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Expressions Hair Design v. Schneiderman

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Supreme Court of the United States
Expressions Hair Design v. Schneiderman
Reference: 15-1391
Issue: Free speech
Term: 2016
Important Dates
Argued: January 10, 2017
Decided: March 29, 2017
Outcome
Second Circuit Court of Appeals vacated and remanded
Vote
8-0 to vacate and remand
Majority
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Ruth Bader Ginsburg • Elena Kagan
Concurring
Stephen Breyer • Samuel Alito • Sonia Sotomayor


Expressions Hair Design v. Schneiderman is a case argued during the October 2016 term of the U.S. Supreme Court. Argument in the case was held on January 10, 2017. The case came on a writ of certiorari to the United States Court of Appeals for the 2nd Circuit. On March 29, 2017, in an opinion by Chief Justice John Roberts, the court vacated and remanded the judgment of the Second Circuit Court of Appeals.

In the opinion, the court held that Section 518 of New York's general business law was a regulation of speech and not merely conduct. The court sent the case back to the Second Circuit to consider whether Section 518 can survive a legal test known as strict scrutiny, which applies to speech regulations. Strict scrutiny requires that any government regulation of a fundamental right must serve a compelling government interest through the least restrictive means of regulation in order to advance that interest. Justice Stephen Breyer wrote an opinion concurring in the judgment. Justice Sonia Sotomayor authored an opinion concurring in the judgment which was joined by Justice Samuel Alito.

HIGHLIGHTS
  • The case: A New York law prohibits surcharges for customers who use credit cards for payment but allows merchants to offer discounts for anyone paying in cash. A group of merchants is challenging the law as violative of the First Amendment because it restricts their rights of free speech.
  • The issue: Does a law prohibiting merchants from charging surcharges on credit card purchases violate the First Amendment?
  • The outcome: On March 29, 2017, the court vacated and remanded the judgment of the Second Circuit Court of Appeals.


    • In brief: Merchants typically pay a fee whenever receiving payments from customers using a credit card for payment. These fees, called swipe fees, are typically passed onto customers. A New York law, however, prohibits surcharges for customers who use credit cards for payment. The law does allow merchants to offer discounts for anyone paying in cash. In a similar case from the Eleventh Circuit Court of Appeals, the court struck a Florida law with the same provision as unconstitutionally restricting speech regarding price information, but here the Second Circuit Court of Appeals upheld the New York law as regulating only commerce, not speech. Argument in the case was held on January 10, 2017.

    You can review the Second Circuit's opinion here.[1]

    Click on the tabs below to learn more about this Supreme Court case.

    Case

    Background

    This is a case about whether a state law regulating credit card surcharges violates the First Amendment and the Due Process Clause of the Fourteenth Amendment.

    In 1984, New York enacted Section 518 of its general business law. Section 518 reads in its entirety,[1]

    “

    No 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.

    Any seller who violates the provisions of this section shall be guilty of a misdemeanor punishable by a fine not to exceed five hundred dollars or a term of imprisonment up to one year, or both. [2]

    		”

    The law permits merchants to offer a discount to those customers paying in cash, but the law prohibits merchants from charging a surcharge on those who choose to pay with a credit card. In 2013, ten businesses filed a lawsuit in a federal district court alleging that Section 518 violated the free speech guarantees of the First Amendment and is void for vagueness under the Due Process Clause of the Fourteenth Amendment. In their complaint, the business stated "that they would like to charge credit-card customers more than cash customers to account for the credit-card companies' swipe fees. Specifically, they would like to impose a credit-card surcharge, as opposed to offering a cash discount." New York filed a motion to dismiss arguing that the businesses lacked standing, failed to state a claim, and that the case was not ripe for adjudication.[1]

    In October 2013, the district court issued an opinion in which they granted the businesses' motion for a preliminary injunction and denied New York's motion to dismiss. "The district court found that Plaintiffs’ challenge was ripe because they were presently chilled from implementing their preferred pricing scheme, and that Plaintiffs had standing based on a credible fear that Section 518 would be enforced against them. As for the First Amendment, the district court concluded that Section 518 burdens speech by 'draw[ing] the line between prohibited ‘surcharges’ and permissible ‘discounts’ based on words and labels, rather than economic realities.' ... The district court also held that Section 518 was void for vagueness because it 'turns on the labels that sellers use to describe their prices.'" New York appealed to the United States Court of Appeals for the 2nd Circuit.[1]

    In an opinion for a unanimous three-judge panel of the Second Circuit, Judge Debra Livingston vacated and remanded the district court judgment. The court held that the plaintiffs' First Amendment free speech and commercial speech rights were not violated by Section 518 because there was "no reason ... to conclude that Section 518 ... differs in a constitutionally significant way from other laws that regulate prices and therefore do not implicate the First Amendment." The panel further held that Section 518 regulated conduct, not speech. [1]

    In regards to the businesses' due process challenge, the court noted that "a law is void for vagueness if it either (1) 'fails to provide people of ordinary intelligence a reasonable opportunity to understand what conduct it prohibits' or (2) lacks 'explicit standards for those who apply [it] ... a law is facially unconstitutional only if it is 'impermissibly vague in all of its applications.'" Because the panel found that Section 518's core meaning could be reasonably understood and that the law, in application, could be applied without violating due process, the plaintiffs' due process challenge was rejected.[1]

    Petitioners' challenge

    Expressions Hair Design et al., the petitioners, challenged the Second Circuit's holding that Section 518 of New York's general business law does not violate the First Amendment and the Due Process Clause of the Fourteenth Amendment.

    Certiorari granted

    On May 12, 2016, Expressions Hair Design et al., the petitioners, initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the 2nd Circuit. The U.S. Supreme Court granted Expression Hair Design's certiorari request on September 29, 2016. Argument in the case was held on January 10, 2017.

    Arguments


    Question presented

    Question presented:

    "Do...state no-surcharge laws unconstitutionally restrict speech conveying price information (as the Eleventh Circuit has held), or do they regulate economic conduct (as the Second and Fifth Circuits have held)?"[3]


    Audio

    • Audio of oral argument:[4]



    Transcript

    • Transcript of oral argument:[5]

    Outcome

    Decision

    Chief Justice John G. Roberts delivered the opinion for the court. In the opinion, the court held that Section 518 of New York's general business law was a regulation of speech and not merely conduct. The court vacated the judgment of the Second Circuit Court of Appeals and remanded the case back to the Second Circuit to consider whether Section 518 can survive a legal test known as strict scrutiny, which applies to speech regulations. Strict scrutiny requires that any government regulation of a fundamental right must serve a compelling government interest through the least restrictive means of regulation in order to advance that interest. Justice Stephen Breyer wrote an opinion concurring in the judgment. Justice Sonia Sotomayor authored an opinion concurring in the judgment which was joined by Justice Samuel Alito.[6]

    Opinion

    In his opinion for the court, Chief Justice Roberts noted the very limited scope of review in this case. The question the court reached was whether Section 518 was unconstitutional as applied to one type of pricing practice which the petitioners wanted to use. The chief justice noted, the petitioners "have expressly identified only one pricing scheme that they seek to employ: posting a cash price and an additional credit card surcharge, expressed either as a percentage surcharge or a 'dollars-and-cents' additional amount. ... Under this pricing approach, petitioner Expressions Hair Design might, for example, post a sign outside its salon reading 'Haircuts $10 (we add a 3% surcharge if you pay by credit card).' Or, petitioner Brooklyn Farmacy & Soda Fountain might list one of the sundaes on its menu as costing '$10 (with a $0.30 surcharge for credit card users).'" The court noted that Section 518, as interpreted by the Second Circuit, would prohibit such a pricing scheme because the appellate court interpreted the single sticker price as being the price without any surcharges. Chief Justice Roberts indicated that "under this interpretation, signs of the kind that the merchants wish to post—'$10, with a $0.30 surcharge for credit card users'—violate §518 because they identify one sticker price—$10—and indicate that credit card users are charged more than that amount."[6]

    The chief justice then addressed the constitutional question of whether Section 518 was merely a conduct regulation, as the Second Circuit held, or was a speech regulation. In his words,[6]

    “

    The Court of Appeals concluded that §518 posed no First Amendment problem because the law regulated conduct,not speech. ... But §518 is not like a typical price regulation. ... 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. [2]

    		”

    Accordingly, the court vacated the judgment of the Second Circuit and remanded the case back to the Second Circuit to consider whether, as a speech regulation, Section 518 could survive a legal test known as strict scrutiny, which applies to speech regulations. Strict scrutiny requires that any government regulation of a fundamental right, like speech, must serve a compelling government interest through the least restrictive means of regulation in order to advance that interest.[6]

    Concurring opinions

    Justice Stephen Breyer authored a brief opinion concurring in the judgment. Justice Breyer agreed with the majority that the statute's operation was unclear and that remanding the case to the Second Circuit was appropriate. He wrote separately to voice that he was uncertain which judicial approach to reviewing the law under the First Amendment was required and that knowing this was more helpful in disposing of the case than trying to distinguish speech from conduct, particularly when the parties themselves differed on the proper approach. He agreed with Justice Sotomayor's suggestion from her concurrence that the Second Circuit should consider asking the New York Court of Appeals for clarity on the precise nature of the obligations of the law. This would better inform the court of the proper approach for First Amendment review in his view.[6]

    Justice Sonia Sotomayor wrote an opinion concurring in the judgment which was joined by Justice Samuel Alito. In her opinion, Justice Sotomayor felt that the Second Circuit erred in not seeking clarity about the statute from the New York Court of Appeals. In her words,[6]

    “

    Resolving petitioners’ challenge to §518 requires an accurate picture of how, exactly, the statute works. That understanding is needed both to decide whether §518 prohibits petitioners’ preferred pricing systems and displays and, if so, whether that prohibition is consistent with the First Amendment. ... But the Second Circuit did not decide just how far §518 extends. It instead decided how §518 applies to part of the petitioners’ challenge—the pricing display Expressions Hair Design and Five Points Academy wish to use—and declined to decide how, or even if, §518 applies to the rest of the challenge. While §518 evades easy interpretation, a partial decision was neither required nor right. The court below erred by not asking the New York Court of Appeals for a definitive interpretation of §518, and this Court errs by not correcting it. ... The Court’s opinion does not foreclose the Second Circuit from choosing that route on remand. But rather than contributing to the piecemeal resolution of this case, I would vacate the judgment below and remand with instructions to certify the case to the New York Court of Appeals to allow it to definitively interpret §518. [2]

    		”

    Dissenting opinions

    There were no dissenting opinions filed in this case.


    The opinion


    Filings

    The court granted Expression Hair Design's certiorari request on September 29, 2016.

    Merits filings

    Parties' filings

    Expressions Hair Design et al., the petitioners, filed a merits brief on November 14, 2016.

    Eric Schneiderman, Attorney General of New York and the respondent in this case, filed a merits brief on December 14, 2016.

    Expressions Hair Design et al. filed a reply brief on the merits on January 3, 2017.

    Amicus curiae filings

    The following groups filed amicus curiae briefs in support of the petitioners, Expressions Hair Design et al.:

    • Brief of Ahold U.S.A., Inc., et al.
    • Brief of Consumer Action et al.
    • Brief of economist Alan S. Frankel
    • Brief of the First Amendment Lawyers Association and various First Amendment scholars
    • Brief of the Institute for Justice
    • Brief of the James Madison Institute et al.
    • Brief of Professor Adam J. Levitin
    • Brief of the Retail Litigation Center et al.
    • Brief of the United States Public Interest Research Group Education Fund, Inc.
    • Brief of various scholars of behavioral economics

    The following groups filed amicus curiae briefs in support of the respondent, Eric Schneiderman:

    • Brief of Action on Smoking and Health et al.
    • Brief of Credit Union National Association
    • Brief of the International Center for Law and Economics and various scholars of law and economics
    • Brief of the New York Credit Union Association
    • Brief of various constitutional, administrative, contracts, and health law professors
    • Brief of various First Amendment scholars
    • Brief of various labor, environmental, and civil rights organizations

    The United States of America filed an amicus brief in support of neither party in the case.

    Certiorari filings

    Parties' filings

    • Expressions Hair Design et al., the petitioners, filed a petition for certiorari on May 12, 2016.

    Amicus curiae filings

    The following groups filed amicus curiae briefs in support of granting certiorari.

    • Brief of Albertsons LLC et al.
    • Brief of Consumer Action et al.
    • Brief of the Marion B. Brechner First Amendment Project
    • Brief of various First Amendment scholars
    • Brief of various scholars of behavioral economics

    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 U.S. Court of Appeals for the Second Circuit, Expressions Hair Design et al. v. Eric T. Schneiderman et al., December 11, 2015
    2. ↑ 2.0 2.1 2.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    3. ↑ Supreme Court of the United States, Expressions Hair Design v. Schneiderman, September 29, 2016
    4. ↑ Supreme Court of the United States, Expressions Hair Design v. Schneiderman, argued January 10, 2017
    5. ↑ Supreme Court of the United States, Expressions Hair Design v. Schneiderman, argued January 10, 2017
    6. ↑ 6.0 6.1 6.2 6.3 6.4 6.5 Supreme Court of the United States, Expressions Hair Design v. Schneiderman, decided March 29, 2017
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