Kaufman v. Acs Systems, Inc.

2 Cal.Rptr.3d 296

110 Cal.App.4th 886

Barry B. KAUFMAN et al., Plaintiffs and Appellants, v. ACS SYSTEMS, INC., et al., Defendants and Respondents.

David L. Amkraut et al., Plaintiffs and Appellants, v. Fax.Com, Inc., et al., Defendants and Respondents.

No. B155804.

No. B156082.

Court of Appeal, Second District, Division 1.

July 22, 2003.

Review Denied October 15, 2003.

Connon & Wood, Nicholas P. Connon, Los Angeles; Zimmermann, Koomer, Connolly & Finkel and Scott Z. Zimmermann, Los Angeles, for Plaintiffs and Appellants Barry B. Kaufman and Vans, Inc.

Harvey Rosenfield, Santa Monica, and Pamela M. Pressley, for The Foundation for Taxpayer and Consumer Rights as Amicus Curiae on behalf of Plaintiffs and Appellants Barry B. Kaufman and Vans, Inc.

Jamie R. Schloss, Los Angeles, for Plaintiffs and Appellants David L. Amkraut and Joel Amkraut.

John D. Ashcroft, United States Attorney General, Robert D. McCallum, Jr., Assistant Attorney General; Debra W. Yang, Mark Stern, Alisa B. Klein and Kathleen Kane for the United States of

America as Amicus Curiae on behalf of Plaintiffs and Appellants.

Bill Lockyer, California Attorney General, Richard M. Frank, Chief Assistant Attorney General, Herschel T. Elkins, Assistant Attorney General, Ronald A. Reiter, Supervising Deputy Attorney General, and Seth Mermin, Deputy Attorney General, for the State of California as Amicus Curiae on behalf of Plaintiffs and Appellants.

Wright, Robinson, Osthimer & Tatum, Charles H. Horn, Richmond, VA, Brian S. Inamine, Donald L. Mabry and Philip J. Bonoli, Los Angeles, for Defendants and Respondents ACS Systems, Inc. and Micro General Corporation.

Epstein Turner & Song, David B. Epstein, Los Angeles, and Daniel J. Kolodziej, for Defendants and Respondents DataMart Information Services Corporation and Joe Girdwood.

David B. Felsenthal, Los Angeles; Law Offices of Nate G. Kraut and Nate G. Kraut, for Defendant and Respondent Fax. com, Inc.

Case, Ibrahim & Clauss and Brian C. Case, Costa Mesa, for Defendant and Respondent Cynet, Inc.

MALLANO, J.

In this appeal we determine the applicability and constitutionality of a federal statute that restricts unsolicited facsimile (fax) advertisements, commonly called "junk fax." The federal Telephone Consumer Protection Act of 1991 (TCPA or Act) (Pub.L. No. 102-243, § 3(a) (Dec. 20, 1991) 105 Stat. 2395) prohibits the sending of unsolicited advertisements to fax machines. Anyone receiving such a fax may, "if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State ... [¶] ... an action [seeking injunctive relief and actual monetary loss or $500 in damages, whichever is greater, plus treble damages for willful or knowing violations]." (47 U.S.C. § 227(b)(3)(A)-(C).)

The trial court ruled that plaintiffs could not pursue a TCPA claim in state court because the California Legislature had not enacted a statute expressly permitting such a claim. The trial court also ruled that the TCPA is constitutional and that TCPA claims may be brought as a class action. We agree with the trial court's resolution of the constitutional and class action issues but conclude that a TCPA action may be maintained in state court because the California Legislature has not prohibited such suits. We reverse.

I BACKGROUND

We begin with an examination of the TCPA's legislative history, followed by the procedural history of the case.

A. Legislative History

From 1989 to 1991, Congress considered 10 bills addressing the telemarketing practices made possible by technological innovations, including the transmission of advertisements by fax. In the process, Congress held three hearings and produced three committee reports. The final bill combined features of three bills.

In drafting the bills, Congress became aware of problems associated with unsolicited fax advertisements—problems that were highlighted in several media reports and by legislative initiatives in many states. (See Telemarketing Practices: Hearing on H.R. No. 628, H.R. No. 2131, and H.R. No. 2184 before the Subcom. on Telecommunications and Finance of the House Com. on Energy and Commerce, 101st Cong., 1st Sess., pp. 54-57 (1989); H.R.Rep. No. 102-317, 1st Sess., p. 25 (1991).) "Since businesses [had] begun to express concern about the interference, interruptions and expenses that junk fax ... placed upon them, states [were] taking action to eliminate these telemarketing practices. [Two states had] enacted laws banning the use of facsimile machines for unsolicited advertising. Similar bills [were] ... pending in the legislatures of about half the states." (H.R.Rep. No. 102-317, 1st Sess., p. 25 (1991).)

"[State laws] had limited effect, however, because States do not have jurisdiction over interstate calls. Many States ... expressed a desire for Federal legislation to regulate interstate telemarketing calls to supplement their restrictions on intrastate calls." (Sen.Rep. No. 102-178, 1st Sess., p. 3 (1991), reprinted in 1991 U.S.Code Cong. & Admin. News, p. 1970.) "[B]usiness owners [were] virtually unanimous in their view that they [did] not want their fax lines tied up by advertisers trying to send messages." (Telemarketing Practices: Hearing on H.R. No. 628, H.R. No. 2131, and H.R. No. 2184 before the Subcom. on Telecommunications and Finance of the House Com. on Energy and Commerce, 101st Cong., 1st Sess., supra, at pp. 54-55, fn. omitted.) "Extensive research ... revealed no case of a company (other than those advertising via fax) which oppose[d] legislation restricting advertising via fax." (Id. at p. 54, fn. 35.) As a state legislator from Utah put it, "`You get a message you didn't want from people you don't know on paper they didn't buy.'" (Id. at p. 54 (statement of Representative Ken Jacobsen).)

Richard Kessel, a New York state official, spearheaded the movement to ban unsolicited fax advertisements in his state after he was unable to fax a document to the governor's office which, at the time, was processing an incoming advertisement. (See Telemarketing Practices: Hearing on H.R. No. 628, H.R. No. 2131, and H.R. No. 2184 before the Subcom. on Telecommunications and Finance of the House Com. on Energy and Commerce, 101st Cong., 1st Sess., supra, at p. 55.) "`The last thing you want when you're trying to meet a deadline, or trying to get a memo to your boss ... is to be disturbed by someone trying to sell draperies or submarine sandwiches.' "(Ibid.)

In hearings held in 1991, the cofounder of the Center for the Study of Commercialism, Michael Jacobson, described the "numerous nuisance faxes" he had received and complained that they "not only use the recipient's paper, but also prevent faxes from being sent out and prevent legitimate faxes from coming in." (Hearing on Sen. No. 1462, Sen. No. 1410, and Sen. No. 857 before the Subcom. on Communications of the Sen. Com. on Commerce, Science, and Transportation, 102d Cong., 1st Sess., p. 41 (1991).) The director of Computer Professionals for Social Responsibility, Marc Rotenberg, noted that "there is widespread opposition to junk faxes." (Telemarketing/Privacy Issues: Hearing on H.R. No. 1304 and H.R. No. 1305 before the Subcom. on Telecommunications and Finance of the House Com. on Energy and Commerce 102d Cong., 1st Sess., p. 45 (1991).)

A House subcommittee heard from the chair of the Florida Public Service Commission, Thomas Beard, who was also a member of the National Association of Regulatory Utility Commissioners (NARUC), a quasi-governmental, nonprofit organization with members from the governmental agencies of all 50 states who attempt to ensure that telecommunication common carriers establish services and facilities as may be required by public convenience and necessity. Beard stated, "The junk fax advertiser is a nuisance who wants to print [its] ad[] on your paper [and] seizes your fax machine so that it is not available for calls you want or need." (Telemarketing/Privacy Issues: Hearing on H.R. No. 1304 and H.R. No. 1305, supra, at p. 31.) Beard also reported: "[At a meeting] in Washington last year, the NARUC reviewed the situation [concerning fax advertising] and passed a resolution ... urging Congress to enact legislation on the subject. The NARUC said that the legislation should restrict the use of ... facsimile machines for unsolicited advertising and prescribe specific penalties for violations." (Id. at p. 31; see id. at p. 32 [text of NARUC resolution].)

The legislative counsel for the American Civil Liberties Union, Janlori Goldman, told the House subcommittee, "we ... support the ... limits on fax machines, in terms of sending unsolicited advertising. We think that because of the burden that is placed on the individual who has to pay for the cost of the communication, that that then justifies [a] broader ban [than that placed on telephone solicitations]." (Telemarketing/Privacy Issues: Hearing on H.R. No. 1304 and H.R. No. 1305 before the Subcom. on Telecommunications and Finance of the House Com. on Energy and Commerce, 102d Cong., 1st Sess., supra, at p. 47.) The subcommittee was well aware that a "festering problem [had] arisen from the so-called `junk fax.' Junk fax is more than merely irritating. It represents an unfair shifting of the cost of advertising from the advertiser to the unwitting customer.... [Unsolicited and unwanted faxes can tie up a machine for hours and thwart the receipt of legitimate and important messages." (Id. at pp. 3-4.)

Congress recognized that, although considered "[a]n office oddity during the mid 1980s, the facsimile machine has become a primary tool for business to relay instantaneously written communications and transactions." (H.R.Rep. No. 102-317, 1st Sess., p. 10 (1991).) By 1991, millions of offices in the United States were sending more than 30 billion pages of information via fax each year in an effort to speed communications and cut overnight delivery costs. (Ibid.) But "the...