The NCSL Blog

04

By Lisa Soronen

Expressions Hair Design v. Schneiderman, like most First Amendment cases, is about much more than its mere facts, here disallowing retailers to pass on credit-card swipe fees to consumers. It raises a more fundamental question over what exactly is speech.

illustration of credit cards; credit: The Washington PostThe question the Supreme Court will decide is whether state “no-surcharge” laws that prohibit vendors from charging more to credit-card customers but allows them to charge less to cash customers violate the First Amendment.

The State and Local Legal Center (SLLC) amicus brief argues these laws don’t violate the First Amendment because they regulate conduct rather than speech.

Per a “no-surcharge” law, if the regular price of an item is $100, customers paying with a credit card may not be charged $103 and cash customers $100. But if the regular price is $103, credit-card customers may be charged $103 and cash customers $100.   

From 1976 to 1984 Congress prohibited vendors from passing on credit-card “swipe fees” (about 2-3 percent charged per transaction to merchants) to credit-card users. When the law expired, 11 states, including New York, passed “no-surcharge” laws.

These laws were ignored until recently because credit-card contracts with vendors prohibited vendors from imposing surcharges on credit-card customers. Visa and MasterCard have dropped this requirement in their contracts pursuant to a nationwide anti-trust lawsuit.

Expressions Hair Design would like to charge 3 percent more to credit card customers for its goods and services but is prohibited from doing so by New York’s “no-surcharge” law, Section 518. Expressions claims that Section 518 violates the First Amendment.

The SLLC amicus brief argues that “no-surcharge” laws regulate prices and not speech or expressive conduct. Expressive conduct triggers First Amendment scrutiny when it conveys a particular message—like burning the flag conveys displeasure with the federal government. “The only particularized message a price inherently expresses is the price itself.”

The SLLC brief also argues that the Supreme Court’s decision in Reed v. Town of Gilbert, Arizona (2015) should not change how the Court views this case.

In Reed the Court struck down the Town of Gilbert’s sign code because it disfavored temporary event signs over political and ideological signs. Reed stands for the proposition that a law can’t escape First Amendment strict (fatal) scrutiny review because an entire topic (i.e. temporary events signs announcing any event) are disfavored. All temporary event signs convey a particularized message--unlike a price.    

Finally, the brief points out state legislatures have had the authority to regulate prices since the Revolution. “No-surcharge” laws provide consumers protection because multiple prices are confusing and credit-card surcharges have no ceiling.

Charles Rothfeld, Andrew Pincus, Paul Hughes, and Michael Kimberly, Mayer Brown wrote the SLLC brief which the following organizations joined:  National Governors AssociationNational Association of CountiesNational League of CitiesUnited States Conference of MayorsInternational City/County Management Association, and International Municipal Lawyers Association.

Lisa Soronen is executive director of the State and Local Legal Center. She writes frequently about judicial issues for the NCSL Blog.

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This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.