Archive for the ‘Dormant Commerce Clause’ Category

Comment on California Only Web Pages

Tuesday, August 14th, 2007

Tim Sandefur, an attorney with Pacific Legal Foundation that litigates Dormant Commerce Clause Cases, had this to say about the People ex rel. Brown v. Puritec decision that I discussed here.

Tim said:

That’s an interesting case, and I have a couple thoughts.
I doubt that any court would say that the DCC stands in the way of state consumer protection requirements, so long as those consumer protection requirements are reasonable. God knows, the court’s upheld plenty of unreasonable ones. Like the milk cases. See, e.g., Shamrock Farms Co. v. Veneman, 146 F.3d 1177 (9th Cir. 1998), cert. denied, 525 U.S. 1105 (1999).  See also People ex rel. Lockyer v. Shamrock Foods Co., 24 Cal.4th 415 (2000).
A couple other tangential thoughts.
In Kearney v. Solomon Smith Barney, the question was one of these personal jursidiction/choice of law things where the company was charged with violating a California law regarding telephone calls, where the company is headquartered in Georgia, and the customers originated the calls in California. I believe the case was settled before a decision. But it’s going to be increasingly problematic that states are able to reach their personal jurisdiction very far–to the full limits of Due Process (the only limit on personal jurisdiction), and that on a rational basis level. And that’s what allows this sort of thing to go on. I think we’re really going to have to re-think the way personal jurisdiction works in the internet age, and in a big way. If Due Process protects fundamental fairness, I think people would regard it as fundamentally unfair for a company doing business in another state, with a website, to be forced to redo its business just because readers can access their site from California.
Another thing this reminds me of is the ACLU v. Reno case, where the Court said that, in evaluating whether a law was the “least restrictive means,” they could consider the availability of private, market alternatives. That was really cool, because before then, the only thing the Court would consider when determining least restrictive means was whether the government could have done something less restrictive. But in Reno, the Court said, there is private software filtering available to consumers, and that was a less restrictive alternative to government censorship of the internet. I love that. Anyway, this case you sent seems like a sort of reverse of that. Here, the court’s imposing on businesses a requirement of redoing their website, because doing so is possible.

The Not-So-Free Market of the Internet: “California Only” Web Pages Can Be Required

Wednesday, August 8th, 2007

Do local regulations apply to items from other states (and presumably other countries) that are offered for sale over the Internet?  How can one state’s rules be used to affect how a company advertises its goods to the world?

The court in People ex rel. Brown v. Puritec conceded that the state could not require changes to the companies “rest of the world” web site.  On the other hand, “technology exists to separate [a] California website from the ROW [rest-of-the-world] website established by [the] company.”  Further, the court ruled that the company could “easily structure its websites to inform California customers at the point of sale (the ‘check out’ page of the website) that its devices are not certified by the State of California.”

Puritec is a Nevada company that sells water filters via the Internet.  The California Attorney General cited the company for violation of a California law that prohibits “health claims” about the filters without certification from the California Department of Health Services.  By regulation, the state agency defined “health claim” to include any claims that the filters “reduces or removes from the water an organic, inorganic or microbiological contaminant, as defined by (1) the State primary drinking water standards from the Health and Safety Code; or (2) the national primary drinking water standards from the federal Safe Drinking Water Act; or (3) Environmental Protection Agency standards.”  Puritec challenged the statute as a violation of the “dormant Commerce Clause” and its commercial free speech rights under the First Amendment.