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In September 2003, the California Legislature realized that Business and Professions Code § 17538.4 (the previous anti-spam law, enacted in 1998) had proved inadequate to stem the rising flood of spam, and enacted § 17529.

The Legislature found that spam cost California organizations well over $1.2 billion in 2003. Cal. Bus. and Prof. Code §17529(d) (emphasis added). This was years ago, before spam was even close to the levels it is today. The California Legislature compared spam to junk faxes in terms of imposing costs on recipients. “Like junk faxes, spam imposes a cost on users, using up valuable storage space in e-mail inboxes, as well as costly computer band width, and on networks and the computer servers that power them, and discourages people from using e-mail.” Cal. Bus. and Prof. Code § 17529(e). “The ‘cost shifting’ from deceptive spammers to Internet business and e-mail users has been likened to sending junk mail with postage due or making telemarketing calls to someone's pay-per-minute cellular phone.” Cal. Bus. and Prof. Code § 17529(h).

The California Legislature defined liquidated damages to be $1,000 per UCE. Cal. Bus. and Prof. Code § 17529.8(a)(1)(B). Although the statute does authorize the court to reduce damages to $100 per UCE, § 17529.8(b), the burden of proof is on Defendant to demonstrate that it has implemented a reasonably effective system to prevent the sending of UCE in violation of § 17529.2.

California’s anti-spam law states, among other things, that:

Notwithstanding any other provision of law, a person or entity may not do any of the following:
(a) Initiate or advertise in an unsolicited commercial e-mail advertisement from California or advertise in an unsolicited commercial e-mail advertisement sent from California.
(b) Initiate or advertise in an unsolicited commercial e-mail advertisement to a California electronic mail address, or advertise in an unsolicited commercial e-mail advertisement sent to a California electronic mail address.
(c) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect any other provision or application that can be given effect without the invalid provision or application. Cal. Bus. and Prof. Code § 17529.2.

The California Legislature recognized that “The true beneficiaries of spam are the advertisers who benefit from the marketing derived from the advertisements.” Cal. Bus. and Prof. Code § 17529(k). If advertisers want the financial benefits of enabling third parties to act as their agents and do their advertising for them, then the advertisers should reasonably expect to bear the risks and liability that may arise from “outsourcing” their marketing functions. This means that advertising entities cannot simply point the finger at the senders of spam and thereby disclaim liability.

The California Legislature applied the general doctrine of agent-principal liability to spamming and will not allow advertisers to avoid liability when third parties send spam on their behalf. "There is a need to regulate the advertisers who use spam, as well as the actual spammers because the actual spammers can be difficult to track down due to some return addresses that show up on the display as “unknown” and many others being obvious fakes and they are often located offshore." Cal. Bus. and Prof. Code § 17529(j).

California and federal courts have held advertisers responsible for unlawful spamming by their agents.

The U.S. District Court in America Online, Inc. v. National Health Care Discount, Inc. held that NHCD was liable for the actions of its third party e-mailers for sending spam through AOL’s network to AOL members, even though the spammers were independent contractors, because they were acting as NHCD’s agents. 174 F. Supp. 2d 890, 897-898 (N.D. Iowa, 2001). The Court issued a permanent injunction against NHCD and awarded AOL over $400,000 in actual and punitive damages. Id. at 901-902.

California courts as well have found that spam advertisers are liable for the marketing they do over email. See, e.g., Balsam v. Trancos, Inc., et al. (San Mateo Superior Court, 2010).

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