Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-02257/USCOURTS-caed-2_05-cv-02257-1/pdf.json

Parties Involved:
Attorney General of California
Defendant
California Department of Consumer Affairs
Defendant
Chamber of Commerce of the United States
Plaintiff
Xpedite Systems, LLC
Plaintiff

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

CHAMBER OF COMMERCE OF THE

UNITED STATES OF AMERICA and

XPEDITE SYSTEMS, LLC.,

NO. 2:05-cv-2257-MCE-KJM

Plaintiffs,

v. MEMORANDUM AND ORDER

BILL LOCKYER, Attorney General

of California, in his official

capacity and CHARLENE ZETTEL,

Director, California

Department of Consumer

Affairs, in her official

capacity,

Defendants.

----oo0oo----

The above entitled matter came before the Court upon

Plaintiffs’ motion seeking a provisional stay, or, alternatively,

a temporary restraining order. Specifically, Plaintiffs are

requesting that this Court exercise its inherent equitable powers

to stay the January 1, 2006, enactment of California Business &

Professions Code Section 17538.43, introduced as Senate Bill 833

Case 2:05-cv-02257-MCE -KJM Document 42 Filed 12/21/05 Page 1 of 5
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(“SB 833”), pending a full and fair hearing on the merits. In

the alternative, Plaintiffs are seeking an order that would

enjoin the enforcement of SB 833 by Defendants Bill Lockyer and

Charlene Zettel. Following its review of the papers submitted on

behalf of both Parties, the Court conducted a hearing at 9:00

a.m. on December 19, 2005. David Remes appeared on behalf of

Plaintiffs and Kathrin Sears appeared on behalf of Defendants. 

At the conclusion of the hearing, the Court took the matter under

submission. For the reasons set forth in detail below, the Court

finds sufficient cause to issue a provisional stay on the

enactment of SB 833 pending further review.

This case involves the convergence of state and federal laws

including the Federal Communications Act of 1934 (“FCA”), the

Telephone Consumer Protection Act of 1991 (“TCPA”), as amended by

the Junk Fax Protection Act of 2005 (“JFPA”) and California’s SB

833. The foregoing federal laws generally create a statutory

framework that seeks to govern interstate communications and,

particularly at issue here, the use of facsimile machines for

advertising. Through SB 833, California’s Legislature is seeking

to accord the citizens of California with more stringent

protections than those afforded under the federal scheme giving

rise to this litigation.

The controversy in this matter arises from divergent

requirements in the state and federal schemes regarding facsimile

advertisements transmitted into and out of California. More

specifically, the federal scheme permits a party to transmit

facsimile advertisements to recipients with whom they have an

“established business relationship” provided those advertisements

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bear an opt-out alternative. Conversely, California’s scheme, as

embodied in SB 833, omits the established business relationship

exception and, instead, requires a party to obtain express prior

consent before transmitting any facsimile advertisements into or

out of California. In addition, SB 833 entitles aggrieved

persons or entities to seek injunctive relief as well as

statutory damages in the amount of five hundred dollars per

violation. In the event the unauthorized transmission is willful

or knowing, the sender is then subject to treble damages. See

Senate Bill No. 833.

Plaintiffs are the Chamber of Commerce of the United States

(“Chamber”), a non-profit corporation organized under the laws of

the District of Columbia and Xpedite Systems, LLC (“Xpedite”), an

entity organized under the laws of Delaware. The Chamber

represents the business interests of more than 3 million

businesses nationwide and commonly sends interstate faxes to its

members informing them of upcoming Chamber programs. Xpedite is

a global outsource provider of business communications, including

data delivery services via fax, e-mail, voice and text messaging. 

Both the Chamber and Xpedite routinely transmit faxes from

outside California to recipients within California with which

they enjoy an established business relationship.

Plaintiffs are requesting that this Court preserve the

status quo by staying the enactment of SB 833. The Court has

inherent power to preserve the status quo by equitable means. 

Republic of Philippines v. Marcos, 862 F.2d 1355, 1361 (9th Cir.

1988). However, principles of deference counsel restraint in

resorting to inherent power and require its use to be a

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reasonable response to the problems and needs that provoke it. 

See Chambers v. NASCO, 501 U.S. 32, 44, 111 S.Ct. 2123 (1991);

see also Bittaker v. Woodford, 331 F.3d 715, 732 (9th Cir.

2003)(citations and quotations omitted).

In the instant action, Plaintiffs allege they will suffer

irreparable harm if the status quo is not preserved. Indeed,

Plaintiffs aver they will suffer harm of constitutional magnitude

because their right to engage in federally protected interstate

communication via facsimile will have been impermissibly

infringed. Deprivation of a right guaranteed under the United

States Constitution will often alone constitute irreparable harm. 

See Goldie’s Bookstore, Inc. v. Superior Court, 739 F.2d 466, 472

(9th Cir. 1984). In addition, Plaintiffs aver that they will

suffer customer losses, future sales, damage to long-term

relationship with customers, loss of referrals, and loss of

goodwill in the marketplace.

Conversely, Defendants do not allege, nor does the Court

find, that they will suffer harm by maintaining the status quo. 

In fact, California consumers currently enjoy protection from

unwanted facsimile advertisements by the federal scheme including

the TCPA, as amended by the JFPA. Lastly, any potential harm

that may arise as the result of postponing the enactment of SB

833 is far outweighed by the danger of proceeding on an

underdeveloped record.

Having found that a provisional stay of SB 833 is the

appropriate remedy under the circumstances of this case, the

Court need not address the propriety of Plaintiffs’ request for a

temporary restraining order.

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CONCLUSION

For the reasons explained fully above, Plaintiffs’ request

for a provisional stay on the enforcement of SB 833 is GRANTED. 

The enactment of SB 833 shall be stayed from January 1, 2006,

through January 31, 2006. A full hearing on the merits of

Plaintiffs’ claims shall be heard before this Court at 9:00 a.m.

in Courtroom 3 on January 23, 2006. The Parties may, but are not

required to, submit supplemental briefing prior to the hearing. 

In the event supplemental briefing is filed, it shall not exceed

20 pages per side and shall be submitted not later than Friday,

January 13, 2006. 

IT IS SO ORDERED.

DATED: December 20, 2005

___________________________________

MORRISON C. ENGLAND, JR

UNITED STATES DISTRICT JUDGE

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