Court Halts California Overreach in NetChoice’s Fight to Protect Economic Opportunity & Innovation

SAN JOSE, Calif.—Today, a court granted NetChoice’s request to halt California’s INFORM Act amendments while our case moves through the legal system. 

These amendments would have kneecapped online marketplaces—disproportionately impacting small businesses and putting them at a competitive disadvantage with the rest of the nation while failing to address the real problem at hand: organized retail crime. The changes also violate the Supremacy Clause by disregarding federal law, which was enacted just two years ago to create a uniform national standard for online marketplaces.

“NetChoice is grateful the court recognized the serious legal infirmities with California’s INFORM Act amendments. If California is serious about addressing problems in the Golden State, it must get serious about the constitutional limits on its authority. Unconstitutional laws do not–and cannot–fix the issues facing Californians. We look forward to the law being struck down in full as our case proceeds,” said Paul Taske, Co-Director of the NetChoice Litigation Center.

Read the U.S. District Court for the Northern District of California’s decision HERE.

NetChoice urges California lawmakers to focus on real solutions to retail crime, like providing funding and support to law enforcement—not dismantling the digital marketplace with ineffective, unconstitutional red tape.

Key Takeaways of NetChoice v. Bonta (California INFORM Act):

• Ignores Real Crimes: California’s INFORM Act amendments fail to address organized retail crime. Instead, they penalize marketplaces and impose burdens on lawful business and speech. 
• Violates Constitution’s Supremacy Clause: California is attempting to exercise authority that Congress took for itself when it passed the federal INFORM Act just two years ago, a clear violation of the U.S. Constitution’s Supremacy Clause.
• Dismantles Congress’ National Framework: If California succeeds, it will eviscerate the national framework Congress sought to create, and a patchwork system for regulating online marketplaces will emerge once again.  
• Violates First Amendment Rights: SB 1144 violates the First Amendment by restricting the ability of sellers to disseminate lawful speech and buyers to receive it. It also violates platforms’ right over editorial discretion outlined in Moody v. NetChoice. 
• Forces Unlawful Monitoring and Censorship: SB 1144 imposes a monitoring and censorship requirement on platforms to review all posts or face a significant liability for failure to remove content and sellers who refuse to submit the Act’s required documentation, violating Section 230 of the Communications Decency Act. 
• Hurts Small Businesses While Ignoring Criminals: SB 1144 does nothing to address the underlying issue—ensuring law enforcement has the necessary resources to put retail thieves in jail. Instead, it hurts small, online businesses. 
• Weakens Existing Law Enforcement Prosecution Tools: In fact, California’s law would undermine its intended purpose and make it more difficult for law enforcement to prosecute retail thieves by foreclosing the ability to rely on evidence provided by the marketplaces.

Read the court’s decision HERE. You can find case resources for NetChoice v. Bonta (SB 1144) HERE.

Please contact press@netchoice.org with inquiries.