On January 3, 2018, in Italian Colors Restaurant v. Becerra, the Ninth Circuit found unconstitutional a California law barring retailers from imposing surcharges on customers using credit cards. The ruling has important implications for retailers operating in California and potentially for retailers operating in several other states with similar bans on credit card surcharges.
Credit card fees are a significant cost to retailers. The typical fee of 2-3 percent can represent a large portion of the profit margin from a sale. Accordingly, retailers have looked for ways to shift the cost of those fees. One strategy is imposing surcharges on purchases made with credit cards. Another is offering discounts on purchases made with any form of payment other than credit cards.
From 1971 to 1984, federal law barred surcharges on credit card purchases. After the federal law expired, several states, including California, enacted their own surcharge bans. Under California Civil Code § 1748.1(a), retailers were not permitted to impose surcharges, but they were allowed to offer discounts for non-credit card payments. Credit card companies also barred surcharges under their agreements, a practice that is the subject of ongoing antitrust litigation.
In 2014, a group of retailers sued the attorney general of California, alleging that the California law violated the Constitution. According to the retailers, the law impermissibly restricted their speech in violation of the First Amendment and was impermissibly vague under the Fourteenth Amendment. The retailers argued that they preferred to impose surcharges rather than offer discounts, because while the two options ostensibly have the same practical effect, customers react to them in different ways. Moreover, using a surcharge rather than a discount allows retailers to display a lower price— i.e., a price that has the “discount” built in, rather than a price reflecting the surcharge.
The district court held, and the Ninth Circuit affirmed, that the California statute regulates speech, not conduct, and cannot survive intermediate scrutiny for evaluating the constitutionality of restrictions on commercial speech. Accordingly, the court struck down the statute and declined to reach the Fourteenth Amendment question.
The Second Circuit, Fifth Circuit and Eleventh Circuit also have addressed whether a surcharge ban regulates conduct or speech—the Second and Fifth said conduct, and the Eleventh said speech. But the Ninth Circuit is the first to address the question since the Supreme Court’s decision in Expressions Hair Design v. Schneiderman, 137 S. Ct. 1144 (2017), which reversed the Second Circuit’s holding that a surcharge ban regulates conduct, and ordered the Second Circuit to analyze the First Amendment challenge. The Supreme Court has also vacated the Fifth Circuit’s decision and denied certiorari in the Eleventh Circuit decision. Those are all good omens for retailers’ ability to impose surcharges on credit card purchases across the country.
- Partner
Mike has more than 36 years of experience with class actions and other complex cases, including wage-hour class actions and collective actions, consumer products class actions, racketeering (RICO), and labor disputes with unions ...
- Partner
Tom is co-head of the firm’s product liability and mass tort litigation practice group. His practice focuses on class action, mass tort and environmental litigation. Tom is a litigator, handling complex civil matters, including ...
Search
Recent Posts
- Ninth Circuit Continues to Clarify When Reference to Back Label is Appropriate in False Advertising Cases
- FTC adopts final “Click-to-Cancel” Rule aimed at recurring subscription services
- From Produce to Insurance Coverage: What Businesses Concerned About Illinois Biometric Information Privacy Act (BIPA) Risks Can Learn From Tony’s Finer Foods
Categories
- Advertising & Marketing
- Bankruptcy
- Class Action
- Competition/Antitrust
- Consumer Protection
- Corporate Governance
- Environmental
- General
- Health Care
- Insurance
- IP
- Labor and Employment
- Mergers & Acquisitions
- Patent Infringement
- Patents
- Privacy & Cybersecurity
- Product Liability
- Real Estate
- Regulatory
- Regulatory
- Technology & E-Commerce
Tags
- 29 C.F.R. § 785.48
- 396-r
- 3D Printer
- 3D Printing
- A. Todd Brown
- A.S. Research (ASR)
- Aaron P. Simpson
- Advertisers
- Advertising
- Advertising Claims
- Advertising Idea
- Agency Guidance
- AI
- AI Interviewing Platforms
- Algorithmic Accountability Act
- Align
- Americans with Disabilities Act
- Americans with Disabilities Act (ADA)
- Andrea DeField
- Ann Marie Buerkle
- Annual Reports
- anti-aging
- Anti-Discrimination
- APEX Agreement
- Arbitration
- Arbitration Agreements
- Arizona
- Arkansas
- Arthritis
- Artificial Intelligence
- Artificial Intelligence (AI)
- Asbestos
- Assembly Bill 51 (AB 51)
- ATDS
- Australia
- Auto-renewals
- automatic telephone dialing system (ATDS)
- Automobile
- Automotive Body Parts Association (ABPA)
- Back to Work Emergency Ordinance
- biased endorsements
- Biden Administration
- Biometric Data
- Biometric Information
- Biometric Information Privacy Act (BIPA)
- BIPA
- Bitcoin
- Blockchain
- Board Diversity Disclosure
- Boards of Directors
- Bonuses
- Braille
- Branding
- Breach
- Breach of Contract
- Business Interruption Loss
- Businessowner’s Insurance
- California
- California Assembly Bill 2011
- California Employment Laws
- California Fair Employment and Housing Act
- California False Claims Act
- California Labor Code
- California Senate Bill 6
- California’s Unfair Competition Law
- CAMS
- Canada
- Cannabis
- CBD
- CBP
- CCPA
- Celebrity Endorsers
- Center for Disease Control (CDC)
- CFIUS
- CGL
- Chatbot
- Children’s Advertising
- Children’s Advertising Review Unit
- Children’s Online Privacy Protection Act (COPPA)
- China
- Christopher J. Dufek
- Christopher W. Hasbrouck
- Christy Kiely
- Class Action
- Class Actions
- Clawback
- Click-to-Cancel
- Climate Change
- clinical trials
- Collective Action
- Colorado
- Commercial General Liability
- Commercial Leasing
- Commodity Futures Trading Commission
- Compliance
- Congress
- Connecticut
- Consent
- Consent Order
- Consumer Data
- Consumer Financial Protection Bureau
- consumer loyalty program
- Consumer Product Safety Act
- Consumer Products
- Consumer Products Safety Commission (CPSC)
- Consumer Protection
- Consumer Review Fairness Act of 2016 (CRFA)
- Consumer Reviews
- Contamination
- Contract Law
- Controlled Substance Act
- Cookware
- COPPA
- Copyright
- Coronavirus/COVID-19
- Corp Fin
- Corporate Governance
- Corporate Sustainability
- Counterfeit Goods
- Counterfeit Goods Seizure Act of 2019
- CPRA
- CPSA
- CPSC
- Crack House Statute
- CRFA
- Cryptocurrency
- CSPA
- Cuba
- Currency
- Customs and Border Protection
- Cyber Coverage
- D&O
- D&O policies
- D. Andrew Quigley
- Damages
- Data Breach
- Davidson
- DEI
- Delaware
- DEP
- Department of Justice
- Department of Labor
- Development Impact Fee
- Digital Assets
- digital currency
- Disclosures
- Distribution
- Division of Corporation Finance
- Dodd-Frank
- DOJ
- DOL
- Duty to Defend
- Duty to Indemnify
- e-liquid products
- Eddie Bauer
- EEOC
- Electric Vehicles
- Eleventh Circuit
- Emily Burkhardt Vicente
- Employee Rights
- Endorsement
- Endorsement Guides
- Endorsement Notice
- Endorsements
- endorser monitoring requirements
- Enforcement
- Environmental Protection Agency
- Environmental Protection Agency (EPA)
- EPA
- Epidemic
- ESG
- ESG Disclosure
- EU Regulation
- European Union
- European Unitary Patent
- EV Charging
- Exceptions
- Exclusions
- Exercise Machines
- Extended Producer Responsibility (EPR)
- FAA
- Fair Labor Standards Act
- Fair Labor Standards Act (FLSA)
- fair use
- False Advertising
- False Advertising Claims
- False Advertising Law
- False Claims Act
- Family Leave Policies
- FCC
- FCRA
- FDA
- Federal Arbitration Act (FAA)
- Federal Communications Commission
- Federal District Court
- Federal Trade Commission
- Federal Trade Commission (FTC)
- FFDCA
- FIFRA
- Fifth Circuit
- Fireworks
- First Amendment
- Fixing America’s Surface Transportation (FAST) Act
- Florida
- Florida House of Representatives (HB 963) and Florida Senate (SB 1670)
- Florida Legislature
- FLSA
- FLSA/Wage & Hour
- food delivery
- Food Safety
- Form 10-K
- Formaldehyde Standards for Composite Wood Products Act of 2010
- fractional interests
- Franchise
- Frederic Chang
- Free Trials
- FTC
- FTC Act
- Gavin Newsom
- GDPR
- General Liability
- Geoffrey B. Fehling
- Georgia
- Gift Cards
- GoodRx
- Gramm-Leach-Bliley (GLB) Act
- Green
- Green Guides
- Greenhouse Gas
- Gun Safety
- Hart-Scott-Rodino
- Hart-Scott-Rodino (HSR)
- hashtag
- Hawaii
- Health Care
- Health Claims
- Hedge Fund
- HIPAA
- hoverboards
- human capital
- Human Rights
- Illinois
- Illinois Artificial Intelligence Video Interview Act (the Illinois Act)
- Illinois Biometric Information Privacy Act (BIPA)
- Indiana
- Influencer Marketing
- Infringement
- initial public offerings (IPOs)
- Injury
- Insurance
- Insurance Loss
- Insurance Provider
- Intellectual Property
- Intellectual Property Licenses in Bankruptcy Act
- Interest Rate
- International
- International Trade Commission
- International Trade Commission (ITC)
- INVISALIGN
- Iowa
- IP
- Ireland
- IT
- ITC
- iTERO
- Katherine Miller
- Kurt A. Powell
- Kurt G. Larkin
- Labeling Rules
- Labor
- Labor Code Private Attorneys General Act of 2004 (PAGA)
- Labor Organizing
- Labor Unions
- Land Use
- Landlord
- Latin America
- Lautenberg Act
- Lawsuit Reform Alliance of New York (LRANY)
- Lead
- Lease
- Legislation
- Leveraged Loans
- Liability Insurance Policy
- Liberty Insurance Corporation
- Liberty Mutual Fire Insurance Company
- LIBOR Discontinuation
- liquidity
- Litigation
- Live Chat
- Louisiana
- M&A
- Made in the USA
- Made in USA
- MagicSleeve
- Magnuson-Moss Warranty Act
- Magnuson-Moss Warranty Act (MMWA)
- Maine
- Malcolm C. Weiss
- Manufacturing
- Marketing Claims
- Maryland
- Massachusetts
- Matthew T. McLellan
- Maya M. Eckstein
- MD&A
- Medtail
- Membership cancellation
- Metaverse
- MeToo Movement
- Mexico
- Michael J. Mueller
- Michael S. Levine
- Minimum Wage
- Minnesota
- Minnesota Pollution Control Agency (MPCA)
- Misclassification
- Mislabeling
- Mission Product Holdings
- Missouri
- Mobile
- Mobile App
- Multi-Level Marketing Program (MLM)
- NAA
- NAD
- NASA
- National Advertising Division
- National Advertising Division (NAD)
- National Advertising Review Board
- National Products Inc.
- National Retail Federation
- Natural Disaster
- Nebraska
- Neil K. Gilman
- Network Outage
- Nevada
- New Jersey
- New York
- NHTSA
- NIL rights
- Ninth Circuit
- NLRA
- NLRB
- no-action request
- non-fungible token (NFT)
- North Carolina
- Obama Administration
- Occupational Safety and Health Administration (OSHA)
- Occurrence
- Office of Labor Standards Enforcement
- Ohio
- Oklahoma
- Online Retailer
- online reviews
- Opioids
- Oregon
- Overboarding
- Overtime
- Overtime Exemptions
- Ownership
- Packaging
- PAGA
- Pandemic
- Patent
- Patent Infringement
- Patents
- Paul T. Moura
- Pay Ratio
- pay-to-play rankings
- Penalty
- Pennsylvania
- Personal and Advertising Injury
- Personal Data
- Personal Information
- Personally Identifiable Information
- Pesticides
- PFAS
- Physical Loss or Damage
- Policy
- price gouging
- Privacy
- Privacy Guidelines
- Privacy Policy
- Privacy Protections
- Prohibition on Sale
- Property Insurance
- Property Rights
- Proposition 65
- Proxy Access
- proxy materials
- Proxy Statements
- Public Companies
- Purdue Pharma
- Randall S. Parks
- Ransomware
- real estate
- Recall
- Recalls
- Regulation
- Regulation S-K
- Restaurants
- Restrictive Covenants
- Retail
- Retail Development
- Retail Industry Leaders Association
- Retail Litigation Center
- Rounding
- Rulemaking
- Ryan A. Glasgow
- Sales Tax
- Scott H. Kimpel
- SD8 coins
- SEC
- SEC Disclosure
- Second Circuit
- Section 337
- Section 365
- Secure and Fair Enforcement Banking Act of 2019 (“SAFE Banking Act”)
- Securities
- Securities and Exchange Commission
- Securities and Exchange Commission (SEC)
- security checks
- Senate
- Senate Data Handling Report
- Sergio F. Oehninger
- Service Contract Act (SCA)
- Service Provider
- SHARE
- Shareholder
- Shareholder Proposals
- Slogan
- Smart Contracts
- Social Media
- Social Media Influencers
- Software
- South Carolina
- South Dakota
- Special purpose acquisition companies (SPACs)
- State Attorneys General
- Store Closures
- Subscription Services
- Substantiation
- Substantiation Notice
- Supplier
- Supply Chain
- Supply contracts
- Supreme Court
- Sustainability
- Syed S. Ahmad
- Synovia
- Targeted Advertising
- Tax
- TCCWNA
- TCPA
- Technology
- Telemarketing
- Telephone Consumer Protection Act
- Telephone Consumer Protection Act (TCPA)
- Tempnology LLC
- Tenant
- Tennessee
- Terms and Conditions
- Texas
- the Fair Credit Reporting Act (FCRA)
- Thomas R. Waskom
- Title VII
- tokenization
- tokens
- Toxic Chemicals
- Toxic Substances Control Act
- Toxic Substances Control Act (TSCA)
- Trade Dress
- Trademark
- Trademark Infringement
- Trademark Trial and Appeal Board (TTAB)
- TransUnion
- Travel
- Trump Administration
- TSCA
- TSCA Title VI
- U.S. Department of Justice
- U.S. Department of Labor
- U.S. Food and Drug Administration
- U.S. House of Representatives
- U.S. Patent and Trademark Office
- Umbrella Liability
- Union
- Union Organizing
- United Specialty Insurance Company
- Unmanned Aircraft
- Unruh Civil Rights Act
- UPSTO
- US Chamber of Commerce
- US Customs and Border Protection (CBP)
- US Environmental Protection Agency (EPA)
- US International Trade Commission (ITC)
- US Origin Claims
- US Patent and Trademark Office
- US Patent and Trademark Office (USPTO)
- US Supreme Court
- USDA
- USPTO
- Utah
- Varidesk
- Vermont
- Virginia
- volatile organic compound (VOC) emissions
- W. Jeffery Edwards
- Wage and Hour
- Walter J. Andrews
- Warranties
- Warranty
- Washington
- Washington DC
- Web Accessibility
- Weight Loss
- Wiretapping
- World Health Organization (WHO)
- Wyoming
- Year In Review
- Zoning Regulations
Authors
- Gary A. Abelev
- Alexander Abramenko
- Yaniel Abreu
- Syed S. Ahmad
- Nancy B. Beck, PhD, DABT
- Brandon Bell
- Fawaz A. Bham
- Michael J. “Jack” Bisceglia
- Jeremy S. Boczko
- Brian J. Bosworth
- Shannon S. Broome
- A. Todd Brown, Sr.
- Samuel L. Brown
- Tyler P. Brown
- Melinda Brunger
- Jimmy Bui
- M. Brett Burns
- Olivia G. Bushman
- Matthew J. Calvert
- Grant H. Cokeley
- Abigail Contreras
- Alexandra B. Cunningham
- Merideth Snow Daly
- Javier De Luna
- Timothy G. Decker
- Andrea DeField
- John J. Delionado
- Stephen P. Demm
- Mayme Donohue
- Nicholas Drews
- Christopher J. Dufek
- Robert T. Dumbacher
- M. Kaylan Dunn
- Frederick R. Eames
- Maya M. Eckstein
- Tara L. Elgie
- Clare Ellis
- Latosha M. Ellis
- Juan C. Enjamio
- Kelly L. Faglioni
- Ozzie A. Farres
- Geoffrey B. Fehling
- Hannah Flint
- Erin F. Fonté
- Kevin E. Gaunt
- Andrew G. Geyer
- Armin Ghiam
- Neil K. Gilman
- Ryan A. Glasgow
- Tonya M. Gray
- Aidan Gross
- Elisabeth R. Gunther
- Steven M. Haas
- Kevin Hahm
- Jason W. Harbour
- Jeffrey L. Harvey
- Christopher W. Hasbrouck
- Eileen Henderson
- Gregory G. Hesse
- Kirk A. Hornbeck
- Rachel E. Hudgins
- Sarah Ingles
- Jamie Zysk Isani
- Nicole R. Johnson
- Roland M. Juarez
- Suzan Kern
- Jason J. Kim
- Scott H. Kimpel
- Andrew S. Koelz
- Leslie W. Kostyshak
- Perie Reiko Koyama
- Torsten M. Kracht
- Brad Kuntz
- Kurt G. Larkin
- Tyler S. Laughinghouse
- Matthew Z. Leopold
- Michael S. Levine
- Ashley Lewis
- Abigail M. Lyle
- Maeve Malik
- Phyllis H. Marcus
- Eric R. Markus
- Brandon Marvisi
- John Gary Maynard, III
- Gray Moeller
- Reilly C. Moore
- Michael D. Morfey
- Ann Marie Mortimer
- Michael J. Mueller
- J. Drei Munar
- Marcus E. Nelson
- Matthew Nigriny
- Justin F. Paget
- Christopher M. Pardo
- Randall S. Parks
- Katherine C. Pickens
- Gregory L. Porter
- Kurt A. Powell
- Robert T. Quackenboss
- D. Andrew Quigley
- Michael Reed
- Shawn Patrick Regan
- Jonathan D. Reichman
- Kelli Regan Rice
- Patrick L. Robson
- Amber M. Rogers
- Natalia San Juan
- Katherine P. Sandberg
- Arthur E. Schmalz
- Daniel G. Shanley
- Madison W. Sherrill
- Kevin V. Small
- J.R. Smith
- Bennett Sooy
- Daniel Stefany
- Katherine Tanzola
- Javaneh S. Tarter
- Jessica N. Vara
- Emily Burkhardt Vicente
- Mark R. Vowell
- Gregory R. Wall
- Thomas R. Waskom
- Malcolm C. Weiss
- Holly H. Williamson
- Samuel Wolff
- Steven L. Wood
- Jingyi “Alice” Yao
- Jessica G. Yeshman