Recently, deceptive pricing actions have been an active area for consumer litigation. From complaints about hidden fees and false price comparisons, to undisclosed surcharges, consumers have been quick to bring claims arising from allegedly unfair or misleading price practices. In connection with a recent deceptive pricing action, a California court addressed an interesting question: is a menu an ad?
In 2017, a consumer filed suit against Noble House Hotels & Resorts for allegedly failing to adequately disclose a 3.5% surcharge in some of its restaurants. This practice, she alleged, was a violation of Californa's unfair competition, false advertising, and consumer legal remedies acts. The CLRA, for example, prohibits (among other things) "[a]dvertising goods or services with intent not to sell them as advertised" and "[a]dvertising that a product is being offered at a specific price plus a specific percentage of that price unless (A) the total price is set forth in the advertisement . . . . " Analyzing both parties motions for summary judgment, the court's determination turned first, on whether a menu is an advertisement, and second, on whether Noble's conduct was likely to mislead a reasonable consumer.
Because one of the alleged violations, CLRA 1770(a)(20), only applies to "advertisements" the court first analyzed whether a menu is in fact an ad. The court relied on statutory guidance stating that advertisements include, but are not limited to, "shelf tags, displays, and media advertising" (and "media advertising" includes but is not limited to "newspapers, magazines, broadcast stations, billboards and transit ads"). The court also analyzed the plain dictionary meaning of "advertising" which defines an advertisement as "a public notice...especially one published in the press or broadcast over the air" and defines the verb to advertise as "to make something known to[;]" "to make publicly and generally known[;]" "to announce publicly especially by a printed notice or a broadcast[;]" or "to call public attention to especially by emphasizing desirable qualities so as to arouse a desire to buy or patronize."
Based on this analysis, the court ultimately found that -- at least under California law -- a menu is not an advertisement. The court wrote, "Noble House's surcharge practice does not constitute a per se violation of § 1770(a)(20) of the CLRA because menus are not advertisements under the plain language of the statute." As such, the court granted summary judgment to the defendant with regard to plaintiff's 1770(a)(20) claim.
On the remainder of the claims, the court's decision looked at whether the practice was deceptive or misleading, and thus, whether it was likely to deceive a reasonable consumer. Ultimately, the court found that the surcharge disclosure was not buried, as plaintiff alleged, but rather was "displayed on menus, on signs throughout the property, and on each patron's bill" and that while the menu prices of the items themselves may have lacked the cost of the surcharge, "a patron may not avoid the multiple disclosures on menus, signs, and the bill regarding the surcharge."
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