The following is a legal brief prepared for IMC to help clarify the current legal situation with respect to Unsolicited Bulk Email (UBE). It is presented here for informational purposes, not as legal advice.

Small Claims Court Enforcement of Federal Unsolicited Fax Law

Margaret H. Marr, Esq.
January 15, 1998

The federal law prohibiting facsimile transmission of unsolicited advertisements, 47 U.S.C. Section 227(b), authorizes individuals to bring action in state court to remedy any violation, 47 U.S.C. Section 227(b)(3). The federal law authorizes the award of $500 per unsolicited fax, treble damages for willful or knowing violations, as well as injunctive relief. 47 U.S.C Section 227(b)(3). Relying on the statements of the author of the federal legislation, a federal court has held that the purpose of authorizing state courts to hear these actions was to ensure that action could be brought in state small claims courts:

       [T]he legislative history of TCPA [Telephone Consumer Protection
       Act] supports our interpretation that Congress intended that private
       actions under 47 U.S.C. Section 227(b)(3) be treated as small claims
       best resolved in state courts designed to handle them, so long as
       the states allow such actions.  Senator Hollings, the sponsor of the
       bill, explained the relatively late addition of the Section 227
       private right of action as follows:

          The substitute bill contains a private right- of-action provision
          that will make it easier for consumers to recover damages from
          receiving these computerized calls.  The provisions would allow
          consumers to bring an action in State court against any entity
          that violates the bill.  The bill does not, because of
          constitutional constraints, dictate to the State which courts in
          each State shall be the proper venue for such an action, as this
          is a matter for State legislators to determine.  Nevertheless, it
          is my hope that States will make it as easy as possible for
          consumers to bring such actions, preferably in small claims
          court. . . .

          Small claims court or a similar court would allow the consumer to
          appear before the court without an attorney.  The amount of
          damages in this legislation is set to be fair to both the
          consumer and the telemarketer.  However, it would defeat the
          purposes of the bill if the attorney's costs to consumers of
          bringing an action were greater than the potential damages.  I
          thus expect that States will act reasonably in permitting their
          citizens to go to court to enforce this bill.
International Science and Technology Institute, Inc. v. Inacom Communications, Inc., 106 F.3d 1146, 1152 (4th Cir. 1997) (citing 137 Cong. Rec. S16205-06 [daily ed. Nov. 7, 1991]).

Proposed federal legislation, specifically the Smith Bill, proposes to expand this Telephone Consumer Protection Act to also prohibit sending unsolicited advertisements via electronic mail. You have asked me to evaluate some of the states' small claims court laws to determine whether we can expect actions to be brought in those courts to effectively enforce the provisions of this federal law, particularly if it expanded to prohibit unsolicited e-mails.

I have sampled Martindale-Hubbell 1997 Law Digest's summary of the small claim courts in California, Texas, New York, Massachusetts and Oregon. I have also reviewed the published cases of efforts to enforce the federal law. (See separate memo.) I have not, however, reviewed the state statutes regulating small claims court. The state statutes cited are those cited by Martindale-Hubbell.

Although the jurisdictional amount does not appear to impose any difficulties, I find two primary areas of concern to any person seeking to bring an enforcement action in small claims court. First, in some states a defendant may request a jury trial thereby escalating the costs of litigation beyond any amount a single plaintiff could expect to recover. In my sample, in New York, Oregon, and Massachusetts, a defendant sued in small claims court can demand a jury trial. NY U.C.C.A Sections 1803, 1806- A, 1805-A; Or. Stats Sections 46.405(2), 46.455(2)(c), 46.465. For example, in Massachusetts, which is said to have adopted the Uniform Small Claims Rules, a case may be removed from small claims court to the regular civil docket, upon motion of any party or the court, in order to avoid the parties' loss of the right to jury trial and appeal. Daum v. Delta Airlines 487 N.E.2d 853 (Mass. 1986) (citing G.L.c. 218, Section 24; Uniform Small Claims Rules, rule 4). Even if the defendant must foot the court costs of jury trial, plaintiffs' attorney's fees in pursuing a jury trial, alone, can be enormous. Moreover, the grant of jury trial will presumably confer all the procedural rights -- and costs, both financial and emotional -- of full litigation, including discovery, pretrial motions, appeal, etc.

Second, in some states it can prove difficult or impossible to bring action in small claims court against a defendant that resides out of state. In California for example, no one may sue in small claims court a defendant that resides out-of-state, unless that defendant (for example a corporation) has a agent for service of process in the state, the matter relates to in-state real estate or an automobile altercation. (Cal. Code Civ. Proc. Section 116.340(d).) In New York, the defendant must either reside, have an office for transaction of business or regular employment, within the city, district or municipality in which the small claims court sits. (N.Y. U.J.C.A. Section 1801, U.C.C.A Section 1801-A.)

Given the nature of the internet, the requirement that a defendant must reside within the state or political subdivision of the state may create an impenetrable barrier to suit in small claims court. An unincorporated individual or company can easily send e-mails to the other 49 states and territories besides that in which s/he resides and thereby avoid suit in many small claims courts. For that matter, the defendant could reside in a foreign country and send unsolicited e-mails throughout the United States and avoid suit in many, if not most, small claims courts.

To rectify these difficulties, I suggest the federal legislation be amended in two ways. First, award attorney's fees and costs to prevailing plaintiffs. (See memo on the California Miller Bill.) If attorneys fees are available, when action must be brought in higher state courts, not small claims courts, or when defendants put up significant legal arguments even in small claims courts, plaintiffs will not be precluded from pursuing the case. See Scefczed v. Hillsborough Beacon 668 A.2d 1099 (N.J. 1995) (in small claims action to enforce TCPA, defendants challenges constitutionality and interpretation of federal statute, U.S. attorney intervened, case resulted in a lenghty published opinion). The award of plaintiffs' attorneys fees will remove a significant barrier to pursuing enforcement actions.

Second, authorize class actions on behalf of all recipients of the same or similar e-mail and putting the burden on the defendant to show the e-mail was solicited. Class actions can make it economically feasible for plaintiff's attorneys to prosecute the case on a contingency fee. They are particularly appropriate in junk e-mail cases where the same unsolicited e-mail is sent to hundreds if not thousands of e-mail addresses. Class actions might also confer diversity jurisdiction in federal court.

It would be tempting to solve the jurisdictional problem of out-of-state or out-of-country defendants by conferring concurrent jurisdiction upon state and federal courts to enforce the law. Federal courts will have jurisdiction over out-of- state and out-of-country defendants. However, if state and federal courts have concurrent jurisdiction to enforce a federal statute, defendants sued in state courts, even small claims courts, will likely move for removal to federal court, thus making the cost of pursuing plaintiff's action prohibitive. Conferring concurrent jurisdiction could effectively eliminate small claims courts' enforcement of the federal statute.

Additionally, if the federal legislation is in fact designed to be enforced in small claims courts as Senator Hollings indicated, it would seem prudent to do a more thorough analysis of the state small claims court law to identify any other shortcomings that might be ameliorated by federal legislation. For example, it would be valuable to know when, and under what circumstances, unrepresented plaintiffs in small claims court could expect to be opposed by skilled attorneys, as appears to be the case in Scefczed, 668 A.2d 1099. Additional research could flush out, and support efforts to prevent, numerous practical difficulties to successful efforts to enforce the law. Accordingly, I recommend further research into the states' small claims court law.