Legislature(2003 - 2004)
02/19/2003 03:17 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 36-ELECTRONIC MAIL Number 0745 CHAIR ANDERSON announced that the next order of business would be HOUSE BILL NO. 36, "An Act relating to electronic mail activities and making certain electronic mail activities unfair methods of competition or unfair or deceptive acts or practices under the Act enumerating unfair trade practices and consumer protections." Number 0750 REPRESENTATIVE LES GARA, Alaska State Legislature, sponsor of HB 36, explained that 27 other states regulate junk e-mails; junk e-mails are uninvited commercial messages commonly referred to as spam. Every year Congress considers legislation to deal with this issue, and every year it dies, so it's up to the states to deal with unwanted e-mail. He explained that in drafting HB 36, he used Washington [state] and California laws because they have been tested and upheld in the courts. Unfortunately, he said, HB 36 does not ban spam. A state cannot impose an outright ban on commercial speech and have it upheld in the courts. REPRESENTATIVE GARA testified that HB 36 requires anyone sending out commercial e-mails to provide the recipients with an easy way to have their addresses removed from the sender's database. In addition, the sender must indeed remove the recipient from the list. Refusing to do either of these actions is a violation of the proposed law. House Bill 36 allows employers to enforce the law on behalf of their employees. It also permits Internet service providers to adopt privacy policies regulating spam and allows them to file a legal action against businesses that don't follow these policies. REPRESENTATIVE GARA explained that the bill is enforced under Alaska's existing Unfair Trade Practices Act. Private citizens and the attorney general's office have the right to enforce the law. In many states, anti-spam laws can only be enforced by attorney generals' offices, which are notoriously underfunded. He stated that he has received letters of support from an employers' association, the Alaska Public Interest Research Group, GCI, an Internet service provider, and AARP. The people who oppose these anti-spam bills do not voice their opposition during the legislative process but instead challenge the laws in court, he suggested. Number 1032 REPRESENTATIVE GUTTENBERG moved to adopt proposed committee substitute (CS) for HB 36, Version 23-LS0224\S, Bannister, 2/17/03, as the working document. Number 1055 REPRESENTATIVE ROKEBERG objected for purposes of an explanation of the proposed CS. REPRESENTATIVE GARA explained that GCI, an Internet service provider and one of the bill's supporters, sent a [February 5, 2003] letter noting a minor, one-word typo on page 5, lines 15- 16, which has been corrected in the proposed CS. Number 1125 REPRESENTATIVE ROKEBERG withdrew his objection. Number 1134 CHAIR ANDERSON, hearing no other objection, announced that proposed CS for HB 36, Version S, is adopted for discussion. REPRESENTATIVE GARA identified one change in the Version S on page 5, lines 13-16. Subsection (5) states that HB 36 governs only commercial e-mails from senders with whom the person doesn't have an existing relationship, e-mails that are sent without the person's consent. Language was added on lines 15-16 to clarify whether the e-mail is solicited or unsolicited: "unless the advertisement is sent at the request of or with the express consent of the recipient." CHAIR ANDERSON noted that the proposed CS is one and a half pages longer than the original bill and asked for details on other changes in Version S. Number 1244 REPRESENTATIVE GARA explained that there are two significant differences between this proposed CS and his original prefiled bill. The original HB 36 used a feature from California law that stated the subject line of commercial e-mail must contain the label "ADV:" and the additional label of "ADLT" if the content is adult. He said he removed this feature because if various states have differing requirements for the subject line, the bill would be vulnerable to constitutional attack. The sender could successfully argue in court, "We can't possibly do in the subject line what 50 different states require." He said it's a good idea but not workable and opens the bill to attack in the courts. REPRESENTATIVE ROKEBERG asked whether there's a constitutional problem with requiring identifiers in the subject heading of an e-mail. He noted that this committee just passed out HB 82, which required the "ADV:ADLT" label in the subject heading of commercial e-mails with adult content. REPRESENTATIVE GARA noted that HB 82 works because it regulates e-mail sent within Alaska. House Bill 36 regulates out-of-state e-mail as well, and that's why his bill was written differently. His bill does not require specific words to be used on the subject line; it follows Washington [state's] lead, requiring that the sender not use misleading words in the subject line. He said it's not a burden on senders of e-mail to be truthful in their subject heading line. The prohibition against sending an e-mail with a misleading heading is on page 3, line 10: "(3) contains false or clearly misleading information in the subject line." Number 1487 CHAIR ANDERSON noted that the Version S has a title change and many of the sections are different. He asked for more explanation. REPRESENTATIVE ROKEBERG said that committee members did not have the opportunity to review the proposed CS before the meeting. He asked about Section 4, which starts on page 5, line 27, and which references uncodified law and the contingent effect of Section 2. Number 1619 REPRESENTATIVE GARA explained that Section 4 of HB 36 creates a backup in case there's a constitutional problem with regulating commercial e-mail too stringently. This bill went through a number of versions as he tried to narrow down the possible constitutional challenges. He said he wants to regulate out-of- state e-mail because little commercial e-mail originates in Alaska. Most of the bill follows the California model, which regulates any e-mail that touches any equipment in the state en route to the recipient. Representative Gara said he believes the bill is valid as written, but if a court were to rule against regulating out-of-state e-mail in this blanket way, then HB 36 contains a clause that would revert to Washington [state's] narrower approach. The contingent effect of Section 2 would regulate out-of-state e-mail if the senders had reason to know they were sending it to recipients in Alaska. He pointed to the example of an "Alaska.net" address that indicates an Alaska Internet service provider. Sections 2 and 4 are fallback provisions so that the law would remain in force if Section 1 were overruled by a court. Number 1787 REPRESENTATIVE GARA explained that a second change in the proposed committee substitute clarified that employers whose employees receive e-mails at their work address can enforce this law. House Bill 36 allows individuals and employers to enforce the law. REPRESENTATIVE ROKEBERG stated that he has never seen a bill drafted in the manner of HB 36. He pointed out Section 2 on page 5, lines 17-24, which states that AS 45.45.800-45.45.890 doesn't apply unless a person sends an unsolicited e-mail either from a computer in Alaska or to a person with an Alaskan e-mail address. Section 4 states that Section 2 doesn't take effect until a court decision rules Section 1 of the law is unconstitutional. Number 1916 REPRESENTATIVE GARA agreed that Sections 2 and 4 of the Version S were unique and said he hoped the situation would never occur in which they took effect. He reiterated that if a court held that HB 36's regulation of junk e-mail was too broad, a narrower approach would take effect. CHAIR ANDERSON said HB 36, because of its many changes, will be held over for additional public hearing. Number 2024 JESSICA CAREY GRAHAM, Legislative Chair, Anchorage Society for Human Resources Management (ASHRM), explained that she practices employment law at the firm of Perkins Coie in Anchorage. The Society for Human Resources Management is the world's largest association devoted to human resources management; the Anchorage chapter has 275 members in business, nonprofit organizations, state, and local government. Her organization supports HB 36 for several reasons. She testified that the phenomenon of bulk commercial e-mail has a significant financial and morale impact on employers and employees in Alaska. Employers commonly have no solicitation policies in place to try to limit the deluge of advertisements. As a result, employees commonly get bombarded with this kind of material from around the globe, with no means of putting a stop to it. Because employees' e-mail addresses are easily identifiable from a corporate web site, employers become an easy target for this spam. MS. GRAHAM said the second reason her group supports HB 36 is because employers have limited control over the content and dissemination of offensive e-mails. Many e-mails have adult themes, and these e-mails can be circulated by employees who think it is a joke. She said that one employee's idea of a humorous adult e-mail can end up as evidence in another employee's sexual harassment lawsuit. As human resources professionals, ASHRM members are on the front lines of dealing with employee issues and complaints, and this bill gives employers another tool to limit this kind of material. She pointed out the productivity costs associated with adult-theme advertisements. She said her group strongly supports HB 36. As an attorney, she said she supports the proposed committee substitute version. She said she appreciates Representative Gara's attempt to give employers standing to pursue these complaints in court. REPRESENTATIVE ROKEBERG asked Ms. Graham to identify where in the proposed CS an employer's standing is strengthened. MS. GRAHAM replied that on page 4, lines 8-9, the proposed CS states, "In this section, 'recipient' includes a business whose employee receives the advertisement in the course of the employment." She said she had sent an e-mail to Representative Gara urging the inclusion of similar language. Number 2189 STEVE CLEARY, Executive Director, Alaska Public Interest Research Group (AkPIRG), testified in support of HB 36. He said HB 36 will be a great cost-saving measure for employees, employers, and private citizens who are being bombarded on a daily basis with unsolicited commercial e-mails. Number 2223 ED SNIFFEN, Assistant Attorney General, Fair Business Practices Section, Civil Division (Anchorage), Department of Law, stated that the department supports the concept of HB 36. He said his department reviewed the bill for potential constitutional issues and did not find any legal infirmities. He said that the sponsor has done a good job of recognizing the limitations of the Washington and California cases. His section within the Department of Law would be responsible for enforcing complaints brought under this bill. Complaints generated by telemarketing and e-mail Internet problems are now equal in number to automobile complaints in his office. He said he hopes this bill will curb fraudulent e-mail practices. Number 2278 MR. SNIFFEN replied to a question from Representative Guttenberg about the meaning of the words "clearly misleading information in the subject line" on page 3, line 10. He replied that a jury would have to decide whether the subject line in an e-mail was clearly misleading. "Clearly misleading" requires a higher standard of proof. REPRESENTATIVE GUTTENBERG asked whether the words "assists in the transmission" on page 3, line 16, apply to an ISP [Internet service provider] that inadvertently transmits virus-infected spam because it didn't use a strong enough virus protection or Internet blocker. Number 2355 MR. SNIFFEN replied that he didn't think the bill was intended to make ISPs responsible for the transmission of viruses but deferred to Representative Gara to discuss the intent of that language. TAPE 03-9, SIDE B Number 2375 REPRESENTATIVE GARA replied that he intended that an Internet service provider not be held liable for such conduct and referred to the language on page 4, lines 10-12, which says these laws "do not apply unless a person sends or causes to be sent an unsolicited electronic mail advertisement ...." He said he has considered narrowing that language even more to make it clearer. Number 2356 REPRESENTATIVE ROKEBERG asked about the meaning of the words "an intervening interactive computer service" in subsection (b), page 3, lines 11-18. REPRESENTATIVE GARA replied that this section assures that Internet service providers are not held liable if somebody uses their lines or sends a virus over their lines. The bill is not aimed at imposing liability upon Internet service providers. The section on page 4, lines 10-24, limits who can be named in a lawsuit. Representative Gara said he has asked a committee member to present an amendment today that would tighten this language. He asserted that HB 36 is aimed at people who send bulk commercial e-mails. REPRESENTATIVE ROKEBERG asked about the language on page 3, lines 11-18, which says the Internet service provider does not violate the law unless the ISP knows the sender is violating the law. He said the word "unless" contradicts Representative Gara's intent to hold only e-mail senders liable. Number 2232 REPRESENTATIVE GARA responded that he agrees and would favor an amendment that ended the sentence on page 3, line 12, after the word "sender." If amended, the sentence would read, "An intervening interactive computer service does not violate (a) of this section by handling or retransmitting the message initiated by a sender." He said, whatever the language on page 3, HB 36 on page 4 limits an Internet service provider's liability. He noted for the record that one of the Internet service providers, GCI, has reviewed the bill and is comfortable with it; GCI's letter of support is in the bill file. REPRESENTATIVE ROKEBERG said he does not like laws or bills that are inconsistent. The result is more ammunition for lawsuits, and the public is confused. REPRESENTATIVE LYNN asked what happens if someone from another country violates this bill. REPRESENTATIVE GARA replied that HB 36 would not regulate the junk e-mails that originate in other countries. Number 2103 REPRESENTATIVE GUTTENBERG asked what really changes for the average person if HB 36 passes. REPRESENTATIVE GARA said HB 36 gives the state and individuals tools to get themselves off e-mail lists. The bill requires a link, an e-mail address, and a local or toll-free phone number to use to be removed from the sender's list. Many e-mails from California now have these valid links, the result of that state's legislation. If Alaska and other states follow the other 27 states in cracking down on junk e-mails, eventually there will be less of them. Of course, the law must be enforced. If people thumb their noses at the law, hopefully the bill's enforcement tools can be used against them. REPRESENTATIVE ROKEBERG asked Mr. Sniffen how HB 36 affects interstate commerce. Typically, the person sending the spam will be outside Alaska. He asked how Alaska will get jurisdiction over that individual or company to pursue prosecution, and whether a federal or state court would be used. Number 1961 MR. SNIFFEN admitted that it is difficult to enforce many of these laws when so many violators who are preying on Alaskan victims are out of state. In HB 36, Alaska asserts personal and subject matter jurisdiction over these violators if they are conducting business within the state by sending e-mails to Alaskan ISP addresses. For jurisdiction, a court case under HB 36 is a civil suit. The department can only go after money. In that process, the department would sue people in state court, get judgments against them, and then try to enforce these judgments in whatever state the company happened to be located. The department works with law enforcement agencies in other states to get help with these efforts. On some occasions, the department convinces the other states to bring actions in their own state courts against these people for violating their own state laws. Nine out of ten times, if the business is violating an Alaska law, it's also violating the same law wherever it happens to be. Number 1877 MR. SNIFFEN responded to a request from Representative Rokeberg to describe how the department works with another state to enforce consumer protection laws. In one case, the Minnesota AG's [attorney general's] office called, asking for help. A person in Alaska was committing Internet fraud, selling things on an Internet site, and taking money with no intention of delivering the merchandise. The department referred the case to the Alaska State Troopers, who made an arrest and stopped the guy from further activity. In another case, the Alaska Department of Law approached the Florida attorney general's office about stopping someone from sending unsolicited faxes to Alaska. Florida officials located the company and sent it cease-and-desist letters. Once the company knew the local agency was after it, it stopped sending faxes to Alaska, and the Alaska Department of Law stopped getting complaints. The department never recovered money or judgments from the company, but it was able to stop the conduct. Number 1810 REPRESENTATIVE ROKEBERG noted that HB 36 provides the private right of action and asked Mr. Sniffen what legal path the citizen would follow. And if the citizen has a solid case, would the department recommend the person take a private action? MR. SNIFFEN replied that private citizens are bound by the same rules as the Department of Law, but citizens are given a few more incentives. Citizens can get their full attorney fees, which the state cannot recover, and unlike the state, private litigants can recover treble damages. His office follows a procedure in getting complaints. If the complaint is widespread and affects a large number of people in Alaska, the department reviews it for a potential investigation and lawsuit. Mr. Sniffen said he tells consumers that if they need immediate relief, they should hire an attorney and go after the violator themselves. These two approaches are not mutually exclusive, he said. In some consumer cases, the state can get penalties that the private litigant cannot. Mr. Sniffen said it's very difficult for the average mom-and-pop consumer to hire an attorney because of the expense. Alaska's consumer protection Act alleviates this barrier by allowing the recovery of full attorney fees and treble damages. Mr. Sniffen said he talks to many consumers who never file actions because they are intimidated by attorneys or fear that it will be a lot of work. He said his office can only encourage citizens so much. REPRESENTATIVE ROKEBERG noted the language on page 4, lines 8-9, which gives an employer standing to bring a legal action. He asked if the word "includes" confuses or expands the term "recipient". Number 1635 MR. SNIFFEN replied that he reads "includes" as an expansion of who is a recipient, that it covers employers with staff who receive these junk e-mails. For example, as an employee of the Department of Law, he receives 30 spam e-mails a day. The Department of Law would be an employer under HB 36, so if it wanted to bring an action against senders of those spam e-mails, it could do so. CHAIR ANDERSON asked whether there's a possible federal solution. Number 1561 REPRESENTATIVE GARA answered that a stringent federal solution would be ideal, but legislation dies in Congress every year. Existing federal and state laws already prohibit fraud in e- mails, but they don't regulate general e-mail conduct. CHAIR ANDERSON asked about the prospects of enforcing the new law. REPRESENTATIVE GARA said he agreed with the comments of Mr. Sniffen. The department has to make choices about what cases it takes. The Fair Business Practices Section has a very capable but limited staff; they take the cases which they think can do the most good for the public. That's also why HB 36 allows private citizens to use the remedies under the consumer protection Act. Most states do not allow the attorney general's office and individual victims to enforce the law. Employers and Internet service providers, who probably have more resources than citizens, can also initiate legal action. He said nobody is going to get rich off this law; remedies in the consumer protection law are treble damages or a $500 fine, whichever is greater. Number 1391 REPRESENTATIVE GARA replied to a question from Representative Rokeberg about whether people bringing civil action have to quantify the damages. If the consumer can quantify the harm, the person is entitled to recover treble damages. The consumer protection Act recognizes that in most cases of consumer fraud, the actual damages are small, so the $500 fine is also available. In other states that have the treble damages clause, it serves as an incentive to get the business to start engaging in proper conduct. REPRESENTATIVE ROKEBERG said that a $500 fine is not much of an incentive for a citizen to bring a private cause of action. REPRESENTATIVE GARA said Alaska law changed several years ago, adding the incentive of full compensation for attorney fees. REPRESENTATIVE ROKEBERG asked whether many individuals could file complaints, thereby running up higher fines. REPRESENTATIVE GARA replied that in the original bill, he considered limiting the number of lawsuits to the first five or ten cases. He said that approach was unworkable. Number 1165 MR. SNIFFEN added that the consumer protection Act recognizes that the fines and penalties are per violation. For an employer, if 50 employees each received an e-mail, the potential fine could equal 50 violations times $500. Case law recognizes that the fine applies per transaction. Number 1040 CHAIR ANDERSON said since several committee members are cosponsors on HB 36 and have indicated that they don't understand the changes in the proposed CS, he would hold the bill. Therefore, it's not appropriate to discuss amendments at this time. But he said he will hold open the public hearing because there's strong evidence of public support for the bill. He intends to bring it back before the committee after conferring with members, perhaps next week. REPRESENTATIVE GARA clarified that his cosponsors signed onto this proposed CS for HB 36 and have seen the CS except for the one-word change he described earlier. Number 0870 REPRESENTATIVE LYNN said he fully supports HB 36 and will vote for it when it returns to the committee. He said it won't change the world, but it's a good step in the right direction. CHAIR ANDERSON suggested that Representatives Guttenberg and Rokeberg work with Representative Gara on a revised CS for HB 36 to bring back before the committee. [House Bill 36 was held over.]
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