By Chris Bruce
A federal appeals court Jan. 3 said a California law that bars merchant surcharges on credit card transactions violates the U.S. Constitution.
The ruling by the U.S. Court of Appeals for the Ninth Circuit means that five California businesses that challenged the law may post a single sticker price on items for sale while charging an extra fee for customers who wish to pay by credit card. Although a lower court went further and struck down the law in its entirety, the Ninth Circuit said its decision only applies to the plaintiffs in this case.
The ruling followed a March U.S. Supreme Court decision that said a New York anti-surcharge law regulates speech. In this case, California Attorney General Xavier Becerra defended the California law, found at Section 1748.1 of the California Civil Code, saying it regulates conduct, not speech. However, the Supreme Court ruling “forecloses” that argument, the three-judge Ninth Circuit panel said. The opinion was written by Judge Sarah S. Vance, a judge sitting by designation who normally presides in the U.S. District Court for Eastern District of Louisiana.
“In sum, Section 1748.1 restricts plaintiffs’ non-misleading commercial speech,” said Vance, joined by Judges Diarmuid F. O’Scannlain and Johnnie B. Rawlinson. “This restriction does not directly advance the Attorney General’s asserted state interest in preventing consumer deception, nor is it narrowly drawn to achieving that interest.”
The separate dispute on the New York surcharge law is ongoing. After deciding the questions before it in March, the Supreme Court sent the case back to the Second Circuit. In December, that court asked New York’s highest court whether merchants meet the requirements of New York General Business Law Section 518 if they post the total-dollars-and-cents price charged to credit card users. The New York Court of Appeals doesn’t have to answer the question. Even if it does so, its answer will carry significant weight but won’t be binding on the Second Circuit.
Case: Italian Colors Restaurant v. Becerra , 9th Cir., 15-cv-15873, 1/3/18 .
To contact the reporter on this story: Chris Bruce in Washington at email@example.com
To contact the editor responsible for this story: Michael Ferullo at firstname.lastname@example.org
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)