258

94 Cal.App.4th 1255

Mark FERGUSON, Plaintiff and Appellant, v. FRIENDFINDERS, INC., et al., Defendants and Respondents.

No. A092653.

Court of Appeal, First District, Division 2.

January 2, 2002.

Certified for Partial Publication.^*

As Modified Jan. 14, 2002.

Review Denied April 10, 2002.^**

Law Offices of John L. Fallat, John L. Fallat, Kentfield, Steven D. Schroeder, Athens, GA; Timothy J. Walton, San Jose, Attorneys for Appellant.

Rothken Law Firm, Ira P. Rothken, Corte Madera, Robert Kovsky, Oakland, Attorneys for Respondents.

Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Herschel T. Elkins, Senior Assistant Attorney General, Seth E. Mermin, Deputy Attorney General, as Amici Curiae.

Carol A. Kunze, The Internet Alliance as Amicus Curiae.

HAERLE, J.

I. INTRODUCTION

Mark Ferguson (Ferguson) sued respondents for violating California law by sending him unsolicited e-mail advertisements that were allegedly deceptive and misleading. The superior court sustained a demurrer without leave to amend with respect to each of Ferguson's causes of action. In reaching its decision, the lower court found that section 17538.4 of the Business and Professions Code¹ violates the dormant Commerce Clause of the United States Constitution.

In the published portion of this decision, we hold that section 17538.4 does not violate the dormant Commerce Clause. In the unpublished portion of this opinion, we conclude that the trial court erred by sustaining a demurrer without leave to amend as to each of Ferguson's causes of action except for the cause of action in which he purported to state a negligence claim.

II. STATEMENT OF FACTS

A. The Statute

Section 17538.4 regulates conduct by persons or entities doing business in California who transmit unsolicited advertising materials. Section 17538.4, which originally applied only to faxed documents, was amended in 1998 to extend to electronic mail (e-mail).

The statute defines "unsolicited e-mail documents" as "any e-mailed document or documents consisting of advertising material for the lease, sale, rental, gift offer, or other disposition of any realty, goods, services, or extension of credit" when the documents (a) are addressed to recipients who do not have existing business or personal relationships with the initiator, and (b) were not sent at the request of or with the consent of the recipient. (§ 17538.4, subd. (e).)

Section 17538.4 requires that a "person or entity conducting business in this state" who causes an unsolicited e-mail document to be sent (1) establish a toll-free telephone number or valid sender operated return e-mail address that recipients may use to notify the sender not to e-mail further unsolicited documents; (2) include as the first text in the e-mailed document a statement informing the recipient of the toll-free number or return address that may be used to notify the sender not to email any further unsolicited material; (3) not send any further unsolicited advertising material to anyone who has requested that such material not be sent; and (4) include in the subject line of each e-mail message "ADV." as the first four characters or "ADV.ADLT" if the advertisement pertains to adult material. (§ 17538.4, subd. (a)-(g).)

Section 17538.4 applies to unsolicited emailed documents that are "delivered to a California resident via an electronic mail service provider's service or equipment located in this state." "Electronic mail service provider" is defined as "any business or organization qualified to do business in this state that provides individuals, corporations, or other entities the ability to send or receive electronic mail through equipment located in this state and that is an intermediary in sending or receiving electronic mail [e-mail]." (§ 17538.4, subd. (d).)

Section 17538.4 states that the section, or any part of it, shall become inoperative when "federal law is enacted that prohibits or otherwise regulates the transmission of unsolicited advertising by electronic mail." (§ 17538.4, subd. (i).) Although Congress has considered several bills addressing this subject, federal law does not currently regulate the transmission of unsolicited advertising by electronic mail.

B. The Complaint

Ferguson, a California resident, filed a complaint on October 20, 1999, which he amended on January 31, 2000.² On behalf of himself and all other persons similarly situated, Ferguson sued Friendfinders, Inc. and Conru Interactive, Inc., two California businesses located in Palo Alto, Andrew B. Conru, a California resident, and 50 doe defendants (jointly, respondents).

Ferguson alleged that respondents sent him and others unsolicited e-mail advertisements that did not comply with the requirement set forth in section 17538.4. Specifically, Ferguson alleged that "the subject lines of the email messages failed to begin with the characters `ADV:'; the first line in the text of the e-mail messages failed to contain information about how recipients could have their email addresses removed from future advertising campaigns; the email messages failed to provide a valid return email address to which Plaintiffs could respond; and the headers of the email messages were altered to mask the identity of the sender."

Ferguson attempted to allege four distinct causes of action for which he sought general and special damages, injunctive relief, and attorneys' fees. In his first cause of action for negligence, Ferguson alleged that respondents' violations of section 17538.4 and other California statutes constituted negligence per se. In his second cause of action, Ferguson alleged respondents were liable for trespass for taking possession and control of plaintiffs'"computer processors, hard drives, Random Access Memory and Internet email accounts" without plaintiffs' consent by sending the unsolicited commercial e-mail advertising.

In his third cause of action, Ferguson alleged respondents' transmission of the unsolicited e-mail advertisements constituted an unfair business practice under California law because respondents' emails (1) were designed to deceive and mislead plaintiffs as to the origin of the transmission, (2) were actually misleading and deceptive, and (3) violated section 17538.4. Citing these same reasons, Ferguson alleged a fourth cause of action for unlawful advertising practices.

C. Proceedings in the Lower Court

Respondents filed their demurrer to the complaint on March 3. They argued that Ferguson failed to state a cause of action for negligence, that sending unsolicited e-mail cannot constitute a trespass as a matter of law, and that Ferguson's third and fourth causes of action for unfair business practices and unlawful advertising practices were flawed in several respects. Among other things, respondents alleged that the relief sought with respect to Ferguson's third and fourth causes of action "would constitute an unconstitutional interference with interstate commerce." In this regard, respondents argued that the Internet cannot be regulated by individual states because it is a national infrastructure without territorial boundaries.

A hearing on respondents' demurrer was held on March 30. At that hearing, the trial court indicated that Ferguson had failed to state a cause of action for negligence because respondents' conduct was intentional, and that Ferguson could not prove that plaintiffs were actually damaged by the alleged trespass. The discussion as to the third and fourth causes of action was limited to the question whether section 17538.4 violates the dormant Commerce Clause of the federal Constitution. After taking the matter under submission, obtaining additional briefing on this discrete issue, and holding a second hearing on May 18, the court issued an order on June 7. That order sustained respondents' demurrer without leave to amend on the following ground: "California Business and Professions Code section 17538.4 unconstitutionally subjects interstate use of the Internet to inconsistent regulations, therefore violating the dormant Commerce Clause of the United States Constitution."³ Judgment was entered on July 17 and this timely appeal followed.

III. DISCUSSION

Ferguson disputes the lower court's conclusion that section 17538.4 is unconstitutional, as does the Attorney General, who has filed an amicus curie brief in this court. Ferguson also argues his entire complaint is viable without section 17538.4. We begin our analysis by addressing the constitutional issue presented and will then consider the adequacy of Ferguson's pleading.

A. Respondents Did Not Establish that Section 17538.4 is Unconstitutional

1. Scope of review

The trial court found that respondents sustained their burden of proving that section 17538.4 is unconstitutional on its face. "A facial challenge to the constitutional validity of a statute or ordinance considers only the text of the measure itself, not its application to the particular circumstances of an individual." (Tube v. City of Santa Ana (1995) 9 Cal.4th 1069, 1084, 40 Cal.Rptr.2d 402, 892 P.2d 1145.) The challenger must "`demonstrate that the act's provisions inevitably pose a present total and fatal conflict with applicable constitutional prohibitions.'" (Ibid.)

2. Dormant Commerce Clause

The Commerce Clause provides that "Congress shall have power ... [¶] ... [¶] [t]o regulate commerce ... among the several states...." (U.S. Const., art. I, § 8, cl. 3.) "[T]his affirmative grant of authority to Congress also encompasses an implicit or `dormant' limitation on the authority of the States to enact legislation affecting interstate commerce." (Healy v. The Beer Institute (1989) 491 U.S. 324, 326, 109 S.Ct. 2491, 105 L.Ed.2d 275, fn. 1 (Healy).) In other words, the dormant commerce clause precludes state regulation in certain areas "even absent congressional action." (CTS Corp. v. Dynamics Corp. of America (1987) 481 U.S. 69, 87, 107 S.Ct....