SF 50 (LSB 1136XS (4) 90)

SENATE FILE 50

BY  SALMON

A BILL FOR

An Act relating to requirements for filters on mobile devices activated in the state, providing for civil liability for manufacturers of mobile devices for certain violations, and including penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  710B.1  Short title.
   This chapter shall be known and may be cited as “Cause of Action to Protect Minors from Unfiltered Devices”.
    Sec. 2.  NEW SECTION.  710B.2  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Activate” means the process of powering on a device and associating it with a new user account.
   2.  “Device” means a tablet or a smart phone sold in this state and manufactured on or after January 1, 2024.
   3.  “Filter” means software installed on a device that is capable of preventing the device from accessing or displaying material that is harmful to minors through the internet or through any applications owned and controlled by the manufacturer and installed on the device.
   4.  “Harmful to minors” means any description or representation, in any form, of nudity, sexual conduct, sexual excitement, or sadomasochistic abuse that is all of the following:
   a.  Taken as a whole, appeals to the prurient interest in sex of minors.
   b.  Is patently offensive to prevailing standards in the adult community as a whole with respect to what is suitable material for minors.
   c.  Taken as a whole, does not have serious literary, artistic, political, or scientific value for minors.
   5.  a.  “Manufacturer” means a person that is engaged in the business of manufacturing devices and that has a registered office and a registered agent that is one of the following:
   (1)  An individual who resides in this state and whose business office is identical with the registered office.
   (2)  A domestic corporation whose business office is identical with the registered office.
   (3)  A foreign corporation authorized to transact business in this state whose business office is identical with the registered office.
   b.  “Manufacturer” includes a registrant as defined in section 548.101.
   6.  “Minor” means an individual under the age of eighteen who is not emancipated, married, or a member of the armed forces of the United States.
   7.  “Smart phone” means an electronic device that combines a cell phone with a hand-held computer, typically offering internet access, data storage, and text and electronic mail capabilities.
   8.  “Tablet” means a mobile device that is equipped with a mobile operating system, touchscreen display, and rechargeable battery, and has the ability to support access to a cellular network.
    Sec. 3.  NEW SECTION.  710B.3  Required filter.
   A manufacturer shall manufacture devices that when such a device is activated in this state the device automatically enables a filter that does all of the following:
   1.  Prevents a user of the device from accessing or downloading material that is harmful to minors on any of the following:
   a.  A mobile data network.
   b.  An application owned and controlled by the manufacturer that is installed on the device.
   c.  A wired or wireless internet network.
   2.  Notifies the user of the device if the filter blocks the device from downloading an application or accessing a website.
   3.  Provides a user of the device who has a passcode the ability to unblock a filtered application or internet site.
   4.  Reasonably precludes a user other than a user with a passcode the ability to deactivate, modify, or uninstall the filter.
    Sec. 4.  NEW SECTION.  710B.4  Manufacturer liability.
   1.  A manufacturer of a device is liable to a minor who resides in the state if all of the following occur:
   a.  The device is activated in this state.
   b.  Upon activation in the state, the device does not enable a filter that complies with section 710B.3.
   c.  Using the device, the minor accesses material that is harmful to minors.
   2.  This section shall not be construed to affect any private right of action existing under any other law.
   3.  Notwithstanding subsection 1, this section shall not apply to a manufacturer that makes a good-faith effort to manufacture a device that upon activation in this state automatically enables a generally accepted and commercially reasonable method of filtration in accordance with this chapter and applicable industry standards.
    Sec. 5.  NEW SECTION.  710B.5  Class actions.
   A class action may be brought under this chapter in accordance with the Iowa rules of civil procedure.
    Sec. 6.  NEW SECTION.  710B.6  Civil actions.
   1.  A court of competent jurisdiction that finds a manufacturer liable under section 710B.4 shall enjoin the manufacturer from committing further violations and may order civil penalties not to exceed five thousand dollars per violation, plus filing and attorney fees, in addition to any other penalty established by law.
   2.  a.  For purposes of imposing a civil penalty under subsection 1, a manufacturer shall be considered to have committed a separate violation for each device manufactured on or after January 1, 2024, that is activated in the state and for which all of the following are true:
   (1)  A filter pursuant to section 710B.3 is not enabled.
   (2)  A minor encounters material harmful to minors.
   b.  Notwithstanding paragraph “a”, the maximum civil penalty imposed in a civil action brought under this section shall not exceed fifty thousand dollars.
   3.  a.  A plaintiff must prove and a court must find by clear and convincing evidence that a manufacturer manufactured a device, on or after January 1, 2024, that was activated in this state in violation of section 710B.4, subsection 1.
   b.  A plaintiff must prove by a preponderance of the evidence that a minor accessed material harmful to minors on the device referenced in paragraph “a”.
   c.  The court shall specify the amount of each of the following for each violation for which a manufacturer is found liable:
   (1)  The civil penalty.
   (2)  The court costs.
   (3)  Reasonable attorney fees.
   d.  In determining the civil penalty for a violation of this chapter the court shall consider all of the following:
   (1)  The nature and extent of the violation.
   (2)  The severity of the violation.
   (3)  The potential economic effect of the civil penalty on the manufacturer.
   (4)  The good-faith measures the manufacturer took to comply with this chapter.
   (5)  The willfulness of the manufacturer’s misconduct.
   (6)  The deterrent effect that the imposition of the civil penalty will have on both the manufacturer and other manufacturers that are subject to this chapter.
   (7)  Any other factors that the court deems appropriate.
   e.  The attorney general may bring a civil action under this chapter in the name of the people of this state.
   f.  A private individual may file a civil action under this chapter to establish a manufacturer’s liability under section 710B.4 after the requirements of paragraphs “g”, ”h”, and “i”, and all of the following prerequisite requirements, are satisfied:
   (1)  The individual has served on the manufacturer and the attorney general’s office a notice of an alleged violation of section 710B.3.
   (2)  Within forty-five days after the date on which the attorney general receives the notice of an alleged violation under subparagraph (1), the attorney general has not provided a letter to the noticing party that indicates any of the following:
   (a)  An action is currently being pursued or will be pursued by the attorney general regarding the alleged violation.
   (b)  The attorney general has determined that there is no merit to the action.
   (3)  The manufacturer has not responded to the notice of alleged violation, or returned the certification of compliance served on the manufacturer pursuant to paragraph “i”.
   g.  (1)  The attorney for the noticing party, or the noticing party if the noticing party is not represented by an attorney, shall execute the notice of an alleged violation.
   (2)  The notice of an alleged violation shall do all of the following:
   (a)  State that the individual executing the notice believes in good faith that the manufacturer has committed a violation.
   (b)  Provide factual information sufficient to establish the noticing party’s basis for asserting that the manufacturer has committed the alleged violation.
   h.  (1)  The attorney general shall review the notice of an alleged violation and may confer with the noticing party.
   (2)  The attorney general shall provide, within forty-five calendar days after the date on which the attorney general receives the notice of an alleged violation, a letter to the noticing party and to the manufacturer that states whether the attorney general finds merit in the action.
   i.  (1)  An individual who serves a notice of an alleged violation described in paragraph “g” shall complete and serve on the manufacturer simultaneously with the notice of the alleged violation, a notice of special compliance procedure and proof of compliance form pursuant to paragraph “j”.
   (2)  The individual may file a civil action against the manufacturer, or recover from the manufacturer, if all of the following requirements are satisfied:
   (a)  The notice of alleged violation alleges that the manufacturer failed to manufacture a device that when activated in this state automatically enabled a filter as required under section 710B.3.
   (b)  A minor encountered material harmful to minors on the device.
   (c)  Within sixty calendar days after the date on which the manufacturer receives the notice of the alleged violation, the manufacturer has failed to do all of the following:
   (i)  Correct the alleged violation and all similar violations known to the manufacturer.
   (ii)  Agree to pay a penalty to the noticing party for the alleged violation in the amount of ten dollars per violation, up to a maximum of five hundred dollars, regardless of the number of separate violations alleged in the notice. The manufacturer shall deliver the penalty to the noticing party within sixty calendar days after the date on which the manufacturer receives notice of the alleged violation.
   (iii)  Notify the noticing party and the attorney general’s office in writing that the violation has been corrected. The notice must be the notice of special compliance procedure and proof of compliance form specified in paragraph “k”.
   j.  The notice required to be provided to a manufacturer pursuant to paragraph “i” shall be presented as follows:
   Date.
   Name of the noticing party or of the attorney for the noticing party.
   Address of the noticing party or of the attorney for the noticing party.
   Phone number of the noticing party or of the attorney for the noticing party.
   SPECIAL COMPLIANCE PROCEDURE
   PROOF OF COMPLIANCE
   You are receiving this form because the noticing party listed above has alleged that you are in violation of Iowa Code section 710B.3. The noticing party may bring legal proceedings against you for the alleged violation checked below if:
   You have not actually taken the corrective steps that you certify in this form.
   The noticing party has not received this form at the address shown above, accurately completed by you, postmarked within fifty calendar days of the date that you receive this notice.
   The noticing party has not received the required ten dollar penalty payment for each alleged violation, with a total payment not to exceed five hundred dollars regardless of the number of separate violations alleged in the notice, at the address shown above and postmarked within sixty calendar days of the date of that you receive this notice.
   PART 1: TO BE COMPLETED BY THE NOTICING PARTY OR THE ATTORNEY FOR THE NOTICING PARTY
   This notice of alleged violation is for failure to provide an activated filter to protect minors against exposure to materials considered harmful to minors. [Provide a complete description of all alleged violations, including when and where observed and the serial numbers of all devices involved.]
   Date.
   Name of the noticing party or of the attorney for the noticing party.
   Address of the noticing party or of the attorney for the noticing party.
   Phone number of the noticing party or of the attorney for the noticing party.
   PART 2: TO BE COMPLETED BY THE MANUFACTURER’S AUTHORIZED REPRESENTATIVE
   CERTIFICATION OF COMPLIANCE
   Accurate completion of this form certifies that you have corrected the alleged violations listed above and are now in compliance with Iowa Code section 710B.3. You must complete and submit the form below to the noticing party at the address shown above, and mail a copy to the Iowa Attorney General’s Office, postmarked within fifty calendar days of the date that you received this notice.
   [Name of manufacturer] hereby agrees to pay to the noticing party within sixty calendar days of the date that [name of manufacturer] received this notice, a penalty of ten dollars for each alleged violation and certifies that [name of manufacturer] has complied with Iowa Code section 710B.3 by (check one of the following):
   [ ] Providing the noticing party shown above with information about how to enable a filter on a device that did not have a filter automatically enabled upon activation in the state.
   [ ] Providing the noticing party shown above with information about how to exchange a device that did not have a filter automatically enabled upon activation in the state for a replacement device of the same model that will automatically enable a filter upon activation in the state.
   CERTIFICATION
   All statements on this form, and on any attachments to this form, are true, complete, and correct to the best of my knowledge and are made in good faith. I have carefully read the instructions to complete this form.
   Signature of manufacturer’s authorized representative.
   Date.
   Name and title of manufacturer’s authorized representative. 

   k.  If a lawsuit is commenced by the plaintiff, the plaintiff may include additional violations in the claim if additional violations are disclosed during the discovery process.
   l.  A manufacturer shall only be required to satisfy the requirements applicable to the manufacturer under paragraph “k” once per device.
   m.  (1)  Notwithstanding a manufacturer’s compliance with paragraph “i”, the attorney general may file an action under paragraph “e”.
   (2)  In a civil action filed under this chapter, the court shall reduce the amount of any civil penalty imposed upon a manufacturer for a violation of this chapter to reflect any payments made by the manufacturer under paragraph “j” for the same violation.
    Sec. 7.  NEW SECTION.  710B.7  Penalties.
   1.  A civil penalty ordered by a court under this chapter shall be paid by the manufacturer to the plaintiff as directed by the court. The court shall provide a copy of the court order to the attorney general’s office.
   2.  A manufacturer shall pay a penalty paid in accordance with the special compliance procedure in section 710B.6, subsection 3, paragraph “j”, directly to the noticing party.
   3.  a.  Fifty percent of any penalty paid under this chapter shall be deposited by the attorney general’s office into the victim compensation fund established in section 915.94. The penalty amount upon which the fifty percent is calculated shall not include attorney fees or costs awarded by the court.
   b.  Within thirty calendar days of the date of the receipt of a civil penalty pursuant to subsection 1, the plaintiff shall remit the amount required under paragraph “a” and a copy of the court order to the attorney general’s office.
   c.  Within thirty calendar days of the date of the receipt of a penalty pursuant to subsection 2, the noticing party shall remit the amount required under paragraph “a” and a copy of the special compliance procedure document under section 710B.6, subsection 3, paragraph “j”, to the attorney general’s office.
   4.  The attorney general’s office shall maintain a log of all notices of alleged violations to which the attorney general’s office did not respond with a letter of merit under section 710B.6, subsection 3, paragraph “h”, subparagraph (2).
   5.  a.  The attorney general’s office shall maintain a record of all documents and payments submitted to the attorney general’s office under subsection 3.
   b.  The attorney general shall annually report to the general assembly in odd-numbered years, beginning in 2025, the following information for the immediately preceding two consecutive calendar years:
   (1)  The number of court orders received by the attorney general’s office under subsection 1.
   (2)  The number of notices received by the attorney general’s office under subsection 4.
   (3)  The total dollar amount received by the attorney general’s office and deposited into the victim compensation fund under subsection 3.
    Sec. 8.  NEW SECTION.  710B.8  Civil penalties —— adjustment.
   1.  Beginning July 1, 2025, and at each subsequent five-year interval, the general assembly shall adjust the dollar amount of the civil penalty provided in section 710B.6 based on the change in the annual consumer price index for the most recent five-year period ending on December 31 of the immediately preceding calendar year, and rounded to the nearest five-dollar increment.
   2.  The attorney general shall publish the dollar amount of the adjusted civil penalty under subsection 1, and the date of the next scheduled adjustment, on the attorney general’s internet site.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to requirements for filters on mobile devices activated in the state, and provides for civil liability for manufacturers of mobile devices for certain violations.
   “Device” is defined in the bill as a tablet or a smart phone sold in Iowa and manufactured on or after January 1, 2024. “Filter” is defined as software installed on a device that is capable of preventing the device from accessing or displaying material that is harmful to minors through the internet, or through any applications owned and controlled by the manufacturer and installed on the device. “Manufacturer”, “harmful to minors”, and “activate” are also defined in the bill.
   The bill requires manufacturers to manufacture devices that when activated in this state automatically enable a filter that performs the functions detailed in the bill. The bill provides that a manufacturer of a device is liable to a minor who resides in the state if the device is activated in this state and upon activation does not enable a filter and the minor uses the device to access material that is harmful to minors. Liability does not extend to a manufacturer that makes a good-faith effort to manufacture a device that upon activation automatically enables a generally accepted and commercially reasonable method of filtration in accordance with the requirements in the bill, and with applicable industry standards.
   The bill provides that a class action may be brought in accordance with the Iowa rules of civil procedure. A court of competent jurisdiction that finds a manufacturer liable must enjoin the manufacturer from committing further violations, and may order civil penalties not to exceed $5,000 per violation, plus filing fees and reasonable attorney fees, in addition to any other penalty available by law. A manufacturer shall be considered to have committed a separate violation for each device manufactured on or after January 1, 2024. The total civil penalty imposed in a civil action cannot exceed $50,000.
   A plaintiff must prove, and a court must find, by clear and convincing evidence, that a manufacturer manufactured a device in violation of the bill on or after January 1, 2024, and prove by a preponderance of the evidence that a minor accessed material harmful to minors on such a device. The court must specify the amount of the civil penalty, court costs, and attorney fees for each violation for which the manufacturer is found liable. In determining the civil penalty for a violation of the bill, the court must consider the factors as detailed in the bill.
   The attorney general may bring a civil action in the name of the people of this state, and a private individual may file a civil action to establish a manufacturer’s liability, after satisfying prerequisite requirements, including a notice to the manufacturer to which the manufacturer must respond as detailed in the bill. The manufacturer’s response may include a penalty paid directly to the noticing party by the manufacturer.
   If a lawsuit is commenced, the plaintiff may include additional violations in the claim if additional violations are disclosed during the discovery process. A civil penalty ordered by a court under the bill must be paid to the plaintiff as directed by the court, and the court must provide a copy of the order to the office of the attorney general. Fifty percent of any penalty paid must be deposited by the office of the attorney general in the victim compensation fund (fund) established in Code section 915.94. The penalty amount upon which the 50 percent is calculated shall not include attorney fees or costs awarded by the court. Within 30 calendar days of the date of the receipt of a civil penalty ordered by the court, the plaintiff must remit 50 percent and a copy of the court order to the office of the attorney general. Within 30 calendar days of the date of the receipt of a penalty paid directly to the noticing party by a manufacturer, the noticing party must remit 50 percent and specific documentation as detailed in the bill to the office of the attorney general.
   The attorney general’s office must maintain a log of all notices of alleged violations to which the attorney general’s office did not respond with a letter of merit. The office of the attorney general must maintain a record of all documents and payments submitted to the office of the attorney general pursuant to the provisions of the bill. The attorney general shall annually report to the general assembly in odd-numbered years, beginning in 2025, information as specified in the bill for the immediately preceding two consecutive calendar years.
   Beginning July 1, 2025, and at each subsequent five-year interval, the general assembly must adjust the dollar amount of the civil penalty provided for in the bill, based on the change in the annual consumer price index for the most recent five-year period ending on December 31 of the immediately preceding calendar year, and rounded to the nearest $5 increment. The attorney general shall publish the dollar amount of the adjusted penalty and the date of the next scheduled adjustment on the attorney general’s internet site.