4 ms·

While I like the spirit of this law (rare for me with CA laws), I expect it to be ruled unconstitutional as attempting to regulate interstate commerce, whose so

While I like the spirit of this law (rare for me with CA laws), I expect it to be ruled unconstitutional as attempting to regulate interstate commerce, whose so jurisdiction is under US Congress.

gshulegaard 8y ago
Not sure it would hold up in the Supreme Court. Provided the law is worded strictly to apply to CA citizens / only when corporations are serving CA citizens there is little to make an interstate regulation argument on. And there is also international precedence (EU GDPR) which could guide court opinion. Maybe it's just wishful thinking but that's my $0.02.
- greglindahl 8y ago
  It may well even be limited to businesses that have a presence in California; there are tons of precedents for crafting this kind of law to survive an interstate commerce challenge, even when the Internet is involved.
- briandear 8y ago
  GDPR isn't a relevant precedent as there isn't a precedent -- GDPR hasn't been challenged in court, not the least, a US court. GDPR also has no relevance for US interstate commerce. South Dakota vs. Wayfair overturned the Quill decision, and, the Quill decision would have been the controlling precedent in any constitutional challenge, based on physical nexus. However, that all changed with Wayfair. One of the key arguments in the overturn of Quill were that Quill created, rather than resolved market distortions. Essentially, Quill (according to the ruling in SD v Wayfair,) created a tax shelter for businesses that limit their physical presence in a state. The problem with Quill is that it disadvantaged economically identical actors for arbitrary reasons -- a small shop with a few items in a warehouse in a state would have to pay taxes on everything they sold in the state, while a large business (such as Wayfair) with no physical presence in the state would be advantaged by not having to charge a tax on the exact same items. Helping customers evade a lawful tax unfairly shifts an increased share of the taxes to those consumers who buy from competitors with a physical presence in the State. "Quill’s physical presence rule has limited States’ ability to seek long-term prosperity and has prevented market participants from competing on an even playing field." So now, we look at the California law requiring online cancellations. It would be an extremely difficult argument to cite SD vs. Wayfair since the online cancellation requirement isn't creating a disadvantage on market participants or the states themselves. Lost economic development due to the imbalance created by Quill was cited repeatedly as a flaw in Quill. An online cancellation requirement is going to be very difficult to prove as having a deleterious effect on economic activity/growth/development as was clearly demonstrated in the majority opinion for Wayfair. Wayfair was essentially about tax shelters. The California law doesn't correct any particular economic harm. However, that being said, any constitutional challenge to the California Law would likely fall short because the Supreme Court interpretation of the Commerce Clause essentially says that laws ought not present an "undue burden" on interstate trade. Allowing for online cancellation, would be, to say the least, a stretch to argue that it places an undue burden on doing business with people within the state. That's why, if this law were to go to court, it would be upheld since someone like the New York Times would have a hard time proving an "undue burden." Ironically (to me,) being required to collect sales tax in all 50 states as well as the thousands of individual jurisdictions (including multiple jurisdictions even within cities, thanks to economic reinvestment zones) -- that to me, seems like a massively undue burden. However, as the court rules in Wayfair, that burden is less important than the economic discrimination that was happening (i.e. a local online shop vs. an out of state online shop being burdened unequally despite selling the exact same product.) As an aside, I might argue that a business without a physical presence in the state isn't availing themselves to the infrastructure or public services of that state, however they are being asked to pay for those infrastructure and services. Shipping companies actually do the deliveries and they, of course, are paying the taxes for their locality. But that's another debate. Incidentally, justices Kagan, Sotomayor, Breyer joined Roberts's Wayfair dissent, in which he stated that Congress ought to be making the laws and not the courts. I never thought I'd agree with Kagan and Sotomayor on anything, but it is strange times in which we live. In anyone's interested, Ginsburg, Alito, Gorsuch, Thomas, Kennedy were in the majority on the Wayfair case while Breyer, Sotomayor, Roberts and Kagan were in the dissent. http://www.scotusblog.com/case-files/cases/south-dakota-v-wayfair-inc/ http://www.scotusblog.com/case-files/cases/south-dakota-v-wa... It was a 5-4 but not how you would have expected! Anyway, to the point, Quill would have made a challenge to the California law rather easy, but now, the California law will likely pass a Constitutional challenge based on the "undue burden" test established by the courts.
  - gshulegaard 8y ago
    This is a very detailed response! I appreciate your attention detail, but I did want to address initial comment reading my comment as proposing GDPR as legal precedence. I never intended to forward the notion that the GDPR would serve as precedence. Indeed in a judicial context "precedence" has a very specific meaning and a piece of legislature from an international body of government would not be considered legal precedence in a U.S. court. I chose the phrasing "guide court opinion" carefully to specifically avoid confusion with the legal meaning of the term. I agree with your analysis of SD v. Wayfair in that this is not likely a piece of legislation that would make it to the Supreme Court on interstate commerce grounds (at least in a post-Quill world). But if it did I would speculate the argument would center around the need for online firms to alter their behavior in other States as a result of the California law. To which I made the leap to suggest that the GDPR, as a current event, and it's affect on altering firms behavior even outside of the EU would be something that would likely be referenced in a Court opinion. Although, if you wanted to find an example limited to the US, you could also refer to the current status of EPA car emission regulations to demonstrate a similar single state regulation altering firm behavior across state lines without running afoul of interstate commerce. But at the end of the day you and I are in agreement, this would not have much of an interstate commerce leg to stand on. P.S. For those interested in the South Dakota vs. Wayfair opinion here is a link: https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf I found it interesting like /u/briandear and it is especially relevant for the tech sector.
lern_too_spel 8y ago
Generally, laws made by the legislature are well thought out. It's that nearly-immutable laws passed through initiative that screw up California law.
- wl 8y ago
  Specifically, the legislative analysts working for the legislature who draft and edit proposed laws are generally very good. The wisdom of what is trying to be accomplished may be questionable, but the text of the law usually is defensible and accomplishes what it sets out to do.

While I like the spirit of this law (rare for me with CA laws), I expect it to be ruled unconstitutional as attempting to regulate interstate commerce, whose so jurisdiction is under US Congress.

gshulegaard 8y ago

Not sure it would hold up in the Supreme Court. Provided the law is worded strictly to apply to CA citizens / only when corporations are serving CA citizens there is little to make an interstate regulation argument on. And there is also international precedence (EU GDPR) which could guide court opinion. Maybe it's just wishful thinking but that's my $0.02.

greglindahl 8y ago
It may well even be limited to businesses that have a presence in California; there are tons of precedents for crafting this kind of law to survive an interstate commerce challenge, even when the Internet is involved.
briandear 8y ago
GDPR isn't a relevant precedent as there isn't a precedent -- GDPR hasn't been challenged in court, not the least, a US court. GDPR also has no relevance for US interstate commerce. South Dakota vs. Wayfair overturned the Quill decision, and, the Quill decision would have been the controlling precedent in any constitutional challenge, based on physical nexus. However, that all changed with Wayfair. One of the key arguments in the overturn of Quill were that Quill created, rather than resolved market distortions. Essentially, Quill (according to the ruling in SD v Wayfair,) created a tax shelter for businesses that limit their physical presence in a state. The problem with Quill is that it disadvantaged economically identical actors for arbitrary reasons -- a small shop with a few items in a warehouse in a state would have to pay taxes on everything they sold in the state, while a large business (such as Wayfair) with no physical presence in the state would be advantaged by not having to charge a tax on the exact same items. Helping customers evade a lawful tax unfairly shifts an increased share of the taxes to those consumers who buy from competitors with a physical presence in the State. "Quill’s physical presence rule has limited States’ ability to seek long-term prosperity and has prevented market participants from competing on an even playing field." So now, we look at the California law requiring online cancellations. It would be an extremely difficult argument to cite SD vs. Wayfair since the online cancellation requirement isn't creating a disadvantage on market participants or the states themselves. Lost economic development due to the imbalance created by Quill was cited repeatedly as a flaw in Quill. An online cancellation requirement is going to be very difficult to prove as having a deleterious effect on economic activity/growth/development as was clearly demonstrated in the majority opinion for Wayfair. Wayfair was essentially about tax shelters. The California law doesn't correct any particular economic harm. However, that being said, any constitutional challenge to the California Law would likely fall short because the Supreme Court interpretation of the Commerce Clause essentially says that laws ought not present an "undue burden" on interstate trade. Allowing for online cancellation, would be, to say the least, a stretch to argue that it places an undue burden on doing business with people within the state. That's why, if this law were to go to court, it would be upheld since someone like the New York Times would have a hard time proving an "undue burden." Ironically (to me,) being required to collect sales tax in all 50 states as well as the thousands of individual jurisdictions (including multiple jurisdictions even within cities, thanks to economic reinvestment zones) -- that to me, seems like a massively undue burden. However, as the court rules in Wayfair, that burden is less important than the economic discrimination that was happening (i.e. a local online shop vs. an out of state online shop being burdened unequally despite selling the exact same product.) As an aside, I might argue that a business without a physical presence in the state isn't availing themselves to the infrastructure or public services of that state, however they are being asked to pay for those infrastructure and services. Shipping companies actually do the deliveries and they, of course, are paying the taxes for their locality. But that's another debate. Incidentally, justices Kagan, Sotomayor, Breyer joined Roberts's Wayfair dissent, in which he stated that Congress ought to be making the laws and not the courts. I never thought I'd agree with Kagan and Sotomayor on anything, but it is strange times in which we live. In anyone's interested, Ginsburg, Alito, Gorsuch, Thomas, Kennedy were in the majority on the Wayfair case while Breyer, Sotomayor, Roberts and Kagan were in the dissent. http://www.scotusblog.com/case-files/cases/south-dakota-v-wayfair-inc/ http://www.scotusblog.com/case-files/cases/south-dakota-v-wa... It was a 5-4 but not how you would have expected! Anyway, to the point, Quill would have made a challenge to the California law rather easy, but now, the California law will likely pass a Constitutional challenge based on the "undue burden" test established by the courts.
- gshulegaard 8y ago
  This is a very detailed response! I appreciate your attention detail, but I did want to address initial comment reading my comment as proposing GDPR as legal precedence. I never intended to forward the notion that the GDPR would serve as precedence. Indeed in a judicial context "precedence" has a very specific meaning and a piece of legislature from an international body of government would not be considered legal precedence in a U.S. court. I chose the phrasing "guide court opinion" carefully to specifically avoid confusion with the legal meaning of the term. I agree with your analysis of SD v. Wayfair in that this is not likely a piece of legislation that would make it to the Supreme Court on interstate commerce grounds (at least in a post-Quill world). But if it did I would speculate the argument would center around the need for online firms to alter their behavior in other States as a result of the California law. To which I made the leap to suggest that the GDPR, as a current event, and it's affect on altering firms behavior even outside of the EU would be something that would likely be referenced in a Court opinion. Although, if you wanted to find an example limited to the US, you could also refer to the current status of EPA car emission regulations to demonstrate a similar single state regulation altering firm behavior across state lines without running afoul of interstate commerce. But at the end of the day you and I are in agreement, this would not have much of an interstate commerce leg to stand on. P.S. For those interested in the South Dakota vs. Wayfair opinion here is a link: https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf I found it interesting like /u/briandear and it is especially relevant for the tech sector.

lern_too_spel 8y ago

Generally, laws made by the legislature are well thought out. It's that nearly-immutable laws passed through initiative that screw up California law.

wl 8y ago
Specifically, the legislative analysts working for the legislature who draft and edit proposed laws are generally very good. The wisdom of what is trying to be accomplished may be questionable, but the text of the law usually is defensible and accomplishes what it sets out to do.