Marketers and businesses were pleased but wanted more from a ruling last this by a U.S. District Court in California that said the federal Telephone Consumer Protection Act preempts the state's fax ban law, except as the ban applies to intrastate faxes.
Under California's law, signed Oct. 7, marketers outside the state cannot send a commercial fax to Californians without written consent, nor can California marketers send commercial faxes to numbers outside the state without such consent.
The rule was to take effect Jan. 1, but the U.S. Chamber of Commerce challenged the law in court because it provides no exemption for sending faxes to recipients who have an established business relationship with the sender. The TCPA includes the exemption.
The lack of such an exception imposes significant costs on companies, especially smaller ones, trying to do business with California residents or entities, the U.S. chamber said. The chamber argued that California disregarded the U.S. Constitution's requirement of federal law supremacy over conflicting state laws.
“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,” said Stephen A. Bokat, executive vice president of the National Chamber Litigation Center, the chamber's public policy law firm, which served as co-counsel in the case.
The Direct Marketing Association also hailed the ruling.
“For small businesses especially, and those involved in business-to-business marketing, faxes remain a vital channel for communication with customers,” said Jerry Cerasale, DMA senior vice president, government affairs. “We … think the court's decision represents a significant victory in our fight to keep this important line of communication open for legitimate commerce.”
The DMA believes jurisdiction to regulate interstate commercial faxes lies exclusively with the federal government, based on the Federal Communications Act of 1934, the Telephone Consumer Protection Act of 1991 and the Junk Fax Prevention Act of 2005.
Last month, the DMA joined with the American Association of Advertising Agencies, the Association of National Advertisers and the Magazine Publishers of America in formal comments to the FCC in support of a petition filed by the Fax Ban Coalition requesting that the FCC have exclusive authority to regulate interstate commercial faxes.
“The court decision was a positive result for legitimate faxers,” said Mark Priebe, president of Proximity Marketing, a Brunswick, OH, company that partners with BTB publications and manages their enterprise e-mail, fax and Web-enabled programs. “[The] decision helps prevent other states from attempting to create their own state regulations to circumvent the Junk Fax Prevention Act of 2005.”
But Joseph Sanscrainte, director of regulatory affairs/general counsel at Call Compliance Inc., Glen Cove, NY, said that though the California case was good news overall for the industry, it is tempered by the court concluding that based on the Federal Communications Act of 1934, the FCC may not have “exclusive jurisdiction” over interstate telephone solicitation.
The American Teleservices Association and others have petitioned the FCC, saying that the FCC Act does give the FCC such exclusive jurisdiction and thus individual state laws are unnecessary.
“The reason the ATA went to the FCC with the petition was that it doesn't make sense to try and overturn individual elements of state laws on a piecemeal basis, one law after another, because it will cost too much money and take too much time,” he said.
Priebe called the ruling incomplete. The court created confusion by not issuing an injunction against the California law, instead stating that the parties must be heard further. Therefore, Priebe said, “California is not presently prevented from enforcing [the law].”
And though the law was declared unconstitutional as it pertains to interstate communications, the court did not rule on intrastate communications, he said. This means “faxing within … California continues to be an area of uncertainty,” he said.
Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters