U.S. Supreme Court Justice Stephen Breyer. (Photo: Diego M. Radzinschi) U.S. Supreme Court Justice Stephen Breyer. (Photo: Diego M. Radzinschi)

 

A U.S. Supreme Court case that was touted as a significant retail business dispute with First Amendment ramifications seemed to fizzle fast Tuesday as justices questioned whether freedom of speech was involved at all.

The case Expression Hair Design v. Schneiderman tests whether New York can dictate what merchants say to their customers about the different prices they charge for credit card and cash payments. Ten other states, including California, Connecticut, Florida, Massachusetts and Texas, have similar laws that prohibit merchants from imposing surcharges to cover the “swipe fee” that pay credit-card companies, laws which in some cases have been interpreted to prevent merchants from using the word “surcharge.”

The credit-card industry has lobbied for such laws since the 1980s, fearing that describing the higher price as a “surcharge” would discourage shoppers from using credit cards. The case argued Tuesday was also viewed as a possible barometer of how the court is viewing the importance of commercial speech these days, a long-debated topic.

But justices wondered aloud on Tuesday whether the New York law at issue actually dictates what merchants can say, or rather is a routine commercial regulation barring merchants from imposing surcharges on credit card transactions.

“What speech precisely do you think is being restricted?” Justice Elena Kagan asked Deepak Gupta of Gupta Wessler, who argued on behalf of New York merchants against the law. “This statute is not written in terms of speech, it’s written in terms of imposing a surcharge.”

Gupta said the law had the effect of prohibiting merchants, under criminal penalties, from describing their prices as a credit card surcharge, rather than calling the lower cash price a “discount,” which is allowed.

“Merchants in this case want to engage in truthful speech,” Gupta said. “They want to disclose more.”

But Justice Stephen Breyer jumped in to express fear that by treating the New York law as a free speech violation, the court would be “diving headlong into an area called price regulation.” Breyer added, “Price regulation goes on all over the place in regulatory agencies.”

The disagreement over the actual meaning of the New York law persisted throughout the arguments, leading Justice Samuel Alito Jr. to say at one point, “I feel somewhat uncomfortable about ruling on the constitutionality of this statute without knowing how the New York Court of Appeals would interpret the statute. So why shouldn’t we certify that question of interpretation to that court before we plunge into this First Amendment issue?”

The suit was pursued in federal court, and New York courts did not weigh in on the Expression Hair Design case. The U.S. Court of Appeals for the Second Circuit ruled in 2015 that the New York law amounted to “a pricing practice” and did not violate the First Amendment.

Sensing the trend of the court, Eric Feigin, an assistant to the U.S. solicitor general, urged the court to remand the case to the Second Circuit and state courts “because there’s clearly some dispute about what the New York law does.”

Deputy New York solicitor general Steven Wu got little pushback from the court when he told the court, “The plain text of New York’s statute refers only to a pricing practice and not to any speech.”

The exception was Justice Anthony Kennedy, who wondered if the law suppresses “truthful information,” adding, “if this is so complicated, doesn’t that indicate the statute is vague?”

Alito asked Wu whether the New York law applied to all merchants. “I mean, suppose some kids  have a lemonade stand or they’re washing cars and they say a glass of lemonade, $1 and then somebody comes up to them and says I’d like to buy that with a credit card. It might happen today. I have never seen anybody younger than me buy anything with cash.”

Amid laughter, Wu replied, “The statute has no exemption for kids selling lemonade.” He added, however, that “I think prosecutorial discretion would almost certainly be exercised in that situation.”