Supreme Court Says New York Is Regulating Speech But Refuses To Say If That's Bad

The justices were puzzling over a state law about credit card swipe fees.
Chief Justice John Roberts' majority opinion went so far and stopped.
Chief Justice John Roberts' majority opinion went so far and stopped.

WASHINGTON ― Looks like the Supreme Court decided not to micromanage how deli shops in New York do business. At least not today.

The high court on Wednesday confronted complicated First Amendment issues when it ruled on a puzzling New York law that penalizes merchants that tell customers they’ll be charged higher fees for using credit cards. But the justices sidestepped the final question by punting the case back to the lower court.

So-called “swipe” surcharges, imposed by some small businesses on people who pay with plastic, are not uncommon. New York has a law that explicitly bans such surcharges. It does not, however, prohibit discounts for people who pay with cash.

A group of shops challenged the measure as unconstitutional because it limits their speech. They argue that the law effectively prevents them from informing customers that they have two options — paying with cash, which is cheaper, or using a credit card, which will cost more.

The Supreme Court, in a decision written by Chief Justice John Roberts, concluded that the New York law regulates the speech of shop owners because it directs how they may or may not communicate prices to their customers. It does nothing to actually set price controls, which the government has the power to do.

Using dollars and cents, Roberts explained how the New York scheme plays out in the real world.

“A merchant who wants to charge $10 for cash and $10.30 for credit may not convey that price any way he pleases,” Roberts wrote. “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,” Roberts wrote, “if the merchant wishes to post a single sticker price, he must display $10.30 as his sticker price.”

Precisely because the New York law doesn’t allow businesses to be transparent and advertise both the lower and the higher price, the court concluded that it’s not “like a typical price regulation” and thus the First Amendment should apply.

But the justices didn’t take the last step in Expressions Hair Design v. Schneiderman and decide what should happen to the law. Instead, they sent the case back to the federal appeals court to determine whether the law is constitutional.

This quarter-loaf outcome is worse than none. Justice Sonia Sotomayor

Confused yet? Justice Stephen Breyer, who during oral argument had expressed concern that weaponizing the First Amendment in this area might encourage judges to become price regulators, wrote a separate opinion agreeing with the majority’s result. But he emphasized that the law’s “operation is unclear” and that New York’s top state court may be best equipped to determine what it means.

He also cautioned that “it is wiser” not to get too hung up on what exactly the government is trying to regulate in any given case. “But that is because virtually all government regulation affects speech,” Breyer wrote. “Human relations take place through speech. And human relations include community activities of all kinds — commercial and otherwise.”

Justice Sonia Sotomayor, joined in an usual pairing by Justice Samuel Alito, also wrote separately to concur in the result. But she argued that the main ruling didn’t do enough and would leave the issue bouncing around in the lower courts.

“This quarter-loaf outcome is worse than none,” she wrote.

Sotomayor said that she too would have asked New York’s highest court to clarify exactly what this “elusive” law does. But she preferred that the Supreme Court do that in the first place, “rather than contribute to the piecemeal resolution of this case.”

A spokeswoman for Eric Schneiderman, the New York attorney general, said that the state respects the court’s ruling and that they would continue to defend the credit card surcharge law in the lower courts.