Monday, April 10, 2017

New York's credit card surcharge law implicates First Amendment

This is not the most exciting First Amendment case I've ever seen, but a First Amendment case it is. The Supreme Court says that

The case is Expressions Hair Design v. Schneiderman, decided on March 29. We examine credit card pricing in this case. New York makes it illegal for merchants to charge more money if customers want to use a credit card. The credit card companies charge a fee for the use of the cards, so merchants want to encourage customers to use cash. The plaintiffs are merchants who want to impose credit card surcharges. They also want to tell customers that it's not the merchant's fault that they have to raise prices to cover these surcharges. Hence, this First Amendment case.

The Second Circuit ruled against the plaintiffs, finding that this law does not restrict speech and that it instead merely regulates conduct in the form of price controls. The Supreme Court disagrees. The law regulates First Amendment speech because it tells merchants how they can communicate their prices. Chief Justice Roberts writes:

The law tells merchants nothing about the amount they are allowed to collect from a cash or credit card payer. Sellers are free to charge $10 for cash and $9.70, $10, $10.30, or any other amount for credit. What the law does regulate is how sellers may communicate their prices. A merchant who wants to charge $10 for cash and $10.30 for credit may not convey that price any way he pleases. He is not free to say “$10,with a 3% credit card surcharge” or “$10, plus $0.30 for credit” because both of those displays identify a single sticker price—$10—that is less than the amount credit card users will be charged. Instead, if the merchant wishes to post a single sticker price, he must display $10.30 as his sticker price. Accordingly, while we agree with the Court of Appeals that §518 regulates a relationship between a sticker price and the price charged to credit card users, we cannot accept its conclusion that §518 is nothing more than a mine-run price regulation. In regulating the communication of prices rather than prices themselves, §518 regulates speech.
The Court does not decide whether this law is constitutional. Now that the Court has found that the law regulates speech, the case is sent back to the Second Circuit to decide if the law is a valid speech regulation or whether it can be upheld as a valid disclosure requirement. The only direction for the Second Circuit is to treat this law as a speech regulation and decide whether it violates the First Amendment.

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