From Fink v. Kirchmeyer, decided last week by Judge Rita Lin (N.D. Cal.):
Joel Fink operates a business called "Spam Private Eye" where he reviews his clients' "junk" emails and identifies ones that might violate California's anti-spam law [and can thus support lawsuits seeking statutory damages -EV]. In July 2023, the California Bureau of Security and Investigative Securities (the "Bureau") cited Fink for acting as an unlicensed private investigator.
The court concluded that the regulation was "a content- and viewpoint-neutral regulation of professional conduct" and thus "subject to rational basis review, requiring only a showing that the licensing requirements are rationally related to Fink's fitness to conduct his business." But, though "[t]hat is a low bar," "the private investigator licensure law fails to clear that low bar as applied to [Fink]":
Specifically, he has shown a gross mismatch between the highly burdensome requirements of the licensing regime, which require him to undertake 6,000 hours of largely unrelated training, and the State's marginal interest in regulating his review of his clients' "junk" emails, which are highly unlikely to be sensitive.
As a result, the court issued a preliminary injunction against the Bureau's applying the law to Fink, reasoning:
The district court in Cornwell v. Hamilton (S.D. Cal. 1999) addressed a similar as-applied constitutional challenge to a licensing scheme under California law, and the Court finds the reasoning in that case persuasive. The plaintiff in Cornwell was an African hair braider who asserted that she should be permitted to lock hair for compensation without fulfilling California's cosmetology licensing requirement. Becoming a licensed cosmetologist required undergoing a 1600-hour cosmetology curriculum and passing a licensing exam. In granting the plaintiff's motion for summary judgment on her Due Process and Equal Protection claims, the district court found that the plaintiff could not "reasonably be classified as a cosmetologist as it is defined and regulated presently," and "[e]ven if [she] were defined to be a cosmetologist, the licensing regimen would be irrational as applied to her because of her limited range of activities," which overlapped only minimally with the types of activities covered in the state's principal training curriculum and examination.
Here, Fink is likely to show that, as in Cornwell, the private investigator licensure law as applied to him would be irrational given the limited scope of his "investigative" activities. To become a licensed private investigator, Fink is required to have at least three years of experience in "investigation work," which is narrowly defined to include work as: (1) a sworn law enforcement officer; (2) military police; (3) an insurance adjuster; (4) a person employed by either a licensed private investigator; (5) a person employed by repossessors in limited capacities; (6) an arson investigator; (7) an investigator for a public defender; and (8) an investigative journalist. Fink would also have to pass an examination, which covers topics including: conducting interviews, asset searches, and surveillances; performing background checks and due diligence analyses; tracking individuals to locate missing or hard-to-find persons; evaluating incident scenes to gather factual evidence related to damage, loss, or injury; preparing for and providing litigation support; and participating in court proceedings.
The legislative history for the 2017 amendments to the licensure law indicates that the California Legislature imposed licensing requirements on private investigators because they "play a unique role in that their job is to delve into an individual's personal information, history, and behavior" and they "have a unique ability [to] interact with consumers' sensitive information." But on the record before the Court, there is no evidence that Fink handles sensitive client information or that he is providing services beyond reviewing his clients' junk emails. The entirety of Fink's "investigation" is reading his clients' self-identified spam emails, which by definition are unlikely to contain any sensitive information, and compiling and creating PDFs of the emails that might violate California's anti-spam law. Fink avers that he does not conduct surveillance, investigate crimes done or threatened against the United States, attempt to locate lost or stolen property, investigate the causes of fires or other property damage, carry a weapon, or operate under a pseudonym. Moreover, Fink is not involved in any of the subsequent litigation that his clients may choose to pursue with their own attorneys (who have a duty of candor toward the courts), other than receiving a percentage of any recovery on a contingency basis
Licensing regimes will often require knowledge of areas not part of a licensee's specific practice. However, Fink's situation presents an extraordinary case. He is in a particularly unusual position because of the minimal overlap between his limited "investigative" activities and the full scope of private investigative conduct contemplated by the Legislature. Fink's business of reviewing inherently non-sensitive spam emails does not appear to implicate the Legislature's concerns about privacy and deceptive practices motivating the oversight of more traditional private investigators, despite that Fink's conduct technically falls within the scope of the licensure law.
Requiring Fink to undertake 6,000 hours of training as, say, an arson investigator or investigative journalist is not rationally related to his capacity or fitness to read his clients' junk emails and identify the ones that may violate the anti-spam law. Accordingly, Fink is likely to succeed in showing that the private investigator licensure law as applied to him fails rational basis review….
Andrew Heller Ward and Dylan Moore of Institute for Justice, as well as Bretton Laudeman and Brendan P. Cullen of Sullivan & Cromwell LLP, represent plaintiff. Lawyers from the Institute for Justice also won Cornwell v. Hamilton (S.D. Cal. 1999), the case cited as a precedent here.
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