cash and credit cardsOn March 29, 2017 the Supreme Court of the United States held that a New York law prohibiting retailers from disclosing credit card surcharges, while allowing discounts for cash purchases (effectively eliminating the surcharge), regulates speech and not just conduct. The Court, however, passed on evaluating whether the statute violates the First Amendment. Instead, the Court remanded the case, Expressions Hair Design et al. v. Schneiderman et al., No. 15-1391, back to the Second Circuit for review under the First Amendment.

At issue in this case was New York’s “single sticker” requirement in General Business Law Section 518. In the Court’s Opinion, Chief Justice Roberts, explained that “[m]erchants who wish to employ differential pricing may do so in two ways relevant here: impose a surcharge for the use of a credit card, or offer a discount for the use of cash. In N.Y. Gen. Bus. Law §518, New York has banned the former practice.”

In 2013, U.S. District Judge Jed S. Rakoff ruled that the statute violated the First Amendment as an impermissible restraint on the retailers’ freedom of speech. In 2015, the Second Circuit reversed the District Court and held that the New York law was constitutional because it regulated conduct, not speech.

The Supreme Court unanimously held that the statue did in fact regulate speech, and therefore the Second Circuit must evaluate if the law can survive First Amendment scrutiny as a speech regulation. In reaching its conclusion, the Supreme Court found that the New York law regulated the communication of prices rather than prices themselves, because the statute “tells merchants nothing about the amount they are allowed to collect from a cash or credit card payer. Instead, it regulates how sellers may communicate their prices.”

Justices Breyer and Sotomayor both wrote concurrences noting that it was unclear exactly what the New York law proscribed and argued that the case should be certified to the New York Court of Appeals to set out more clearly the contours of the law. Although not required to do so by the Court, the Second Circuit may decide to certify the case to the New York Court of Appeals for clarification of the statue’s effect before conducting a First Amendment analysis. This story seems far from over, and is just one of many recent challenges to compelled speech (or non-speech) on First Amendment grounds (a recent case in California, for example, addressed warnings on soda.) Given how active the Roberts Court has been on First Amendment issues, this and other similar matters bear watching. This specific case may not conclude until the parties make another trip to the Supreme Court.

Will that be cash or credit?