Delivering for Best-in-Class Wholesaler-Distributors
December 2005

The Plaintiffs in our California lawsuit filed a motion for a temporary restraining order asking that the effective date of the California statute be delayed pending final outcome of the litigation. On December 19th a judge in California held a hearing on the motion and granted a “provisional stay on the enforcement” of the CA statute, effectively postponing the effective date of the new law to February 1st, 2006. The judge also scheduled a hearing on the merits of the case for January 23rd. We will provide an update as soon as the California courts take further action.

The ban on unsolicited advertising faxes which was signed into law in California this fall is scheduled to take effect on January 1st. Actions are being taken to prevent this statute from taking effect with respect to interstate faxes, but it is not certain that any of these measures will succeed before the January 1, 2006 effective date of the new law. Please note that even if these actions are successful, the California law will still apply to faxes sent within California.

Litigation filed challenging the California statute:

A lawsuit was filed in California federal court by members of the NAW-led Fax Ban Coalition challenging the California statute. The complaint argues that the California statute is inconsistent with provisions of federal law that govern interstate communications by fax and is therefore preempted by the federal statute, and that the California law violates the Commerce Clause of the U.S. Constitution because it places an undue burden on interstate commerce.

The plaintiffs in the case filed a motion for a Temporary Restraining Order to prevent the new law from taking effect while the litigation is pending. A hearing on that motion was conducted on Monday, December 19th, and it is possible that a favorable ruling could be obtained from the Court before January 1st, thus at least postponing the effective date of the law with respect to interstate faxes.

Petition for Declaratory Ruling filed with the Federal Communications Commission:

Simultaneously with the filing of the litigation challenging the California law, the Fax Ban Coalition filed a Petition with the FCC asking them to exercise their statutory authority under the Telephone Consumer Protection Act to pre-empt state statutes governing interstate communication by fax. The matter is pending before the Commission, and a Public Notice of Proposed Rulemaking by the FCC has been published in the Federal Register, with comments due to be filed by mid-January.

A favorable ruling from the FCC on our Petition would pre-empt not just the California law, but would prevent any other state from enacting laws inconsistent with the federal laws restricting interstate communication by fax. While we hope for a favorable ruling, it clearly cannot be granted in time to protect business from the provisions of the California law.

Therefore, if the California court does not grant a Temporary Restraining Order within the next ten days, the California statute will take effect and those who send unsolicited commercial faxes into, within or from California will have to comply with the new regulations as explained below.

California Fax Ban on Unsolicited Advertisements In Force on January 1, 2006:

Effective January 1, 2006, it will be illegal for any person or entity outside California to send an “unsolicited advertisement” via a fax to a recipient in California. It will also be illegal for any person or entity in California to send an unsolicited advertisement via fax to a recipient wherever located.

An unsolicited advertisement is defined as “any material advertising the commercial availability or quality of any property, goods, or services that is transmitted to any person or entity without that person’s or entity’s prior express invitation or permission. Prior express invitation or permission may be obtained for a specific or unlimited number of advertisements and may be obtained for a specific or unlimited period of time.”

Civil Lawsuits Authorized

The law authorizes the recipient of an unsolicited advertisement via fax to bring a civil lawsuit against the sender for injunctive relief, and/or actual damages or statutory damages of $500 per violation, whichever is greater. If the court finds that the defendant willfully or knowingly violated the law, the court has the discretion to increase the damages by up to 300%. These remedies are in addition to any remedy the recipient may have against the sender under federal law (i.e., the Telephone Consumer Protection Act, 47 USC §227). A class action by a recipient, on behalf of other similarly situated recipients, is a potential threat as well.

Special Provision For Trade Associations

The California law does not apply to a fax sent by or on behalf of a trade or professional association that is a tax-exempt nonprofit organization, but only if all the following conditions are met: