Legislative Updates/Local Government ::..

A California federal court on February 27 overturned that state's law restricting business faxes, sending the U.S. Chamber and the nation's small businesses a resounding victory. The U.S. District Court for the Eastern District of California ruled that the fax ban undermined existing federal law by regulating interstate fax transmissions.

"Because of this victory, businesses nationwide will be spared the unnecessary costs and bureaucracy of navigating what would have been grossly conflicting federal and state laws," says Stephen A. Bokat, executive vice president of the National Chamber Litigation Center (NCLC), the Chamber's public policy law firm. NCLC served as co-counsel in the case.

Bokat adds that the court's decision sends a message to other states. "I hope that this court decision will give pause to other states thinking about ignoring federal law and unfairly restricting legitimate business communications."

The legal challenge arose last fall after the California Legislature passed a fax ban requiring businesses to obtain prior express consent before sending commercial faxes to their customers. California's law directly conflicted with the federal Junk Fax Prevention Act, which waives the prior consent requirement in cases where the fax sender and the recipient have an established business relationship. Having to obtain prior express consent before sending a fax would have imposed significant costs on businesses, especially smaller ones, attempting to do business with California residents or entities.

Soon after the California law passed last year, NCLC filed a preliminary injunction motion asking the District Court judge in Sacramento to block the law from going into effect. The Chamber fought the case on the grounds that the California Legislature had disregarded the U.S. Constitution, which makes federal law supreme when it conflicts with state law.

"The federal law was enacted for good reason after careful consideration of the competing values at stake," explains Amar Sarwal, NCLC litigation counsel. "The California court's decision restores the appropriate balance of sensible regulation."

Legal Protection and Reform

SUPPORT SB 1429 (Morrow; R-Oceanside) Protects Against Unwarranted Punitive Damages — Helps bring balance to the court system by prohibiting punitive damages awards in product liability cases against companies that have complied with government standards as to that product. Senate Judiciary Committee hearing May 9.

Energy

OPPOSE SB 1368 (Perata; D-Oakland) Increases Electricity Costs — Limits the available power sources to meet California’s energy demands while substantially increasing the price of electricity to consumers and businesses by establishing an unattainable greenhouse gas emission performance standard. Senate Appropriations Committee hearing May 8.

Corporate Political Contributions

OPPOSE SB 1354 (Dunn; D-Garden Grove) Political Contributions: Reporting/Refund Mandate — Chills business participation in the political process and interfere s with shareholder dividends by placing significant administrative burdens on corporations to return to a shareholder that shareholder’s pro rata share of a political contribution to which the shareholder objects. Senate Appropriations Committee hearing May 8.

Frivolous Lawsuits

OPPOSE SB 1274 (Dunn; D-Garden Grove) Increases Costly Litigation — Significantly increases the ability of plaintiffs to bring frivolous anti-competition suits against companies and virtually removes the ability of defendants to achieve dismissal of these meritless suits, forcing businesses into drawn-out and costly jury trials or unreasonable settlements. Senate Judiciary Committee hearing May 9.

Employment Arbitration Agreements