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Notorious Spammer Loses His Appeal

The Richmond Times-Dispatch reports:

Jeremy D. Jaynes was convicted in Loudoun County Circuit Court in 2004 on three counts of violating the state’s 2003 Anti-Spam Act and sentenced to nine years in prison in a case that attracted attention from around the world.

While the state hailed the decision as a victory against online crime, Justice Elizabeth B. Lacy wrote a dissenting opinion arguing that Virginia’s anti-spam law was overbroad and improperly infringed on free speech rights.

“The current use of the Internet as the marketplace for expressing political ideas, views and positions emphasizes the need for ensuring that the use of this medium not be chilled by the threat of criminal prosecution,” wrote Lacy, joined by justices Donald W. Lemons and Lawrence L. Koontz Jr.

The Supreme Court of Virginia’s failure to allow the defendant to raise the First Amendment question, citing a lack of standing, was troubling. Nevertheless, it pales in comparison to the jurisdictional and commerce clause analysis.

In holding that Virginia could apply its anti-spam law to a North Carolina resident, the court somewhat glibly held:

The evidence established that the AOL servers are located in Virginia, and that the location of AOL’s servers was information easily accessible to the general public.

The dormant commerce clause analysis was even more troubling:

Jaynes also contends that the Court of Appeals erred because it did not hold that Code § 18.2-152.3:1 violates the Commerce Clause, Art. 1, Section 8 of the United States Constitution. The Commerce Clause provides that, “[t]he Congress shall have power . . . [t]o regulate commerce . . . among the several states.” U.S. Const., art. I, § 8, cl. 3.

The Commerce Clause has been said to contain a “dormant” aspect which limits a state’s ability to “discriminate[] against or unduly burden[] interstate commerce and thereby imped[e] free private trade in the national marketplace.” PSINet, Inc. v. Chapman, 362 F.3d 227, 239 (4th Cir. 2004) (citations omitted). Jaynes sole argument on appeal is that the statute is “per se invalid because its practical effect is to regulate wholly extraterritorial e-mail transactions.” The Commonwealth acknowledges that a rule of “virtual per se invalidity” applies if a state statute discriminates “either on its face, or in practical effect” against interstate commerce. (Emphasis omitted.)

A state statute may violate the dormant Commerce Clause if it discriminates against interstate commerce, favoring “in-state economic interests over out-of-state interests,” Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 579 (1986), or if it has the “‘practical effect’ of regulating commerce occurring wholly outside that State’s borders.” Healy
v. Beer Institute, 491 U.S. 324, 332 (1989). When a state statute directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests, we have generally struck down the statute without further inquiry. When, however, a statute has only indirect effects on interstate commerce and regulates evenhandedly, we have examined whether the State’s interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits. Id. at 337 n.14 (citation omitted).

Jaynes asserts that Code § 18.2-152.3:1 falls within the second category of violation because it affects e-mails that “merely pass through Virginia servers en route to their final destinations,” thus regulating wholly extraterritorial e-mail transactions.

In rejecting Jaynes’ dormant Commerce Clause argument, we first note that his argument contains an inherent contradiction. An e-mail that passes through Virginia cannot be a “wholly extraterritorial” transaction. Nevertheless, the sender of an e-mail cannot insure that the e-mail will not at some point pass through Virginia. This factual reality of e-mail transmission has the potential of burdening interstate commerce because email senders may have a heightened concern of possible criminal prosecution if their e-mails were routed through Virginia without their direction or knowledge.

To determine if this burden invalidates the statute, we apply the balancing test recited in Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970):

“[w]here the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.”

In this case, the legitimate local public interest in preventing the proliferation of falsified unsolicited bulk email, or “spam”, is well documented. The Federal Government and many states have adopted anti-spam statutes. See, e.g., Arminda B. Bepko, Note: A State-By-State Comparison of SPAM Laws, 13 Media L. & Pol’y 20 (2004). Congress has recognized that unsolicited e-mail may result in costs to recipients, and impose significant monetary costs on providers of Internet access services. 15 U.S.C. § 7701 (2004). Furthermore, Congress has specifically allowed the states to regulate spam that involves “falsity or deception in any portion of a commercial electronic mail message or information attached thereto.” 15 U.S.C. § 7707(b). As noted earlier, Jaynes’ e-mails were unquestionably commercial and contained false routing and header information. It is clear that the Commonwealth has a strong local interest in, and gains local benefits from, regulating the type of e-mail proscribed by Code § 18.2-152.3:1. By contrast, the effects of this statute on interstate commerce are incidental and do not impose an undue burden.

Whatever burden there may be is the same for a Virginia or a non-Virginia unsolicited bulk e-mail sender. The only burden placed on the e-mail sender is that the e-mail not contain false or forged transmission information. In the realm of legitimate commercial transactions, true identification of the market participant would seem to be the norm, not the transmission of e-mails with false identification. In comparing the obvious local benefit with the minimal burden on in-state or out-ofstate commerce, both the Court of Appeals and the circuit court cited oft-quoted commentators:

Even assuming that the antispam laws do not further the state’s interest, it is hard to see how the antispam laws burden interstate commerce at all. The spam laws essentially require truthfulness in the header, return address, and subject line of the e-mail. Far from burdening commerce, the truthfulness requirement facilitates it by eliminating fraud and deception. Compliance with the various antispam statutes is easy compared to noncompliance, which requires the spammer to incur costs of forging, re-mailing, and the like.

Jack L. Goldsmith and Alan O. Sykes, The Internet and the Dormant Commerce Clause, 110 Yale L.J. 785, 819 (2001).16
For these reasons, we conclude that Code § 18.2-152.3:1 does not violate the dormant Commerce Clause.

I hate spam probably more than anyone else. However, the thought of a man spending 9 years in prison for sending emails to unwilling recipients rubs me the wrong way. When it is the result of a single state reaching outside its borders and regulating purely interstate commerce, it becomes a Constitutional crisis.

The decision is here.

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