Monday, September 14, 2009

Constitutional Attack on Maine Privacy Law Results in Negotiated Order: Challenger

This posting was written by John W. Arden.

A lawsuit challenging the constitutionality of a new Maine privacy law that prohibits the collection of personal information for marketing purposes from minors without parental consent and bars “predatory marketing” to minors has apparently culminated in a negotiated order, according to one of the plaintiffs.

A blog posting by NetChoice—a coalition of trade associations, eCommerce businesses, and online consumers—indicated that, on September 8, federal judge John Woodcock instructed the plaintiffs and Maine officials to work out acceptable language for an order settling the lawsuit.

The parties agreed to an order:

(1) Acknowledging the constitutional defects of the law,

(2) Documenting the state’s promise to refrain from enforcing the law,

(3) Citing the legislature’s promise to revise the law in the next session, and

(4) Putting Maine plaintiff attorneys on notice that suits brought under the law would have to overcome the constitutional questions raised in the action.

Text of the blog item appears here on “The Voice of the eCommerce Industry.”

Statutory Prohibitions

The statute at issue (“An Act to Prevent Predatory Marketing Practices Against Minors,” Public Law 230, see text here) was enacted on June 2, 2009 and became effective on September 12, 2009.

It specifically prohibits the collection of health-related or personal information from a minor for marketing purposes without first obtaining verifiable parental consent. It further bars the sale or transfer of unlawfully collected information. Use of such health-related or personal information for the purpose of marketing a product or service to the minor is prohibited as “predatory marketing.”

Violations of the statute are unfair trade practices under the Maine Unfair Trade Practices Act and are also subject to civil penalties of up to $20,000 per violation.

A person about whom information is unlawfully collected or who is the object of predatory marketing in violation of this statute may bring an action for injunctive relief and actual damages or up to $250 in statutory damages for each violation, whichever is greater. The statute provides for an award of attorneys fees and costs upon the finding of a violation.

Constitutional Challenge

On August 26, the challengers filed an action for injunctive relief in the federal district court in Maine, claiming that the statute violates the First Amendment rights of adults, as well as minors and online operators; violates the Commerce Clause; and is preempted by the federal Children’s Online Privacy Protection Act.

The plaintiffs’ memorandum in support of its motion for injunctive relief alleged that the prohibitions against collecting, transferring, or using information about minors impermissibly regulates protected speech and unconstitutionally restricts the ability of minors to receive information. The statute also violates the Commerce Clause by subjecting interstate Internet commerce to inconsistent regulatory rules, according to the plaintiffs.

On September 2, Maine Attorney General Janet Mills announced that she would not enforce the law, due to her concerns about its constitutionality. (See September 3, 2009 posting on Trade Regulation Talk.)

Neither the Attorney General’s decision not to enforce the law nor the negotiated order between the parties to the lawsuit precludes a private plaintiff from bringing a action under the law.

Thus, the blog item’s conclusion that “This Court Order squashes the threat of the [Maine privacy law]” may be overly enthusiastic.

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