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Expressions Hair Design v Schneiderman: First Amendment Protects NY Credit Card Surcharge Ban

In a unanimous decision, the U.S. Supreme Court ruled that a New York law prohibiting merchants from charging surcharges for paying via credit card is subject to scrutiny under the First Amendment. The Court’s narrow decision in Expressions Hair Design v Schneiderman, 581 U. S. ____ (2017), leaves the Second Circuit Court of Appeals to further examine the constitutionality of the New York law.

Facts of Expressions Hair Design v Schneiderman

To recoup the transaction fees that must be paid to credit card companies, merchants often employ differential pricing, such as imposing a surcharge for the use of a credit card or offering a discount for the use of cash. New York bans merchants from imposing surcharges for credit card use. New York General Business Law §518 provides that “[n]o seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means.”

Five New York businesses and their owners filed suit against state officials, arguing that the law violates the First Amendment by regulating how they communicate their prices and was also unconstitutionally vague because liability under the law “turn[ed] on the blurry difference” between surcharges and discounts. While the District Court sided with the merchants, the Court of Appeals for the Second Circuit vacated the judgment with instructions to dismiss.

The Second Circuit analyzed the law in the context of single-sticker pricing—where merchants post one price and would like to charge more to customers who pay by credit card — and determined that the law regulated a relationship between two prices. Relying on this Court’s precedent holding that price regulation alone regulates conduct, not speech, the Court of Appeals concluded that §518 did not violate the First Amendment. The Court of Appeals abstained from reaching the merits of the constitutional challenge to pricing practices outside the single-sticker context.

Court’s Decision in Expressions Hair Design v Schneiderman

By a vote of 8-0, the Court determined that the credit card law falls under the purview of the First Amendment. “We conclude that §518 does regulate speech and remand for the Court of Appeals to determine in the first instance whether that regulation is unconstitutional,” Chief Justice John Roberts wrote on behalf of the Court.

The Chief Justice further explained:

The Court of Appeals concluded that §518 posed no First Amendment problem because price controls regulate conduct, not speech. Section 518, however, is not like a typical price regulation, which simply regulates the amount a store can collect. The law tells merchants nothing about the amount they are allowed to collect from a cash or credit card payer. Instead, it regulates how sellers may communicate their prices. In regulating the communication of prices rather than prices themselves, §518 regulates speech.

Noting that “we are a court of review, not of first view,” the Court did not address the constitutionality of the New York statute. On remand, the Court directed the Second Circuit to analyze §518 as a speech regulation.

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The Amendments

  • Amendment1
    • Establishment ClauseFree Exercise Clause
    • Freedom of Speech
    • Freedoms of Press
    • Freedom of Assembly, and Petitition
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  • Amendment2
    • The Right to Bear Arms
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  • Amendment4
    • Unreasonable Searches and Seizures
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  • Amendment5
    • Due Process
    • Eminent Domain
    • Rights of Criminal Defendants
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Preamble to the Bill of Rights

Congress of the United States begun and held at the City of New-York, on Wednesday the fourth of March, one thousand seven hundred and eighty nine.

THE Conventions of a number of the States, having at the time of their adopting the Constitution, expressed a desire, in order to prevent misconstruction or abuse of its powers, that further declaratory and restrictive clauses should be added: And as extending the ground of public confidence in the Government, will best ensure the beneficent ends of its institution.

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