Earlier this year, coffee chain Peet’s Coffee & Tea LLC was sued by a putative class comprised of all California customers who purchased subscriptions of coffee and tea from the company after February 2013. The class alleged that Peet’s Coffee violates California’s Automatic Renewal Law (“ARL”) and Unfair Competition Law (“UCL”) by automatically charging customers’ credit or debit cards on a recurring basis for coffee and/or tea subscriptions.  California’s ARL requires companies to provide “clear and conspicuous” disclosure of automatic renewal or continuous service offer terms.

Judge Curtis Karnow of the San Francisco Superior Court rejected Peet’s Coffee’s demurrer on the class’s ARL and UCL claims. Specifically as to the ARL claim, the complaint alleged there were no notifications on the checkout webpage that plaintiffs were in fact signing up to renew their orders every month, and therefore they were entitled to recover the money they paid for the recurring products.  Judge Karnow found this allegation sufficiently pled an injury under California’s ARL

Takeaway: Companies with automatic renewal offers operating in California should provide clear notice on their websites, particularly on payment or checkout pages, that customers are signing up for a subscription service and will be charged accordingly to ensure compliance with California’s ARL.