In This Issue:
- Supreme Court to Review Credit Card Surcharge Statutes
- SPECIAL FOCUS: Responses to Retail Webinar Attendee Questions
- 2 for 1—Private and Government Actions Regarding Price Comparisons
- Judge Puts the Brakes on Uber's $100M Settlement
- A Cold Day in Court for Plaintiff Suing Starbucks Over Iced Drinks
- Zipping out of Court: D.C. Circuit Tosses Privacy Suit
- California Employee Can Pursue Termination Claims Over Marijuana Use
By Richard Lawson, Partner, Consumer Protection
Why it matters: In an effort to resolve a conflict between Circuits, the Supreme Court has agreed to hear arguments in a challenge to New York’s credit card surcharge law, one of several similar pending lawsuits. For all players in the retail and electronic payments world, the New York challenge will be an important one to watch.
Detailed discussion: The New York law at issue states that “[n]o seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means.” N.Y. Gen. Bus. Law § 518. Several businesses challenged this statute as a violation of the First Amendment. Specifically, they asserted that the statute allowed the use of the word “discount” while prohibiting the use of the word “surcharge” when pricing retail items. These retailers challenged the law in New York, and while they won in the trial court, that decision was reversed by the Second Circuit Court of Appeals, which upheld the validity of the statute. Expressions Hair Design v. Schneiderman, 808 F.3d 118 (2d Cir. 2015).
This New York challenge is one of several that are currently working their way through the court system. The four most populous states—California, Texas, Florida, and New York—each have a statute on this issue, and each statute has been challenged as constitutionally infirm. The Fifth Circuit has upheld the Texas statute, while the Eleventh Circuit has struck it down. In California, the trial court held the statute to be unconstitutional and the matter is before the Ninth Circuit.
The heart of the conflict between the Second and Eleventh Circuits rests in the significance, or lack thereof, of the nomenclature used. The New York analysis centered on established case law regarding prices; as it held, “If prohibiting certain prices does not implicate the First Amendment, it follows that prohibiting certain relationships between prices also does not implicate the First Amendment.” As the Second Circuit reasoned, if the seller charges something more than the list price because the consumer uses a credit card, that is a violation of the surcharge statute; that there might be a cash discount would not run afoul of the statute. The court held that prices are not speech within the meaning of the First Amendment, and that the statute relates only to conduct, i.e., the prohibited imposition of an additional credit card fee on top of the list price.
Conversely, the Eleventh Circuit directly held that the statute affects speech, not conduct. Applying a higher level of scrutiny, the Eleventh Circuit faulted the statute for not addressing any false or misleading speech, or otherwise addressing any significant government interest. The court stated that “holding out discounts as more equal than surcharge” (emphasis in original) was unconstitutionally beyond the scope of governmental authority.
With this conflict, the matter was ripe for Supreme Court review. The issue is far from academic, as these statutes are on the books in the four most populous states and in several others. Retailers should pay close attention to the developments in this case.
SPECIAL FOCUS: Responses to Retail Webinar Attendee QuestionsBy Marc Roth, Co-Chair, TCPA Compliance and Class Action Defense
Why it matters: During our hugely successful “Avoiding TCPA Pitfalls: Essential Guidance for Retailers” webinar this summer, we received dozens of questions from attendees, most of which we were not able to address during the closing minutes of the presentation. But, we held on to the questions and present below responses to those that we felt would be most relevant to readers. Please note that these are general responses and are not intended as, and should not be construed to be, specific legal advice. Should you have any specific follow-up questions on these responses, please reach out to the webinar speakers: Manatt partners Marc Roth and Christine Reilly.
Q: I thought mobile phones always trigger the TCPA even if manually dialed? Especially in certain states? Not exactly. The TCPA is only triggered when communicating with consumers on their mobile phone when using an autodialer. That said, the FCC’s July 2015 rulemaking declared that a dialing system that is used to manually dial numbers may be an autodialer if it has the current or future capacity to autodial. With regard to state laws, there are about half a dozen states that prohibit calling or texting a mobile device without the consumer’s consent, regardless of whether an autodialer is used. But this restriction only applies to commercial, and not informational or transactional, communications.
Q: If there is time, could you please address TCPA applicability to texts delivered to cell phones? The FCC has expressly stated that text messages delivered to cell phones are treated as calls under the TCPA.
Q: If you use a prerecorded message that is only informational in nature (e.g., fraud prevention), does prior express consent need to be obtained? It depends on where the call is terminated. If the call is to a landline and contains no marketing content, no consent is required. On the other hand, if the call is to a mobile phone, and is purely informational, the caller will still need the recipient’s express consent, which may generally be satisfied by the caller receiving the number from the call recipient.
Q: Do autodialed calls to mobile numbers assigned to a business fall under the TCPA? For calls to “residential” numbers, can we assume “residential” means a call to a consumer landline phone? Unless expressly exempted, all autodialed calls to a mobile phone require some level of consent, even if to a business. The TCPA and FCC rules do not distinguish between consumer and business lines when calling mobile numbers. This distinction is only relevant in regard to do-not-call regulations, since these rules only apply to consumer numbers. However, as some people use a single phone line for both personal and business purposes, a more detailed analysis of the source and use of the number is required in order to determine whether the DNC rules apply.
Q: Is the company required to determine whether the consumer’s phone number is a landline or cell phone? Or is this information provided by the consumer? A company must itself determine whether a number terminates with a landline or mobile phone. As the TCPA is a strict liability statute, even if a consumer provides her mobile phone number in response to a request for a home (landline) phone, a call to that number will still be treated as a call to a mobile device under the TCPA.
Q: Can voice recordings giving consent to be marketed (via inbound call) comply with the ESIGN Act? Yes, under FCC rules, a company may obtain a consumer’s express written consent for marketing calls via an inbound call if conducted in accordance with the requirements of the ESIGN Act.
Q: Does a check box work as a signature for prior express written consent (PEWC)? A check box may satisfy the FCC regulations for prior express written consent if the box is unchecked and is accompanied by the applicable FCC consent language in accordance with the ESIGN Act.
Q: Is it imperative to be able to store and produce (if need be) the check box that is used for the consumer to affirmatively agree to receive telephone calls? It is important to maintain some proof of a consumer opt-in in the event a call is ever challenged. While the best proof may be a copy or screenshot of the exact web page a consumer completed and submitted for this purpose, if this is impossible, it may be acceptable to maintain a file of the opt-in that includes the information that the consumer provided as well as a date and time stamp of and IP address associated with the opt-in.
Q: A retailer announces via the in-store intercom: text COUPON to 12345 to get 10% off your purchase today. Is this allowed? Can the response include an invitation to subscribe via web form, e.g., Your 10% off code is XYZ. Click to subscribe: bit.ly123? Under the FCC’s July 2015 ruling, a retail store may instruct consumers to text a word to a short code to obtain a discount code by reply text without including the required language for prior express written consent. Under the FCC rules, the reply text must only contain the requested information (i.e., the discount code) and may only be used once. Including any other information in the reply text (such as an invitation to subscribe to the retailer’s savings or loyalty program via a web link) may present some risk as such content may be viewed as exceeding the consumer’s specific request.
Q: What are your thoughts on placing express written consent language below a “submit” button? The FCC regulations require that express written consent language be presented clearly and conspicuously so that it is not missed by consumers. Placing this language below a submit button presents some risk of not satisfying this requirement if displayed in a way that may be missed by...
