Expressions Hair Design v. Schneiderman

PETITIONER: Expressions Hair Design, et al.
RESPONDENT: Eric T. Schneiderman, Attorney General of New York, et al.
LOCATION: United States Court of Appeals for the Second Circuit

DOCKET NO.: 15-1391
DECIDED BY:
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: US ()
GRANTED: Sep 29, 2016
ARGUED: Jan 10, 2017

ADVOCATES:
Deepak Gupta - for the petitioners
Eric J. Feigin - Assistant to the Solicitor General, Department of Justice, for the United States, as amicus curiae
Steven C. Wu - Deputy Solicitor General of New York, for the respondents

Facts of the case

The New York General Business Law prohibits surcharges on credit card transactions. Expressions Hair Design, along with four other New York businesses and their owners, sued Eric T. Schneiderman, the Attorney General of New York, as well as the District Attorneys of New York County and argued both that the statute violated the Free Speech Clause of the First Amendment and that the statute was unconstitutionally vague under the Due Process Clause of the Fourteenth Amendment. The district court held that the statute was unconstitutional under both theories. The district court found that the statute impermissibly distinguished between surcharges and discounts, which narrowed the form of commercial speech available to the plaintiffs and violated the First Amendment. Additionally, the statute was vague because its application depended entirely on the labels plaintiffs used. The U.S. Court of Appeals for the Second Circuit reversed and held that the statute qualified as permissible regulation of economic activity. The appellate court determined  that prices were not inherently protected speech and that, because the surcharge provision had an easily understood meaning, the provision was not unconstitutionally vague.

Question

Does the New York General Business Law’s prohibition of credit card surcharges violate the Free Speech Clause of the First Amendment or the Due Process Clause of the Fourteenth Amendment?

Media for Expressions Hair Design v. Schneiderman

Audio Transcription for Oral Argument - January 10, 2017 in Expressions Hair Design v. Schneiderman

John G. Roberts, Jr.:

We will hear argument first this morning in Case 15-1391, Expressions Hair Design v. Schneiderman. Mr. Gupta.

Deepak Gupta:

Mr. Chief Justice, and may it please the Court: This case is about whether the State may criminalize truthful speech that merchants believe is their most effective way of communicating the hidden cost of credit cards to their customers. By design, New York's law suppresses the message that you pay more --

Sonia Sotomayor:

I'm sorry.

I -- I -- you're two groups of -- of Petitioners.

One wants to just give a cash price without any information about the surcharge, and the other, I thought, wanted to give two separate prices.

So not everybody doesn't want to give truthful information about the surcharge.

Deepak Gupta:

No -- well, they do, Your Honor. They all want to do the same thing.

They -- they -- I think what you're referring to is that some of them are doing different things now. One of the Petitioners, Expressions Hair Design, is engaging in dual pricing, they're charging two different prices, one for cash, one for credit, but they are trying as hard as they can to describe that as a -- as a discount so that they comply with the law. The other Petitioners right now are refraining from dual pricing altogether, because they don't want to run the risk of -- of failing to comply with this regime.

But if we win this case, all of the Petitioners would like to charge two different prices for cash or for credit, and they would like to be able to characterize the price difference as a surcharge for using a credit card.

Sonia Sotomayor:

That's not what I understood, but your adversary can tell me.

Elena Kagan:

Mr. Gupta, what -- what speech precisely do you think is being restricted?

Deepak Gupta:

The -- the message that when you use a credit card, you're paying more, and to be more precise, I think if you look at Joint Appendix 103 through 104, you'll find there the supplemental declaration of Expressions Hair Design where they say exactly what they'd like to do.

And if you look at the yellow brief, it's page 1 of the yellow brief, we have a chart.

And what we'd like to do, ideally, is describe the pastrami sandwich as $10, and then tell you that it's going to cost a certain percentage more, 2 percent more, to pay with a credit card.

Elena Kagan:

Well, I guess that's why I said like what speech precisely, and you said the message that you're going to pay more if you use a credit card.

Deepak Gupta:

Right.

Elena Kagan:

But, you know, as -- this -- this statute is not written in terms of speech, it's -- it's written in terms of imposing a surcharge.

And -- and let's say that somebody -- let's say that there is a merchant and the merchant charges the list price for something as a dollar and the person comes up to the cash register and offers a dollar bill.

Deepak Gupta:

Uh-huh.

Elena Kagan:

And -- and the cashier says, oh, no.

For you it's 95 cents because I impose a surcharge for people who use credit cards; right?

Deepak Gupta:

Uh-huh.

Elena Kagan:

Now, would that violate this law?

Deepak Gupta:

I -- you know, I don't know, and what -- part of the difficulty is -- and the reason, we have a vagueness challenge --

Elena Kagan:

You don't know? How would it violate the law?

Deepak Gupta:

I don't think -- I don't think it would.

I don't think it would.

And certainly the State hasn't taken that position --

Elena Kagan:

You don't think it would.

Deepak Gupta:

I don't think it would.

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