FOR IMMEDIATE RELEASE
CONTACT: PRESS@NETCHOICE.ORG
SAN JOSE, Calif.—Today, NetChoice sued California for the third time over yet another unconstitutional, failing power grab. If this law goes into effect, SB 1144 will hurt 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. NetChoice is suing to stop it.
“SB 1144 is a blatant violation of federal law. Congress passed the INFORM Act only two years ago to ensure online marketplaces across America have clear, streamlined rules to follow—not copious multi-state layers of big government bureaucracy. And rather than going after actual criminals, California is choosing to punish small businesses and online marketplaces that are driving the digital economy,” said Paul Taske, NetChoice Associate Director of Litigation.
Taske continued: “What’s worse is that this law won’t stop organized retail crime—it will only further inhibit entrepreneurs from growing their businesses in California. SB 1144 prioritizes paperwork over prosecution and politics over public safety. California should be investing in law enforcement, not advancing unconstitutional proposals that yet again create more problems for businesses in the Golden State.”
SB 1144 contradicts the federal INFORM Act—enacted just two years ago to create a uniform national standard for online marketplaces—by imposing duplicative and confusing requirements on platforms and sellers. The federal law includes a preemption clause that prohibits states from enacting conflicting rules, and California’s amendments are a clear violation of the Constitution’s Supremacy Clause.
It is also totally ineffective at achieving its goal—SB 1144 neither provides law enforcement nor marketplaces with resources to detect or prevent retail crime, nor does it give them the necessary funding to put these thieves in jail. In fact, it actually weakens investigators’ ability to rely on evidence provided by digital marketplaces—undermining the existing tools for police to pursue retail criminals.
An example of how extraordinary the vagueness of this law really is: Girl Scouts using Nextdoor to promote or facilitate sales of cookies in their neighborhood could fall within SB 1144’s scope and be mandated to report data to Nextdoor—or Nextdoor would face massive penalties.
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.
Read NetChoice’s complaint filed today in the U.S. District Court for the Northern District of California HERE.
WATCH TASKE DISCUSSING THIS LAWSUIT HERE.
Key Takeaways of NetChoice v. Bonta (SB 1144):
- 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.
You can find case resources for NetChoice v. Bonta (SB 1144) HERE.
Please contact press@netchoice.org with inquiries.