Amicus Curiae Brief — Expressions Hair Design v. Schneiderman, 137 S. Ct. 30 (2016) (No. 15-1391)

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No. 15-1391 JUN - 7 2016

CE OF ETT

In the Supreme Court of the United States

EXPRESSIONS HAIR DESIGN, et al.,

Petitioners,

Vv.

ERIC T. SCHNEIDERMAN, et ai..

Respondents

On Petition for Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

BRIEF OF AMICUS CURIAE THE MARION B. BRECHNER

FIRST AMENDMENT PROJECT

IN SUPPORT OF PETITIONERS

CLAay CALVERT

Counsel of Record

Marion B. BRECHNER

First AMENDMENT PROJECT

2060 Weimer Hal!

Gainesville, FL 32611

(352) 273-1096

ccalvert@jou.ufl.edu

Counsel for Amicus Curiae

June 7, 2016

Becker Gallagher - Cincinnati, OH - Washington, D.C. - 800.890.5001

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ...................

IDENTITY AND INTEREST OF

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SUMMARY OF ARGUMENT ..................

I. The Right to Receive Speech is a Fundamental

Corollary of the Right to Speak ..............

II. New York General Business Law § 518 Violates,

in Paternalistic Fashion, the First Amendment

Right of Consumers to Receive Truthful

Information that Affects Their Purchasing

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TABLE OF AUTHORITIES

CASES

44 Liquormart, Inc. v. Rhode Island,

ee ee bees ues 8

American Meat Inst. v. U.S. Dep’t Agriculture,

oo gy Bb fi Legs > | | reer 7

Bulldog Investors Gen. P’ship v. Sec’y of

Commonwealth,

953 N.E.2d 691 (Mass. 2011)................ 7

Expressions Hair Design v. Schneiderman,

808 F.3d 118 (2d Cir. 2015) ............... 3,9

Griswold v. Connecticut,

eee 5,6

Martin v. City of Struthers,

ee nes Ce ea eS 2

Spargo v. New York State Comm’n on Judicial

Conduct, 351 F.3d 65 (2d Cir. 2003) .......... 2

Stanley v. Georgia,

ES 2 2 brs Gait a eg) Uk ahh 6

Va. State Bd. Pharmacy v. Va. Citizens Consumer

Council, Inc., 425 U.S. 748 (1976) ...... 3, 6, 7,8

Winters v. New York,

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FEDERAL CONSTITUTION

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STATUTES

Cal. Civ. Code § 1748.1(a) (2016) ............... 5

Pa Oe ES GUE ie widen ks ceetiede weds 5

N.Y. Gen. Bus. Law § 518 (2016) ............. 2,8

Tex. Fin. Code § 339.001 (2016) ................ 5

OTHER AUTHORITIES

Derek E. Bambauer, Shopping Badly: Cognitive

Biases, Communications, and the Fallacy of the

Marketplace of Ideas, 77 U. Colo. L. Rev. 649

le ate) att arate catets reich ele aera 8

Marc J. Blitz, Constitutional Safeguards for Silent

Experiments in Living: Libraries, the Right to

Read, and a First Amendment Theory for an

Unaccompanied Right to Receive Information, 74

CJR) Shs , CUP GUD ove hoes dew eesv esse 5

Jennifer A. Chandler, A Right to Reach an

Audience: An Approach to Intermediary Bias on

the Internet, 35 Hofstra L. Rev. 1095 (2007) .... 3

Adam Levitin, The Antitrust Super Bowl: America’s

Payment Systems, No-Surcharge Rules, and the

Hidden Costs of Credit, 3 Berkeley Bus. L.J. 265

Syren ek See ks ECE a eee 9

Alison M. Newman, Note: Doing the Public a

Disservice: Behavioral Economics and

Maintaining the Status Quo, 64 Duke L.J. 1173

SE ek aa wick Sia es eu Rash adoe ark oe te eal 4

1V

Robert C. Post, Viewpoint Discrimination And

Commercial Speech, 41 Loy. L.A. L. Rev. 169

EEE a Selatan te ate tee uhe a eel ate ea Sade ela we eee

Jonathan Slowik, Comment: Credit CARD Act II:

Expanding Credit Card Reform by Targeting

Behavioral Biases, 59 UCLA L. Rev. 1292 (2012)

ee, LS ee ee ee, ee ee ee i Es aa ee ee aa me a a ee ee. ee ee ane a ee

Rodney A. Smolla, Free Speech in an Open Society

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IDENTITY AND INTEREST OF AMICUS CURIAE'’

The Marion B. Brechner First Amendment

Project is a nonprofit, nonpartisan organization

located in the College of Journalism and

Communications at the University of Florida in

Gainesville. Directed by professor and attorney Clay

Calvert, the Project is dedicated to contemporary issues

of free expression, including current cases and

controversies affecting freedom of information and

access to information, freedom of speech, freedom of

press, freedom of petition, and freedom of thought.

This case presents issues affecting freedom of speech —

namely, both the First Amendment right of merchants

to speak and the First Amendment right of consumers

to receive speech.

The Project’s arguments thus may assist the Court

in deciding this matter. As an organization dedicated

to research into First Amendment rights, and advocacy

in support of such rights — though one with no direct

stake in the outcome of this case — the Project is well-

positioned to offer this Court information about issues

affecting the First Amendment speech rights of both

merchants and consumers.

' Pursuant to Rule of Court 37.6, amicus curiae states that no

counsel for a party authored this brief in whole or in part, and no

counsel or a party made a monetary contribution intended to fund

the preparation or submission of this brief. No person other than

amicus curiae or its counsel made a monetary contribution to its

preparation or submission. Counsel of record received timely

notice of the intent to file this brief under this Rule, and the

parties have provided written consent for the filing of this brief.

2

SUMMARY OF ARGUMENT

Retail transactions involve merchants § and

consumers. Conversations involve speakers and

listeners. This case melds both kinds of relationships,

involving merchants as otherwise willing speakers and

consumers as. otherwise willing listeners.

Unfortunately, here the merchants are not allowed to

speak as they wish and the consumers, in turn, are

prohibited from receiving important information from

merchants.

Amicus curiae argues that New York General

Business Law § 518 interferes with the First

Amendment speech nmghts of two groups of

stakeholders in the Empire State — merchants and

consumers — not merely one. Specifically, the statute

detrimentally affects not only the right of merchants to

freely communicate truthful pricing information

regarding surcharges to their consumers, but it also

hinders the reciprocal and derivative First Amendment

right of consumers to receive truthful information that

may directly influence their personal decision making

and spending choices regarding how to pay for products

and use finite fiscal resources.

There is a rich and lengthy tradition of protecting

the right to receive speech in First Amendment

jurisprudence, both at the level of this Court and that

of the federal appellate circuit from which this cases

arises. See Martin v. City of Struthers, 319 U.S. 141,

143 (1943) (observing that the First Amendment.

“necessarily protects the right to receive” literature);

Spargo v. New York State Comm’n on Judicial

Conduct, 351 F.3d 65, 83 (2d Cir. 2003) (“it is well-

established that the First Amendment protects not only

3

the right to engage in protected speech, but also the

right to receive such speech”). Indeed, “courts have

recognized in a variety of contexts that a right to free

speech is not held just by speakers. Listeners, too, have

a First Amendment right to receive speech.” Jennifer

A. Chandler, A Right to Reach an Audience: An

Approach to Intermediary Bias on the Internet, 35

Hofstra L. Rev. 1095, 1100 (2007).

Of particular importance for this case, one such

context where the First Amendment right to receive

speech is paramount is the realm of commercial speech.

As this Court wrote four decades ago, “lajs to the

particular consumer’s interest in the free flow of

commercial information, that interest may be as keen,

if not keener by far, than his interest in the day’s most

urgent political debate.” Va. State Bd. Pharmacy v. Va.

Citizens Consumer Council, Inc., 425 U.S. 748, 763

(1976).

Amicus thus concentrates on the First Amendment

right of consumers to receive speech in Expressions

Hair Design and, specifically, to hear a higher price

imposed for a credit-card purchase as involving a

surcharge. Amicus asserts that New York’s no-

surcharge law inhibits the free flow of accurate pricing

information to consumers and, in doing so, keeps them

ignorant about the reality of swipe fees and surcharges

and, ultimately, the actual cost of credit.

Such fiscal ignorance may be anything but bliss for

consumers when New York merchants choose to charge

two prices for the same product (a higher one for credit

card purchases and a lower one for cash purchases).

That’s because research indicates that, due to cognitive

perceptual biases, consumers respond quite differently

4

to the labels “surcharge” and “discount.” See Jonathan

Slowik, Comment: Credit CARD Act Il: Expanding

Credit Card Reform by Targeting Behavioral Biases, 59

UCLA L. Rev. 1292, 1328 (2012) (“consumers react

much less intensely to discounts than they do to

surcharges’). The way consumers respond to truthful

pricing information depends, in brief, on how it is

framed, including which price is framed as the baseline

or anchor point for the “regular” price and whether a

change or deviation from it is framed as an addition or

subtraction. See Alison M. Newman, Note: Doing the

Public a _ Disservice: Behavioral Economics and

Maintaining the Status Quo, 64 Duke L.J. 1173, 1190

(2015) (“A cash discount does not feel like a loss to

credit-card users; it is instead perceived as a forgone

gain. If, however, the payment were framed as a charge

for using a card, the consumer would view it as a loss

because he would be paying more than the baseline

cost paid by cash consumers”).

This raises the critical question of whether

consumers have a reciprocal First Amendment right to

receive truthful information as framed and intended by

merchant-speakers, without the government of New

York placing a thumb on the scale of free expression

that permits framing price information only in the

manner it paternalistically deems acceptable. Amicus

contends that consumers possess an unenumerated

First Amendment right to receive truthful speech from

those with whom they choose do business that

describes the cost of credit as a credit-card surcharge.

Amicus thus respectfully requests that this Court

grant the petition for writ of certiorari to decide

whether no-surcharge laws like that in New York, as

5

well as similar ones in other populous states, including

but not limited to California (Cal. Civ. Code

§ 1748.1(a)), Florida (Fla. Stat. § 501.0117 (2016)), and

Texas (Tex. Fin. Code § 339.001 (2016)), violate the

First Amendment right of consumers to receive

truthful information that affects their personal, fiscal

decision making.

ARGUMENT

I. The Right to Receive Speech is a Fundamental

Corollary of the Right to Speak

Professor Marc Blitz explains that a listener’s right

to receive information “is simply the mirror image of

the speaker’s right to express it. And the First

Amendment cannot protect one without meaningfully

protecting the other.” Marc J. Blitz, Constitutional

Safeguards for Silent Experiments in Living: Libraries,

the Right to Read, and a First Amendment Theory for

an Unaccompanied Right to Receive Information, 74

UMKC L. Rev. 799, 809 (2006). Indeed, without both a

listener and a speaker, the free speech guarantee is, in

the words of First Amendment scholar and current

Delaware Law School Dean Rodney Smolla, “as empty

as the sound of one hand clapping.” Rodney A. Smolla,

Free Speech in an Open Society, 198 (1992).

The First Amendment right to receive speech,

however, is not merely the conjecture of academics and

scholars. In fact, it is well established in this Court’s

jurisprudence.

More than fifty years ago, this Court wrote that

“It|}he right of freedom of speech and press includes not

only the right to utter or to print, but the right to

distribute, the mght to receive .. .” Griswold v.

6

Connecticut, 381 U.S. 479, 482 (1965). It struck down

the stavute in Griswold, which harmed the free flow of

“information, instruction, and medical advice to

married persons as to the means of preventing

conception.” Jbid. at 480.

Four years later, this Court concluded, in holding

unconstitutional a state statute that banned the

possession of obscenity, that “ijt is now well

established that the Constitution protects the right to

receive information and ideas.” Stanley v. Georgia, 394

U.S. 557, 564 (1969). It added then that “[t|his right to

receive information and ideas, regardless of their social

worth, see Winters v. New York, 333 U.S. 507, 510

(1948), is fundamental to our free society.” [bid.

In 1976, this Court reiterated the importance of the

right to receive speech, noting that when there is a

willing speaker, the First Amendment “protection

afforded is to the communication, to its source and to

its recipients both.” Va. State Bd. of Pharmacy v. Va.

Citizens Consumer Council, Inc., 425 U.S. 748, 756

(1976). Critically, the Virginia statute banned the

ability of licensed pharmacists to convey to consumers,

via direct or indirect advertising, truthful and factual!

price information about prescription drugs. Jbid. at

750, n.2. The law was challenged by “prescription drug

consumers.” /bid. at 753. They argued “that the First

Amendment entitles the user of prescription drugs to

receive information that pharmacists wish _ to

communicate to them through advertising and other

promotional means, concerning the prices of such

drugs.” Ibid. at 754.

The Court determined that, “[a]s to the particular

consumer's interest in the free flow of commercial

7

information, that interest may be as keen, if not keener

by far, than his interest in the day’s most urgent

political debate.” Jbid. at 763. The Court therefore

struck down the Virginia statute so that consumers

could make better informed choices when purchasing

drugs, remarking that “|slo long as we preserve a

predominantly free enterprise economy, the allocation

of our resources in large measure will be made through

numerous private economic decisions. It is a matter of

public interest that those decisions, in the aggregate,

be intelligent and well informed.” /bid. at 765.

The Virginia State Board of Pharmacy decision laid

the foundation for a commercial speech doctrine under

which, as current Yale Law School Dean Robert Post

describes it, “|clommercial speech is protected so that

citizens can receive information.” Robert C. Post,

Viewpoint Discrimination and Commercial Speech, 41

Loy. L.A. L. Rev. 169, 177 (2007). Indeed, the

consumer’s interest in the free flow of information has

been this Court’s “longstanding focus, in_ the

commercial speech area.” American Meat Inst. v. U.S.

Dep't Agriculture, 760 F.3d 18, 29 (D.C. Cir. 2014). As

the Supreme Judicial Court of Massachusetts recently

wrote, the “interests of consumers in receiving

commer .al information, and the interests of society in

the fre. flow of such information, have been the

foundation of commercial speech doctrine from its

inception.” Bulldog Investors Gen. P’ship v. Sec’y of

Commonwealth, 953 N.E.2d 691, 716 (Mass. 2011).

This Court has observed, in turn, that “[t]he First

Amendment directs us to be especially skeptical of

regulations that seek to keep people in the dark for

what the government perceives to be their own good.”

8

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 503

(1996).

Il. New York General Business Law § 518

Violates, in Paternalistic Fashion, the First

Amendment Right of Consumers to Receive

Truthful Information that Affects Their

Purchasing Decisions

Unfortunately, by permitting the framing of price

information in only the manner the government of New

York deems fit, consumers are kept in the dark about

the cost of credit. This is particularly troubling

because research suggests that when consumers are

made aware of surcharges imposed when paying with

credit cards, they tend to avoid paying with credit

cards. That is because a surcharge is perceived as a

loss of money.

One article, for example, points out that “when

considering the relative costs of two forms of payment,

consumers readily accept a ‘discount for cash’ but are

offended by a ‘surcharge for credit card use.’ The

critical difference is selecting either the higher or lower

price as the anchor for evaluation, particularly since

consumers value avoiding losses more than potential

gains. Thus, commercial entities can influence our

behavior as consumers by framing how we perceive

their actions.” Derek E. Bambauer, Shopping Badly:

Cognitive Biases, Communications, and the Fallacy of

the Marketplace of Ideas, 77 U. Colo. L. Rev. 649, 684

(2006). Another article asserts that credit card

companies prefer use of the term “discount” and would

rather bury the word “surcharge” because “consumers

perceive a discount as a gain, but a surcharge as a

penalty and will prefer to use another payment system

9

rather than be penalized for using credit.” Adam

Levitin, The Antitrust Super Bowl: America’s Payment

Systems, No-Surcharge Rules, and the Hidden Costs of

Credit, 3 Berkeley Bus. L.J. 265, 281 (2006).

In a nutshell, prohibiting the free flow of

information to consumers about surcharges imposed on

credit card purchases keeps consumers in the dark

about the hidden costs of credit. No-surcharge laws

thus manipulate consumers’ cognitive biases by

concealing information from them. The Second Circuit,

however, gave this short shrift, writing that “(t]he First

Amendment poses no obstacle” to a no-surcharge law

“spurring demand for credit-card use.” Expressions

Hair Design v. Schneiderman, 808 F.3d 118, 133 (2d

Cir. 2015).

The bottom line here is, indeed, the financial bottom

line: consumers have a First Amendment right to

receive truthful information as disclosed and framed in

a manner that merchants see fit — not only in the

manner the government deems acceptable — in order to

make better informed decisions about how they spend

their money. New York’s no-surcharge law

paternalistically keeps them in the dark to the benefit

of credit card companies. The First Amendment right

of consumers to receive truthful commercial speech

must not be lost or forgotten in Expressions Hair

Design. This case thus provides the Court with a prime

opportunity to return the commercial speech doctrine

to its original foundation: to facilitate “the free flow of

commercial information” among citizens, thereby

“enlighten[ing] public decisionmaking in a democracy.”

Va. State Bd. of Pharmacy v. Va. Citizens Consumer

Council, Inc., 425 U.S. 748, 764—65 (1976).

10

CONCLUSION

For the reasons set forth above, Amicus respectfully

requests that this Court grant Petitioners’ Petition for

a Writ of Certiorari and decide whether no-surcharge

laws like that in New York and similar ones in other

populous states, including but not limited to Florida,

California and Texas, not only violate the First

Amendment speech rights of merchants, but also

violate the First Amendment rights of consumers to

receive truthful information that affects their personal,

fiscal decision making.

Respectfully submitted,

Clay Calvert

Counsel of Record

Marion B. Brechner

First Amendment Project

2060 Weimer Hall

Gainesville, FL 32611

(352) 273-1096

ccalvert@jou.ufl.edu

Counsel for Amicus Curiae