Crumbl hidden fee case unlikely to crumble under dismissal motion

Crumbl in Folsom, California, is one of over 800 bakeries in the company throughout the nation. (Alan Riquelmy/Courthouse News Service)

SACRAMENTO, Calif. (CN) — A federal judge on Thursday said he was leaning toward denying a motion to dismiss brought by Crumbl, the cookie company that’s facing a lawsuit over accusations of hidden fees.

Two California residents filed suit in August against the company, saying that a 2.95% service fee was added to customer orders. It was hidden under the phrase “taxes and fees” on a tablet in the store, or app when ordering remotely.

Attorney Jaikaran Singh, representing Crumbl, argued the fee wasn’t hidden. A question mark icon was by the “taxes and fees” phrase, and if pressed would have shown a breakdown of costs.

Clicking on the icon revealed details about the sales tax and service fee, the latter of which is around 13 cents on a $4 cookie.

“This is not a hidden fee,” Singh told U.S. District Court Judge Daniel Calabretta. “If it says ‘fees,’ you’re going to be charged fees.”

Crumbl no longer charges the service fee, though that doesn’t affect the suit. The company has said the litigation played no role in discontinuing the fee, which occurred in May 2023.

Calabretta said he didn’t think an average person would think a fee exists on the purchase of a cookie. That person might see a line item for a fee and think it’s for a delivery.

A delivery fee wouldn’t apply if the person was buying in-store.

Singh argued that nothing in Crumbl’s fee was false — or hidden.

“At most, what that is is an ambiguity,” he said.

The Californians who filed the suit, Lisa Watson and Angela Keers, have said they didn’t know about the service fee until after they finished buying from Crumbl. They saw no disclosure about the service fee beforehand and believed the taxes and fees were local or sales taxes applied to any purchase.

Crumbl in its motion to dismiss said the service fee was disclosed before any purchase occurred.

“Indeed, everything the customer needed to know to understand what they were being charged for the product, taxes, and fees was readily accessible and prominently displayed at the checkout screen,” Crumbl wrote.

According to Singh, customers have a duty to look further into the purchase details. They use tablets when ordering in a store, not the employee, and customers use an app when ordering online. No deception exists because Crumbl informed people they were paying taxes and fees.

Attorney Erin Ruben, representing Watson and Keers, said Singh had relied on case law that hinged on deceptive language on a shampoo bottle. Ordering food on a tablet or app is different.

Ruben said her argument wasn’t limited to one point. It includes the service fee itself, the way it was presented to the customer and the unlikelihood someone would differentiate a 2.95% fee from taxes.

“It’s also not hard to click on a question mark,” Calabretta said, pushing back on her argument.

Ruben disagreed, saying the customer has no duty to delve into the taxes and fees. A duty could exist if a $5 fee was placed on a $4 cookie, she said, but people don’t expect a 13-cent fee. They also don’t expect additional fees when they buy a consumer good.

The taxes-and-fees item was misleading to consumers, and it misled her clients, she said.

Ruben also said that how people interact with the Crumbl app will come out during discovery.

“I don’t think there are questions that can be determined as a matter of law at this stage,” Ruben said. “Our burden is low at this stage.”

After hearing the arguments, Calabretta said he needed to determine the scope of a consumer’s requirement to investigate the potential of misleading or ambiguous statements.

He did not indicate when he would rule.

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