FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ITALIAN COLORS RESTAURANT, a 

California Business Entity; ALAN 

CARLSON, Owner, Italian Colors 

Restaurant; LAURELWOOD 

CLEANERS, LLC, DBA Laurelwood 

Cleaners and Laundry, DBA Milo’s 

Cleaners and Laundry, a California 

Limited Liability Company; 

JONATHAN EBRAHIMIAN, Owner, 

Laurelwood Cleaners, LLC; FAMILY 

LIFE CORPORATION, DBA Family 

Graphics, a California Corporation; 

TOSHIO CHINO, Owner, Family Life 

Corporation; STONECREST GAS &

WASH, a California Business Entity; 

SALAM RAZUKI, Co-owner, 

Stonecrest Gas & Wash; LEON’S 

TRANSMISSION SERVICE, INC., a 

California Corporation; VINCENT 

ARCHER, Administrator/Controller, 

Leon’s Transmission Service, Inc.,

Plaintiffs-Appellees,

v.

XAVIER BECERRA, Attorney General, 

State of California,

Defendant-Appellant.

No. 15-15873

D.C. No.

2:14-cv-00604-

MCE-DAD

OPINION
2 ITALIAN COLORS RESTAURANT V. BECERRA

Appeal from the United States District Court

for the Eastern District of California

Morrison C. England, Jr., District Judge, Presiding

Argued and Submitted August 17, 2017

San Francisco, California

Filed January 3, 2018

Before: Diarmuid F. O’Scannlain and Johnnie B. 

Rawlinson, Circuit Judges, and Sarah S. Vance,*

District Judge.

Opinion by Judge Vance

SUMMARY**

Civil Rights

The panel affirmed the district court’s summary 

judgment in favor of plaintiffs in an action challenging 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 payments by cash or other means.

The panel first held that it was satisfied that plaintiffs had

modified their speech and behavior based on a credible 

 * The Honorable Sarah S. Vance, United States District Judge for 

the Eastern District of Louisiana, sitting by designation.

** This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
ITALIAN COLORS RESTAURANT V. BECERRA 3

threat of Section 1748.1’s enforcement. Plaintiffs therefore 

satisfied their burden of establishing standing.

The panel limited its review of the surcharge law to a 

First Amendment as-applied challenge based on plaintiffs’ 

representation that they were not bringing a facial challenge. 

The panel further held that Section 1748.1 regulated speech 

and rejected the Attorney General’s argument that the 

Section instead regulated conduct.

Applying intermediate scrutiny, the panel held that the 

activity to which plaintiffs’ desired speech was directed –

charging credit card users more than cash users – was not 

unlawful or misleading. The panel held that enforcing 

section 1748.1 against plaintiffs did not directly advance 

California’s asserted interest in preventing consumer 

deception. Finally, the panel held that there was no 

reasonable fit between the broad scope of Section 1748.1 and 

the asserted state interest, and therefore the statute was more 

extensive than necessary. The panel therefore agreed with 

the district court that Section 1748.1 violated the First 

Amendment, but only as applied to plaintiffs.

COUNSEL

John W. Killeen (argued) and Anthony R. Hakl, Deputy 

Attorneys General; Stepan A. Haytayan, Supervising 

Deputy Attorney General; Douglas J. Woods and Thomas S. 

Patterson, Senior Assistant Attorneys General; Xavier 

Becerra, Attorney General; Office of the Attorney General,

Sacramento, California; for Defendant-Appellant.

Deepak Gupta (argued) and Jonathan E. Taylor, Gupta 

Wessler PLLC, Washington, D.C.; Mark Wendorf, 
4 ITALIAN COLORS RESTAURANT V. BECERRA

Reinhardt Wendorf & Blanchfield, St. Paul, Minnesota; 

Kevin K. Eng, Markun Zusman Freniere & Compton LLP, 

San Francisco, California; for Plaintiffs-Appellees.

Michael E. Chase, Boutin Jones Inc., Sacramento, 

California, for Amicus Curiae Credit Union National 

Association.

Richard A. Arnold, William J. Blechman, and James T. 

Almon, Kenny Nachwalter PA, Miami, Florida, for Amici 

Curiae Safeway Inc., The Kroger Co., Walgreen Co., 

Albertson’s LLC, and Hy-Vee Inc.

Thomas S. Knox, Knox Lemmon & Anapolsky LLP, 

Sacramento, California, for Amicus Curiae California 

Retailers Association.

Dale A. Stern, Downey Brand LLP, Sacramento, California, 

for Amicus Curiae California Grocers Association.

Eric L. Bloom, Hangley Aronchick Segal Pudlin & Schiller, 

Harrisburg, Pennsylvania, for Amicus Curiae Rite Aid 

Corporation.

John J. McDermott, General Counsel, Arlington, Virginia, 

as and for Amicus Curiae National Apartment Association.

OPINION

VANCE, District Judge:

Plaintiffs challenge the constitutionality of California 

Civil Code Section 1748.1(a). This statute prohibits retailers 
ITALIAN COLORS RESTAURANT V. BECERRA 5

from imposing a surcharge on customers who make 

payments with credit cards, but permits discounts for 

payments by cash or other means. The district court granted 

summary judgment in favor of plaintiffs, declared the statute 

both an unconstitutional restriction of speech and 

unconstitutionally vague, and permanently enjoined its 

enforcement. We hold that the statute as applied to these 

plaintiffs violates the First Amendment. Thus, we affirm the 

district court’s judgment. We also narrow the scope of the 

district court’s relief to apply only to plaintiffs.

I. BACKGROUND

A. Factual Background

Plaintiffs are five California businesses and their owners 

or managers: Italian Colors Restaurant and owner Alan 

Carlson; Laurelwood Cleaners and owner Jonathan 

Ebrahimian; Family Graphics and owner Toshio Chino; 

Stonecrest Gas & Wash and owner Salam Razuki; and 

Leon’s Transmission Service and administrator Vincent 

Archer. Plaintiffs pay thousands of dollars every year in 

credit card fees, which are typically 2–3% of the cost of each 

transaction. With the exception of Stonecrest, each plaintiff 

charges a single price for goods, with prices slightly higher 

than they would be otherwise to compensate for the credit 

card fees. Stonecrest currently offers discounts to customers 

who use cash or debit cards.

Each plaintiff represents that it would impose a credit 

card surcharge if it were legal to do so. Stonecrest, which 

already offers different prices for cash customers and credit 

card customers, would describe this difference as a 

surcharge rather than a discount. Italian Colors would also 

charge different prices and label the difference as a 

surcharge. Laurelwood would charge different prices and 
6 ITALIAN COLORS RESTAURANT V. BECERRA

“express the price difference as an additional percentage fee, 

or surcharge, that [customers] will pay if they decide to use 

credit.” Likewise, Family Graphics “would have two 

different prices,” and “would express that difference as a 

percentage fee that is incurred for using a credit card.” And 

Leon’s Transmission would “charge a fee for credit-card 

transactions,” i.e., offer a base price and impose an 

additional surcharge for using a credit card. Plaintiffs have 

not imposed credit card surcharges for fear of violating 

Section 1748.1.

Plaintiffs put forth several reasons why they desire to 

impose credit card surcharges rather than offer cash 

discounts. First, they contend that credit card surcharges are 

a more effective way of conveying to customers the high cost 

of credit card fees. Second, plaintiffs state that their current 

practice forces them to raise their prices slightly to 

compensate for the credit card fees, making their goods and 

services appear more expensive than they would be 

otherwise.

Third, plaintiffs believe that imposing a credit card 

surcharge would be more effective than offering a cash 

discount in encouraging buyers to use cash. Scholars have 

posited that credit card companies prefer cash discounts over 

credit card surcharges for precisely this reason. See Amos 

Tversky & Daniel Kahneman, Rational Choice and the 

Framing of Decisions, 59 J. Bus. S251, S261 (1986). 

Although mathematically equivalent, surcharges may be 

more effective than discounts because “the frame within 

which information is presented can significantly alter one’s 

perception of that information, especially when one can 

perceive the information as a gain or a loss.” Jon D. Hanson 

& Douglas A. Kysar, Taking Behavioralism Seriously: Some 

Evidence of Market Manipulation, 112 Harv. L. Rev. 1420, 
ITALIAN COLORS RESTAURANT V. BECERRA 7

1441 (1999). Indeed, research has shown that economic 

actors are more likely to change their behavior if they are 

presented with a potential loss than with a potential gain. 

Plaintiffs point to one study in which 74% of consumers 

reacted negatively to a credit card surcharge, while only 22% 

reacted positively to cash discounts. See Adam J. Levitin, 

The Antitrust Super Bowl: America’s Payment Systems, NoSurcharge Rules, and the Hidden Costs of Credit, 3 Berkeley 

Bus. L.J. 265, 280–81 (2005).

B. Statutory Background

Section 1748.1 succeeded a now-lapsed federal 

surcharge ban. In 1974, Congress amended the Truth in 

Lending Act (TILA) to provide that credit card companies 

“may not, by contract or otherwise, prohibit any [retailer] 

from offering a discount to a cardholder to induce the 

cardholder to pay by cash, check, or similar means rather 

than use a credit card.” Act of Oct. 28, 1974, Pub. L. No. 

93-495, § 167, 88 Stat. 1500 (codified at 15 U.S.C. 

§ 1666f(a)). Two years later, Congress again amended 

TILA to prohibit retailers from “impos[ing] a surcharge on a 

cardholder who elects to use a credit card in lieu of payment 

by cash, check, or similar means.” Act of Feb. 27, 1976, 

Pub. L. No. 94-222, § 3(c)(1), 90 Stat. 197 (formerly 

codified at 15 U.S.C. § 1666f(a)(2)). This amendment also 

added definitions to the statute, defining “discount” as “a 

reduction made from the regular price,” and “surcharge” as 

“any means of increasing the regular price to a cardholder 

which is not imposed upon customers paying by cash, check, 

or similar means.” Id. § 3(a) (codified at 15 U.S.C. 

§ 1602(q)–(r)).

Congress renewed the surcharge ban in 1981. Act of 

July 27, 1981, Pub. L. No. 97-25, § 201, 95 Stat. 144. At 

that time, Congress also added a definition of “regular 
8 ITALIAN COLORS RESTAURANT V. BECERRA

price”: the posted price if only one price was posted, or the 

credit card price if either no price was posted or both a credit 

card price and a cash price were posted. Id. § 102(a) 

(codified at 15 U.S.C. § 1602(y)). This definition effectively 

limited the scope of the surcharge ban to only “posting a 

single price and charging credit card users more than that 

posted price.” Expressions Hair Design v. Schneiderman 

(Expressions III), 137 S. Ct. 1144, 1147 (2017).

The federal surcharge ban expired in 1984. Several 

states, including California, then adopted surcharge bans of 

their own. See Cal. Civ. Code § 1748.1; Colo. Rev. Stat. § 5-

2-212; Conn. Gen. Stat. § 42-133ff; Fla. Stat. § 501.0117; 

Kan. Stat. § 16a-2-403; Me. Rev. Stat. tit. 9-A, § 8-303(2) 

(repealed Sept. 27, 2011); Mass. Gen. Laws ch. 140D, 

§ 28A; N.Y. Gen. Bus. Law § 518; Okla. Stat. tit. 14a, § 2-

211; Tex. Bus. & Com. Code § 604A.0021.

California enacted its surcharge ban, codified at Civil 

Code Section 1748.1, in 1985. The law provides: “No 

retailer in any sales, service, or lease transaction with a 

consumer may impose a surcharge on a cardholder who 

elects to use a credit card in lieu of payment by cash, check, 

or similar means.” Cal. Civ. Code § 1748.1(a). But the law 

permits a retailer to “offer discounts for the purpose of 

inducing payment by cash, check, or other means not 

involving the use of a credit card, provided that the discount 

is offered to all prospective buyers.” Id. Willful violators of 

the surcharge ban are liable for three times actual damages,

as well as the cardholder’s attorney’s fees and costs in an 

action enforcing the ban. Id. § 1748.1(b). The stated 

purpose of Section 1748.1 is “to promote the effective 

operation of the free market and protect consumers from 

deceptive price increases for goods and services by 

prohibiting credit card surcharges and encouraging the 
ITALIAN COLORS RESTAURANT V. BECERRA 9

availability of discounts by those retailers who wish to offer 

a lower price for goods and services” purchased by cash 

customers. Id. § 1748.1(e).

In addition to these statutory provisions, credit card 

companies also restricted surcharges by contract. Although 

under federal law credit card companies could not prohibit 

retailers from offering cash discounts, see 15 U.S.C. 

§ 1666f(a), they could—and did—contractually prohibit 

surcharges. See Expressions III, 137 S. Ct. at 1147. These 

contractual surcharge bans have been subject to antitrust 

challenges, culminating in a since-vacated class action 

settlement that required Visa and MasterCard to eliminate 

their surcharge bans. In re Payment Card Interchange Fee 

& Merch. Disc. Antitrust Litig., 986 F. Supp. 2d 207, 230–

34 (E.D.N.Y. 2013), rev’d and vacated, 827 F.3d 223 (2d 

Cir. 2016).

C. Procedural History

On March 5, 2014, plaintiffs sued the Attorney General 

of California in her official capacity1 in the District Court for 

the Eastern District of California.2 Plaintiffs alleged that 

Section 1748.1 operates in a manner that restricts speech, 

based on both content and the identity of the speaker, in 

violation of the First Amendment. Plaintiffs also alleged that 

Section 1748.1 is unconstitutionally vague under the Due 

Process Clause of the Fourteenth Amendment. Plaintiffs 

 1 Kamala Harris was the California Attorney General when the 

lawsuit was filed. After Harris was elected to the United States Senate, 

Xavier Becerra replaced Harris as Attorney General.

2 Plaintiffs amended their complaint to add Stonecrest and Leon’s

Transmission, and their respective owners, as plaintiffs on April 1, 2014.
10 ITALIAN COLORS RESTAURANT V. BECERRA

sought a declaration that Section 1748.1 is unconstitutional 

and asked for its enforcement to be permanently enjoined.

The parties filed cross-motions for summary judgment. 

On March 25, 2015, the district court ruled that plaintiffs had 

standing to pursue their constitutional claims, that the First 

Amendment applied to Section 1748.1 because it regulated 

more than economic conduct, and that Section 1748.1 did 

not pass muster under intermediate scrutiny. The district 

court also found that Section 1748.1 was unconstitutionally 

vague. Accordingly, the district court granted plaintiffs’ 

motion for summary judgment, denied the Attorney 

General’s motion for summary judgment, declared the 

statute unconstitutional, and permanently enjoined its 

enforcement.

II. DISCUSSION

A. Standard of Review

This Court reviews summary judgment rulings de novo. 

Zetwick v. County of Yolo, 850 F.3d 436, 440 (9th Cir. 2017). 

“Summary judgment is appropriate when, viewing the 

evidence in the light most favorable to the nonmoving party, 

there is no genuine dispute as to any material fact.” Id. 

(quoting United States v. JP Morgan Chase Bank Account 

No. Ending 8215, 835 F.3d 1159, 1162 (9th Cir. 2016)). The 

Court also reviews standing determinations de novo. Fair 

Hous. of Marin v. Combs, 285 F.3d 899, 902 (9th Cir. 2002).

B. Standing

The district court held that, notwithstanding the meagre 

enforcement history of Section 1748.1, there is a credible 

threat of enforcement should plaintiffs communicate prices 

in the way they desire. We agree.
ITALIAN COLORS RESTAURANT V. BECERRA 11

To establish standing, a plaintiff must show: (1) she 

suffered an “injury in fact,” which is an “actual or imminent” 

invasion of a legally protected interest that is “concrete and 

particularized”; (2) the injury must be “fairly traceable” to 

the challenged conduct of the defendant; and (3) it must be 

likely that the plaintiff’s injury will be redressed by a 

favorable judicial decision. Lujan v. Defs. of Wildlife, 

504 U.S. 555, 560–61 (1992) (internal citations and 

alterations omitted). The injury requirement does not force 

a plaintiff to “await the consummation of threatened injury 

to obtain preventive relief.” Blanchette v. Conn. Gen. Ins. 

Corps., 419 U.S. 102, 143 (1974) (quoting Pennsylvania v. 

West Virginia, 262 U.S. 553, 593 (1923)). Instead, “[i]t is 

sufficient for standing purposes that the plaintiff intends to 

engage in ‘a course of conduct arguably affected with a 

constitutional interest’ and that there is a credible threat that 

the challenged provision will be invoked against the 

plaintiff.” LSO, Ltd. v. Stroh, 205 F.3d 1146, 1154–55 (9th 

Cir. 2000) (quoting Babbitt v. United Farm Workers Nat’l 

Union, 442 U.S. 289, 298 (1979)).

First Amendment challenges “present unique standing 

considerations” because of the “chilling effect of sweeping 

restrictions” on speech. Ariz. Right to Life Political Action 

Comm. v. Bayless (ARLPAC), 320 F.3d 1002, 1006 (9th Cir. 

2003). In order to avoid this chilling effect, the “Supreme 

Court has endorsed what might be called a ‘hold your tongue 

and challenge now’ approach rather than requiring litigants 

to speak first and take their chances with the consequences.” 

Id. (citing Dombrowski v. Pfister, 380 U.S. 479, 486 (1965)). 

Even in the First Amendment context, a plaintiff must 

show a credible threat of enforcement. Lopez v. Candaele, 

630 F.3d 775, 786 (9th Cir. 2010); LSO, 205 F.3d at 1155. 

In determining whether a plaintiff faces such a credible 
12 ITALIAN COLORS RESTAURANT V. BECERRA

threat in the pre-enforcement context, this Court considers 

three factors: 1) the likelihood that the law will be enforced 

against the plaintiff; 2) whether the plaintiff has shown, 

“with some degree of concrete detail,” that she intends to 

violate the challenged law; and 3) whether the law even 

applies to the plaintiff. Lopez, 630 F.3d at 786. But “when 

the threatened enforcement effort implicates First 

Amendment rights, the [standing] inquiry tilts dramatically 

toward a finding of standing.” LSO, 205 F.3d at 1155.

The Court first addresses whether Section 1748.1 applies 

to plaintiffs. This inquiry requires us to interpret the scope 

of the statute. By its terms, Section 1748.1 simply prohibits 

credit card surcharges. The statute does not define 

“surcharge,” nor has the California Supreme Court 

interpreted the provision. Of course, the statute does not 

generally prohibit charging credit card customers more than 

cash customers—to the contrary, it explicitly permits cash 

discounts. And a California Court of Appeal has held that 

the statute does not prohibit a “two-tier pricing system” in 

which the difference in prices is communicated neither as a 

surcharge nor as a discount. Thrifty Oil Co. v. Superior 

Court of L.A. Cty., 111 Cal. Rptr. 2d 253, 259–60 (Cal. Ct. 

App. 2001)

There are two remaining pricing schemes possibly 

covered by the statute. First, a retailer may post a single 

sticker price and then charge an extra fee for credit card 

users. As counsel for the Attorney General conceded at oral 

argument, Section 1748.1 plainly covers this single-stickerpricing scheme. See Expressions Hair Design v. 

Schneiderman (Expressions II), 808 F.3d 118, 129 (2d Cir. 

2015) (noting that New York’s surcharge ban “clearly 

prohibits” a single-sticker-pricing scheme), vacated, 137 S. 

Ct. 1144; cf. Lopez, 630 F.3d at 788 (noting that “plaintiffs’ 
ITALIAN COLORS RESTAURANT V. BECERRA 13

claims of future harm lack credibility when . . . the enforcing 

authority has disavowed the applicability of the challenged 

law to the plaintiffs”). Indeed, this scheme accords with the 

ordinary meaning of “surcharge”: an extra fee in addition to 

the price the retailer would otherwise charge a customer. See 

Random House College Dictionary 1321 (rev’d ed. 1980) 

(defining “surcharge” as “an additional charge, tax, or 

cost”); see also Surcharge, Merriam-Webster Dictionary

Online, www.merriam-webster.com (defining “surcharge” 

as “an additional tax, cost, or impost”). Second, a retailer 

may post two prices—one for cash customers, the other for 

credit card customers—and label the credit card price a 

surcharge. See Expressions Hair Design v. Schneiderman 

(Expressions I), 975 F. Supp. 2d 430, 442–44 (S.D.N.Y. 

2013) (Rakoff, J.) (distinguishing between single-stickerpricing and dual-sticker-pricing schemes, but finding that 

New York’s surcharge ban covers both). We need not reach 

whether Section 1748.1 covers this dual-sticker-pricing 

scheme because, as explained below, it is not at issue in this 

as-applied challenge.

All five plaintiffs desire to post a single price and charge 

an extra fee on customers who use credit cards. Admittedly, 

some of the plaintiffs are clearer about their intentions than 

others. Ebrahimian’s declaration states that Laurelwood 

would impose “an additional percentage fee, or surcharge, 

that [customers] will pay if they decide to use credit.” 

Chino’s declaration states that Family Graphics would also 

impose “a percentage fee that is incurred for using a credit 

card.” Likewise, Archer’s declaration states that Leon’s 

Transmission would “charge a fee for credit-card 

transactions.” These plaintiffs’ desired pricing schemes 

clearly qualify as surcharges under Section 1748.1.
14 ITALIAN COLORS RESTAURANT V. BECERRA

The owners of Stonecrest and Italian Colors state 

somewhat vaguely that they would charge different prices to 

cash customers and credit card customers, and would label 

the difference as a surcharge. But a close reading of the 

declarations reveals that these plaintiffs seek to impose a 

single-sticker-pricing scheme like the other plaintiffs. 

Carlson states that Italian Colors does not want to use cash 

discounts because they would make the restaurant’s 

“advertised prices look higher than they are.” This statement 

suggests that Italian Colors contemplates posting only a 

single set of “advertised prices,” and desires to charge an 

extra fee on top of those prices for credit card customers. 

Razuki states that Stonecrest’s customers would react 

differently if Stonecrest were able to say that it charges “a 

fee, or a surcharge, for credit card transactions,” rather than 

offers a cash discount. This statement suggests that Razuki 

equates surcharges with fees, and wants to impose an added 

fee on credit card users—not merely label the price 

difference as a “surcharge.” Moreover, at oral argument, 

counsel for plaintiffs confirmed that all plaintiffs—including 

Stonecrest and Italian Colors—would like to employ a 

single-sticker-pricing scheme. Therefore, the record shows 

that all plaintiffs wish to post a single sticker price and then 

charge an extra fee for credit card users, a pricing scheme 

clearly prohibited by Section 1748.1.

Turning to the likelihood of enforcement, plaintiffs 

concede that California has not communicated any threat or 

warning of impending proceedings against them. But a 

plaintiff may suffer injury by being “forced to modify [her] 

speech and behavior to comply with the statute.” ARLPAC, 

320 F.3d at 1006. Such “self-censorship” may be a sufficient 

injury under Article III, “even without an actual 

prosecution.” Virginia v. Am. Booksellers Ass’n, 484 U.S. 

383, 393 (1988); see also Libertarian Party of L.A. Cty. v. 
ITALIAN COLORS RESTAURANT V. BECERRA 15

Bowen, 709 F.3d 867, 870 (9th Cir. 2013) (“[A] chilling of 

the exercise of First Amendment rights is, itself, a 

constitutionally sufficient injury.”).

Plaintiffs assert that they have avoided posting credit 

card surcharges for fear of an enforcement action against 

them. Several circumstances suggest that this fear is 

reasonable. First, California has not suggested that Section 

1748.1 will not be enforced if plaintiffs (or others) decide to 

violate the law, nor has the law “fallen into desuetude.” 

ARLPAC, 320 F.3d at 1006–07 (citing Bland v. Fessler, 

88 F.3d 729, 737 (9th Cir. 1996)); see also LSO, 205 F.3d at 

1155 (“Courts have also considered the Government’s 

failure to disavow application of the challenged provision as 

a factor in favor of a finding of standing.”). At a hearing on 

the cross-motions for summary judgment, the Deputy 

Attorney General refused to stipulate that California will not 

enforce the statute. And when the district court suggested 

enforcement would be likely if a chain like Home Depot or 

Wal-Mart initiated surcharges, the Deputy Attorney General 

responded that the suggestion was “certainly a reasonable 

assertion.” Moreover, even if the Attorney General would 

not enforce the law, Section 1748.1(b) gives private citizens 

a right of action to sue for damages. In fact, a California 

citizen recently filed a class action lawsuit in the Central 

District of California alleging violations of Section 1748.1. 

The court in that case agreed with the district court below 

that the statute violates the First Amendment, and granted 

defendants’ motion for summary judgment. See Jang v. 

Asset Campus Hous., Inc., No. 15-1067, 2017 WL 2416376, 

at *3–7 (C.D. Cal. May 18, 2017).

California’s reliance on Section 1748.1’s sparse 

enforcement history is misplaced. Although the parties cite 

only one published case involving the enforcement of 
16 ITALIAN COLORS RESTAURANT V. BECERRA

Section 1748.1, see Thrifty Oil, 111 Cal. Rptr. 2d 253, 

“enforcement history alone is not dispositive.” LSO, 

205 F.3d at 1155. Moreover, as the Supreme Court 

recognized in Expressions III, major credit card companies 

did not drop their contractual provisions banning surcharges 

until 2013. 137 S. Ct. at 1148. California’s ban on 

surcharges was likely not enforced in the past because 

retailers were contractually barred from surcharging, and 

thus there were few, if any, violations to punish.

Finally, the Court examines whether plaintiffs have 

shown that they have a concrete plan to impose credit card 

surcharges. “A general intent to violate a statute at some 

unknown date in the future does not rise to the level of an 

articulated, concrete plan.” Thomas v. Anchorage Equal 

Rights Comm’n, 220 F.3d 1134, 1139 (9th Cir. 2000) (en 

banc). But “plaintiffs may carry their burden of establishing 

injury in fact when they provide adequate details about their 

intended speech.” Lopez, 630 F.3d at 787. Each declaration 

makes clear that if it were legal to do so, plaintiffs would 

charge more for credit card purchases at their respective 

businesses and communicate to their customers that this 

additional charge is a surcharge for credit cards.3 Far from 

asserting a vague, generalized, or “hypothetical intent to 

violate the law,” Thomas, 220 F.3d at 1139, plaintiffs have 

declared their specific intent to impose these surcharges. 

Moreover, they describe “when, to whom, where, [and] 

under what circumstances,” id., they would do so: plaintiffs 

would impose credit card surcharges at their stores, on their 

 3 Indeed, Ebrahimian states that Laurelwood charged additional fees 

for credit card users in the 1990s before learning of California’s 

surcharge ban.
ITALIAN COLORS RESTAURANT V. BECERRA 17

customers, when credit card surcharges are legal. This is 

enough to show a concrete plan.

Considering these factors, and keeping in mind that 

“when the threatened enforcement effort implicates First 

Amendment rights, the [standing] inquiry tilts dramatically 

toward a finding of standing,” LSO, 205 F.3d at 1155, the 

Court is satisfied that plaintiffs have modified their speech 

and behavior based on a credible threat of Section 1748.1’s 

enforcement. This is an actual injury to a legally protected 

interest, fairly traceable to Section 1748.1, and it is likely 

that this injury will be redressed by a favorable decision 

enjoining the enforcement of the law. Plaintiffs have 

therefore satisfied their burden of establishing standing.

C. Plaintiffs’ First Amendment Challenge

The district court held that Section 1748.1 is a contentbased restriction on commercial speech rather than an 

economic regulation. Applying intermediate scrutiny, see 

Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of 

N.Y., 447 U.S. 557, 561–66 (1980), the district court found 

that the surcharges plaintiffs desire to post are neither 

misleading nor related to unlawful activity; that the state’s 

asserted interest in preventing consumer deception, though 

substantial, is not advanced by Section 1748.1; and that there 

is no reasonable fit between that state interest and the scope 

of Section 1748.1. Thus, the district court struck down the 

statute as violating the First Amendment.

1. Whether Plaintiffs’ Challenge Is Facial or As 

Applied

As an initial matter, the parties dispute whether 

plaintiffs’ First Amendment challenge is facial or as applied. 

The distinction affects plaintiffs’ burden of establishing 
18 ITALIAN COLORS RESTAURANT V. BECERRA

Section 1748.1’s unconstitutionality. If plaintiffs’ challenge 

is as applied, then they must show only that the statute 

unconstitutionally regulates plaintiffs’ own speech. But if 

their challenge is facial, then they must show either that “‘no 

set of circumstances exists under which [the challenged law] 

would be valid,’ or that it lacks any ‘plainly legitimate 

sweep.’” Ctr. for Competitive Politics v. Harris, 784 F.3d 

1307, 1314–15 (9th Cir. 2015) (alteration in original) 

(quoting United States v. Salerno, 481 U.S. 739, 745 (1987); 

Washington v. Glucksberg, 521 U.S. 702, 740 n.7 (1997) 

(Stevens, J., concurring)). The distinction also affects the 

proper scope of injunctive relief. While “[a] successful 

challenge to the facial constitutionality of a law invalidates 

the law itself,” a successful as-applied challenge invalidates 

“only the particular application of the law.” Foti v. City of 

Menlo Park, 146 F.3d 629, 635 (9th Cir. 1998).

Before this Court, plaintiffs press only an as-applied 

challenge. They did the same before the district court.4 The 

district court nevertheless enjoined the law in its entirety—

relief that would have been appropriate only if plaintiffs had 

prevailed on a facial challenge. A lower court’s treatment of 

a claim as facial in nature, however, does not require an 

appellate court to do the same. In Expressions II, for 

example, the Second Circuit treated the plaintiffs’ challenge 

as both facial and as applied. 808 F.3d at 130. But before 

the Supreme Court, the plaintiffs disclaimed any facial 

 4 Plaintiffs stated in a summary judgment brief that they were 

“simply requesting the same relief granted by Judge Rakoff in 

Expressions.” Judge Rakoff enjoined New York’s enforcement of the 

law only against the plaintiffs in that case. See Stipulated Final Judgment 

and Permanent Injunction, Expressions I, 975 F. Supp. 2d 430 (No. 13-

3775), 2013 WL 7203883, at *2 (“[T]he Court permanently enjoins the 

defendants from enforcing New York General Business Law § 518 

against the plaintiffs.” (emphasis added)).
ITALIAN COLORS RESTAURANT V. BECERRA 19

challenge. See Expressions III, 137 S. Ct. at 1149. The 

Court took the plaintiffs “at their word” and limited its 

review to their as-applied challenge. Id. We do the same.

2. Whether Section 1748.1 Restricts Plaintiffs’ 

Commercial Speech

The parties also dispute whether Section 1748.1 even 

regulates speech. The Attorney General argues that Section 

1748.1 restricts conduct—namely, the practice of imposing 

a surcharge for credit card users. The Supreme Court’s 

opinion in Expressions III, published after the parties 

submitted briefing in this case, forecloses the Attorney 

General’s argument.

The Court in Expressions III held that New York’s 

surcharge ban “regulat[es] the communication of prices 

rather than prices themselves.” 137 S. Ct. at 1151. The 

Second Circuit had held that the law “regulates conduct, not 

speech.” Expressions II, 808 F.3d at 135. New York’s law 

provides 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.”5

N.Y. Gen. Bus. Law § 518. The Supreme Court first noted 

that this statute “tells merchants nothing about the amount 

they are allowed to collect from a cash or credit card payer.” 

Expressions III, 137 S. Ct. at 1151. “What the law does 

regulate is how sellers may communicate their prices.” Id. 

The Court noted, by way of example:

 5 Although New York’s law does not explicitly permit discounts, the 

law has been interpreted to allow them. See Expressions I, 975 F. Supp. 

2d at 436.
20 ITALIAN COLORS RESTAURANT V. BECERRA

A merchant who wants to charge $10 for cash 

and $10.30 for credit may not convey that 

price any way he pleases. He is not free to 

say “$10, with a 3% credit card surcharge” or 

“$10, plus $0.30 for credit” because both of 

those displays identify a single sticker 

price—$10—that is less than the amount 

credit card users will be charged.

Id. The Court therefore vacated the Second Circuit’s 

decision and remanded for consideration of whether New 

York’s surcharge ban survives First Amendment scrutiny.6 

Id. at 1152.

Like the plaintiffs in Expressions, plaintiffs in this case 

want to post a single sticker price and charge an extra fee for 

credit card use. Section 1748.1 prohibits plaintiffs from 

expressing their prices in this way, but it does allow retailers 

to post a single sticker price and offer discounts to customers 

paying with cash—despite the mathematical equivalency 

between surcharges and discounts. Thus, Section 1748.1, 

like New York’s surcharge ban, regulates commercial 

speech.

 6 Two other circuits have weighed in on whether surcharge bans 

implicate the First Amendment. In Rowell v. Pettijohn, 816 F.3d 73 (5th 

Cir. 2016), the Fifth Circuit held that Texas’s surcharge law did not 

regulate speech, while in Dana’s Railroad Supply v. Attorney General, 

Florida, 807 F.3d 1235, 1239 (11th Cir. 2015), the Eleventh Circuit held 

that Florida’s ban did. The Supreme Court vacated the Fifth Circuit’s 

decision, Rowell v. Pettijohn, 137 S. Ct. 1431 (2017), and denied 

certiorari in the Florida case, Bondi v. Dana’s R.R. Supply, 137 S. Ct. 

1452 (2017).
ITALIAN COLORS RESTAURANT V. BECERRA 21

3. Whether Section 1748.1 Survives Intermediate 

Scrutiny

Restrictions on commercial speech must survive 

intermediate scrutiny under Central Hudson. See Retail 

Digital Network, LLC v. Prieto, 861 F.3d 839, 841 (9th Cir. 

2017) (en banc). The Central Hudson test first asks whether 

the speech is either misleading or related to illegal activity. 

447 U.S. at 563–64. If the speech “is neither misleading nor 

related to unlawful activity,” then “[t]he State must assert a 

substantial interest to be achieved by” the regulation. Id. at 

564. The regulation must directly advance the asserted 

interest, and must not be “more extensive than is necessary 

to serve that interest.” Id. at 566. California’s burden under 

this test is “heavy,” 44 Liquormart, Inc. v. Rhode Island, 

517 U.S. 484, 516 (1996), and the Attorney General cannot 

satisfy it “by mere speculation or conjecture,” Edenfield v. 

Fane, 507 U.S. 761, 770 (1993).

a. Plaintiffs’ speech concerns lawful activity and is 

not misleading

It is obvious that the activity to which plaintiffs’ desired 

speech is directed—charging credit card users more than 

cash users—is not unlawful. Cent. Hudson, 447 U.S. at 564. 

After all, Section 1748.1 permits cash discounts.

Additionally, the Attorney General does not articulate 

why plaintiffs’ desired pricing scheme would be misleading. 

Plaintiffs can already charge credit card customers more than 

cash customers. They seek to communicate the difference 

in the form of a surcharge rather than a discount. To 

paraphrase the Eleventh Circuit, imposing a surcharge rather 

than offering a discount is no more misleading than calling 

the weather warmer in New Orleans rather than colder in 

San Francisco. Dana’s R.R. Supply, 807 F.3d at 1249. 
22 ITALIAN COLORS RESTAURANT V. BECERRA

To be sure, credit card surcharges can be deceptive, 

especially if they are imposed surreptitiously at the point of 

sale. The Attorney General focuses on such bait-and-switch 

surcharges, and their potential to deceive, in arguing that 

Section 1748.1 targets misleading speech. But nothing in the 

record suggests that plaintiffs desire to impose credit card 

surcharges in this way. To the contrary, plaintiffs’ 

declarations all state that plaintiffs want to communicate, not 

conceal, credit card surcharges. Thus, plaintiffs’ desired 

pricing schemes are not misleading.

b. Enforcing Section 1748.1 against plaintiffs does 

not directly advance California’s asserted 

interest

The Attorney General, quoting Section 1748.1 itself, 

asserts that the state’s interest in banning surcharges is to 

“promote the effective operation of the free market and 

protect consumers from deceptive price increases.” Cal. 

Civ. Code § 1748.1(e). The Supreme Court has accepted 

that preventing consumer deception by “ensuring the 

accuracy of commercial information in the marketplace” is 

a substantial state interest. Edenfield, 507 U.S. at 769.

But the Attorney General must do more than merely 

identify a state interest served by the statute. Under the third 

prong of the Central Hudson test, the Attorney General 

“must demonstrate that the harms [he] recites are real and 

that [the speech] restriction will in fact alleviate them to a 

material degree.” Greater New Orleans Broad. Ass’n, Inc. 

v. United States, 527 U.S. 173, 188 (1999) (quoting 

Edenfield, 507 U.S. at 770–71).

The Attorney General relies solely on the legislative 

history of Section 1748.1 to argue that “the California 

Legislature understood the economic dangers of credit card 
ITALIAN COLORS RESTAURANT V. BECERRA 23

surcharges to be real” and adopted Section 1748.1 to 

“eliminate that danger.” But the Attorney General has 

pointed to no evidence that surcharges posed economic 

dangers that were in fact real before the enactment of Section 

1748.1, or that Section 1748.1 actually alleviates these 

harms to a material degree. See Edenfield, 507 U.S. at 771–

72 (noting that the record contained no studies or anecdotal 

evidence indicating that ban on solicitation by certified 

public accountants advanced Florida’s asserted interests).

Indeed, Section 1748.1 does not promote the accuracy of 

information in plaintiffs’ places of business. The law has the 

effect of allowing retailers to charge credit card users more 

for the same goods, but only if this price differential is 

expressed as a discount to cash users, rather than a surcharge 

for credit card users. But the higher cost is a result of credit 

card fees, and referring to the price differential as a discount 

prevents retailers from accurately conveying that causal 

relationship. In other words, Section 1748.1 prevents 

retailers like plaintiffs “from communicating with [their 

customers] in an effective and informative manner” about 

the cost of credit card usage and why credit card customers 

are charged more than cash users. Sorrell v. IMS Health Inc., 

564 U.S. 552, 564 (2011). We fail to see how a law that 

keeps truthful price information from customers increases 

the accuracy of information in the marketplace. Cf. id. at 

577 (“The First Amendment directs us to be especially 

skeptical of regulations that seek to keep people in the dark 

for what the government perceives to be their own good.” 

(quoting 44 Liquormart, 517 U.S. at 503)).

Even if there were evidence of consumer deception, or 

other harm to the free market, the statute’s broad swath of 

exemptions would undermine any ameliorative effect. See 

Rubin v. Coors Brewing Co., 514 U.S. 476, 489 (1995) 
24 ITALIAN COLORS RESTAURANT V. BECERRA

(noting that a law’s “exemptions and inconsistencies” meant 

that the law “will fail to achieve” the asserted government 

interest). Section 1748.1 itself establishes that it “does not 

apply to charges for payment by credit card or debit card that 

are made by an electrical, gas, or water corporation and 

approved by the Public Utilities Commission.” Cal. Civ. 

Code § 1748.1(f). The state has also broadly exempted itself 

and its municipalities from the coverage of Section 1748.1. 

See Cal. Gov. Code § 6159(h)(1) (allowing “a court or agent 

of the court, city, county, city and county, or any other public 

agency [to] impose a fee for the use of a credit or debit 

card”); Cal. Civ. Proc. Code § 1010.5 (“[A]ny court 

authorized to accept a credit card as payment pursuant to this 

section may add a surcharge to the amount of the transaction 

. . . .”); Cal. Food & Agric. Code § 31255(b) (permitting state 

animal-control officers to impose credit card surcharges). 

That California exempted itself and its subdivisions from the 

asserted free market protections of Section 1748.1 suggests 

that this justification is thin. See Dana’s R.R. Supply, 

807 F.3d at 1250 (noting that the many exemptions to 

Florida’s surcharge ban “betray[] the frailty of any potential 

state interests”); see also Valley Broad. Co. v. United States, 

107 F.3d 1328, 1334–36 (9th Cir. 1997) (striking down law 

under Central Hudson and noting that “numerous 

exceptions” to the law “undermine the government’s 

purported interest”). The Attorney General offers no 

explanation why these exempt surcharges are any less 

harmful or deceptive than the surcharges plaintiffs seek to 

impose. Thus, enforcing Section 1748.1 against plaintiffs 

does not directly advance the state’s interest in preventing 

consumer deception.
ITALIAN COLORS RESTAURANT V. BECERRA 25

c. Section 1748.1 is more extensive than necessary

The final prong of the Central Hudson test asks “whether 

the speech restriction is not more extensive than necessary 

to serve the interests that support it.” Greater New Orleans 

Broad., 527 U.S. at 188. California is not required to 

“employ the least restrictive means conceivable, but it must 

demonstrate narrow tailoring of the challenged regulation to

the asserted interest,” or, in other words, a reasonable fit. Id. 

But when challenged laws have “numerous and obvious lessburdensome alternatives to the restriction on commercial 

speech,” these alternatives will be a “relevant consideration 

in determining whether the ‘fit’ between ends and means is 

reasonable.” City of Cincinnati v. Discovery Network, Inc., 

507 U.S. 410, 417 n.13 (1993).

There is no reasonable fit between the broad scope of 

Section 1748.1—covering even plaintiffs’ non-misleading 

speech—and the asserted state interest. California has other, 

more narrowly tailored, means of preventing consumer 

deception. For example, the state could simply ban 

deceptive or misleading surcharges. See Expressions I, 

975 F. Supp. 2d at 447. Alternatively, California could 

require retailers to disclose their surcharges both before and 

at the point of sale, as Minnesota does. See Minn. Stat. 

§ 325G.051(1)(a) (allowing retailers to impose surcharges 

provided the “seller informs the purchaser of the surcharge 

both orally at the time of sale and by a sign conspicuously 

posted on the seller’s premises”). California could also 

enforce its existing laws banning unfair business practices 

and misleading advertising in pricing. See Cal. Bus. & Prof. 

Code §§ 17200, 17500. These alternatives would restrict 

less speech and would more directly advance California’s 

asserted interest in preventing consumer deception.
26 ITALIAN COLORS RESTAURANT V. BECERRA

Given these more narrowly drawn alternatives, 

California cannot prevent plaintiffs from communicating 

credit card surcharges to their customers because of the 

potential for misleading information in other cases. See In 

re R.M.J., 455 U.S. 191, 203 (1982) (“States may not place 

an absolute prohibition on certain types of potentially 

misleading information, . . . if the information also may be 

presented in a way that is not deceptive.”). Section 1748.1, 

therefore, is more extensive than necessary.

In sum, Section 1748.1 restricts plaintiffs’ nonmisleading commercial speech. 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. For these reasons, we agree 

with the district court that Section 1748.1 violates the First 

Amendment, but only as applied to plaintiffs.7

III. CONCLUSION

For the foregoing reasons, we AFFIRM the district 

court’s grant of summary judgment for plaintiffs on the First 

Amendment claim. Because a successful as-applied 

challenge invalidates only a particular application of the 

challenged law, see supra Part II.C.1, we MODIFY the 

district court’s declaratory and injunctive relief to apply only 

to plaintiffs, and only with respect to the specific pricing 

practice that plaintiffs, by express declaration, seek to 

employ.

 7 Because plaintiffs’ as-applied challenge is successful on First 

Amendment grounds, we need not reach their vagueness challenge to 

accord them the relief they seek. Moreover, counsel stated at oral 

argument that plaintiffs no longer press their vagueness challenge. We 

therefore do not reach the vagueness issue.