John Locke Update / Research Brief

Merchants 1, Free Speech Enemy Schneiderman 0

posted on in Law & Regulation, Legal Update
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In December, I reported that the John Locke Foundation, along with 10 other amici curiae (“friends of the court”), had filed a brief in Expressions Hair Design v. Schneiderman, a case involving a group of New York City merchants who had challenged New York State’s credit card law on constitutional grounds. Today, I’m happy to report that the U.S. Supreme Court has decided in favor of the merchants.

The law in question made it a crime for merchants to add surcharges to credit card purchases, but it allowed them to offer discounts for purchases made with cash. The merchants argued that, because there’s no substantive difference between “deducting a discount” and “adding a surcharge,” forcing them to describe what they are doing as the former, rather than the latter, violates their right to free speech under the First Amendment.

As I noted, the law is a typical exercise of cronyism between big corporations and big government. It was enacted at the behest of the credit card industry to keep consumers from knowing that a “swipe fee” is imposed on every credit card purchase. Cronyism, however, was not the issue before the Supreme Court. The issue was whether the law violates plaintiffs’ right to freedom of speech.

The State of New York argued that the law primarily regulates conduct (“pricing”) and that any restrictions on speech are merely incidental. The merchants, on the other hand, argued that the law does not regulate prices at all—they are, after all, free to charge a higher price for credit card purchases—what it does, instead, is forbid them from telling their customers the truth about why the credit card price is higher.

The Supreme Court agreed. Writing for the majority, Chief Justice Roberts held that, “In regulating the communication of prices rather than the prices themselves, [the law in question] regulates speech.” That’s not the end of the case, however. While speech receives more constitutional protection than conduct, that protection is not absolute, despite the First Amendment’s seemingly absolute language, and the courts are particularly inclined to make an exception when it comes to so-called “commercial speech.” The case will now go back to the Court of Appeals for the Second Circuit, which will determine whether the speech restrictions imposed under New York’s credit card law can be justified under Supreme Court precedent.

Nevertheless, it’s a victory for the merchants, it’s a victory for free speech, and it’s a victory for the many organizations, including the John Locke Foundation, who filed amicus briefs in the case. That’s not the only reason I’m happy about it, however. I’m also happy because it’s a defeat for Eric Schneiderman, Attorney General for New York State. Over the years, Schneiderman has shown himself to be a consistent enemy of free speech. I’ve written previously about his attacks on companies and individuals who have expressed heterodox opinions regarding climate change. It’s nice to see him lose.

Jon Guze is the Director of Legal Studies at the John Locke Foundation. Before joining the John Locke Foundation, Jon practiced law in Durham, North Carolina for over 20 years. He received a J.D., with honors, from Duke Law School… ...

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