Nathan A Adams IV is a Partner in Holland & Knight's Tallahassee office
In Italian Colors Restaurant v. Becerra, 8787 F. 3d 1165 (9th Cir. 2018), the court affirmed the district court's grant of summary judgment in favor of the plaintiffs on their challenge to the constitutionality of California Civil Code Section 1748.1(a), which prohibits retailers from imposing a surcharge on customers who make payments with credit cards but permits discounts for payment by cash or other means. The state argued that the regulation is necessary to advance its interest in preventing consumer deception. The court ruled that the provision does not actually advance this interest, as it prevents retailers from communicating with their customers about the cost of credit card usage and why credit card customers are charged more than cash users. In addition, the statute exempts the state, municipalities, and electrical, gas or water companies. The court also ruled that the state has more narrowly tailored means of preventing consumer deception, such as by banning deceptive or misleading surcharges. As a result, the court determined that the law violates intermediate scrutiny and the commercial speech doctrine of the First Amendment. But the court modified the district court's declaratory and injunctive relief to apply only to the plaintiffs, and only with respect to the specific pricing practice that plaintiffs seek to employ; namely, posting a single price and charging an extra fee on customers who use credit cards.
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