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

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FILED

DEC 21 20%

No. 15-1391 |_OFFICE OF THE CLERK _|

IN THE

Supreme Court of the Anited States

E.XPRESSIONS HAIR DESIGN, ET AL.,

Petitioners,

Vv.

ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL OF THE

STATE OF NEW YORK, ET AL.,

FE pews Respondents.

On Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

Brief of Amici Curiae Public Citizen, Inc.,

Consumers Union, National Consumer Law Center,

and the Campaign for Tobacco-Free Kids

in Support of Respondents

GEORGE P. SLOVER Scott L. NELSON

CONSUMERS UNION Counsel of Record

1101 17th Street NW ALLISON M. ZIEVE

Suite 500 JULIE A. MURRAY

Washington, DC 20036 PUBLIC CITIZEN

(202) 462-6262 LITIGATION GROUP

1600 20th Street NW

ALAN B. MORRISON Washington, DC 20009

GEORGE WASHINGTON (202) 588-1000

UNIVERSITY LAW SCHOOL snelson@citizen.org

2000 H Street NW

Washington, DC 20052

(202) 994-7120

Attorneys for Amici Curiae

December 2016

ADDITIONAL COUNSEL LISTED ON INSIDE COVER

; ee

STUART T. ROSSMAN

NATIONAL CONSUMER

LAW CENTER

7 Winthrop Square

4th Floor

Boston, MA 02110

(617) 542-8010

MARK E. GREENWOLD

CAMPAIGN FOR TOBACCO-

FREE KIDS

1400 Eye Street NW

Suite 1200

Washington, DC 20005

(202) 296-5469

i

QUESTION PRESENTED

Does a New York statute prohibiting merchants

from imposing surcharges on customers who pay

with credit cards violate the First Amendment?

PB

TABLE OF CONTENTS

UT LAIN F MAMIE 6 BOP vescccssccsesecccacesncccosesesenseersses: i

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INTEREST OF AMICI CURIAE..................000.....-.... 1

INTRODUCTION AND SUMMARY OF

IEE ei iniad stanssceuiet ooist tukxsskbeenibhestsesens siaes ese 3

BE ecsicscipntisnniihonscodaicrps scccirkpianys Ubapanniommentincwrete 5

I. Prohibiting imposition of surcharges on

credit-card users regulates conduct, not

IE. vii; cccemagencgnsbbacdinasenmtaoppiendbdinbes tors tniviank das 5

A. Imposing higher prices on particular

purchasers is commercial conduct. .......... fddeumdaals 5

B. The New York statute addresses prices, not

RARER att Fae AR a hh Pa ee 8

C. The statute reflects economic regulatory

policies that, whether wise or misguided,

are subject to rational-basis review. ................ 10

II. Ifthe Court decides First Amendment

scrutiny is warranted in this case, the Court

should apply its precedents concerning

regulation of commercial speech. ...................... 15

A. To the extent the statute merely regulates

disclosure of differential cash and credit-

card pricing, it may be subject only to

Zauderer’s rational-basis standard. ................. 17

B. If deemed a commercial-speech prohibition,

the no-surcharge statute would be subject

to intermediate scrutiny. .................00ec0ecereeeeeeee 2O

lll

1. This Court has long applied intermediate

scrutiny to content-based commercial-

SPGREE TOMTIMGIBOG, 2cccccoscccscocscnescoscssccccossecesescs 20

2. Sorrell and Reed do not alter the

intermediate scrutiny standard for

restrictions on commercial speech................. 23

3. Applying strict scrutiny to content-based

commercial-speech regulations is neither

MACOSGRTH BOE WOGIGSL,. 0. .cccessccccocevscescovscccsocccscss 26

a. Applying strict scrutiny to commercial

speech would threaten a broad range of

commonsense regulations. ................ce0eceeee 27

b. Applying strict scrutiny to commercial

speech would harm protection of pure

speech and is unnecessary to protect

I CII oo oc sinciesscessecncoscdds donssevsccsss 29

I hsdidiactnbbinnuonivectiteissgensssiessicivmtmsdeentin 30

lv

TABLE OF AUTHORITIES

Cases Page(s)

44 Liquormart, Inc. v. Rhode Island,

IIE vcvricincncnettusticinnocdeintenabetin 6, 15, 19

Bd. of Trustees of State Univ. and N.Y. v. Fox,

492 U.S. 469 (1989) .. Phra MENA Te OOS RE ROOD

Bolger v. Youngs Drug Prods. Cone.

SG IE ee ee 21, 22

Cent. Hudson Gas & Elec. Corp. v. Pub. Serv.

Comm'n, 447 U.S. 557 (1980)..............cceeceeee passim

City of New Orleans v. Dukes,

ig 8 |. a ee eeeeD 13, 14

Clark v. Jeter,

ee a ssaandapeminnedapedeenii 24

CTIA—-The Wireless Ass'n v. City of Berkeley,

139 F. Supp. 3d 1048 (N.D. Cal. 2015), app.

filed, No. 16-15141 (9th Cir. Feb. 1, 2016) ......... 26

Dandridge v. Williams,

I I oa sl a ssnngvaensovnnhewdile 13

Edenfield v. Fane,

4 i i 6 dll a

FCC v. Beach Comme’ns, Inc.,

ey Rt, SE IIE... ss ccscecsnnndaneceninceausecens 13, 14

Ferguson v. Skrupa,

8 a ee

Fla. Bar v. Went For It, Inc.,

fe S| a:

Greater New Orleans Broad. Ass'n, Inc. v.

United States, 527 U.S. 173 (1999)............... 21, 22

Lochner v. New York,

a eo cats necchecien 12

Lorillard Tobacco Co. v. Reilly,

533 U.S. 525 (2001) ....20.. 2.2 .cceee cence ne ceeeeeeeeeeneeee neces 1

Milavetz, Gallop & Milavetz, P.A. v. United

States, 559 U.S. 229 (2010) ..........-...-ccececeeerreneeees 19

Minnesota v. Clover Leaf Creamery Co.,

a ase Si asichentletn 13

Munn v. Illinois,

94 U.S. 113 (18786) ............ LE EOS MO ae One ee 6

Nat'l Ass’n of Tobacco Outlets, Inc. v. City of

Providence, 731 F.3d 71 (1st Cir. 2013)................ 6

Nixon v. Shrink Mo. Gov’t PAC,

528 U.S. 377 (ZOOO) .............cccceeeeeeeeeeceeeetereeeeee sens 24

Ohralik v. Ohio State Bar Ass'n,

496 U.S. 447 C1GTE) acccosccccccsccscosscesssnceseonseceees 21, 29

POM Wonderful, LLC v. FTC,

777 F.3d 478 (D.C. Cir. 2015) ........------------eeeeeeeees l

R.A.V. v. City of St. Paul,

506 U.S. 377 (192) .....ccccccccscoeceseerereerserescercesesenes 29

Reed v. Town of Gilbert,

135 8. Ct. 2218 (20156) ............c0000 23, 24, 25, 26, 28

In re R.M.d.,

IE DO II co isiceenorent nonsinsanesnsnsasncnseis 22

Rubin v. Coors Brewing Co.,

th EO i csningnsasanesdevareresooneny 22

Rumsfeld v. Forum for Acad. & Inst. Rights,

Bnd, GET UG. ST DOW aan caneccncsnsncenconcvniscsennconn 14

v1

Sorrell v. IMS Health Inc.,

564 U.S. 552 (2011)........................ 6, 23, 24, 25, 26

United States v. Carolene Prods. Co.,

4 ES ee <1

United States v. Virginia,

BPO Py ON I ci cicnna ass sco dincduveseserss on 24

U.S. RR. Retirement Bd. v. Fritz,

re I i . 13

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

Council, Inc., 425 U.S. 748 SII isctcmictesoeert aces 1,15

W. Coast Hotel Corp. v. Parrish,

| __. AN e 12

W. Va. State Bd. of Educ. v. Barnette,

SID WB. GEG CIDER) ons cncccesccneeeccee....... 18

Williams- Yulee v. Fla. Bar,

135 S. Ct. 1656 (2015)... LAD 29

Williamson v. Lee Optical of Okla., Inc.,

348 U.S. 483 (1955)... 13

Zauderer v. Office of Disciplinary Counsel,

Cre We ee passim

Statutes and Rules

15 U.S.C. § 1692d(3)-(4) ooo coooceeeeeeece ee. 28

49 U.S.C. § 32908(D) o.oo. eececcccccocecececeeeeeee ec. 28

21 C.F.R. § 101.9............ 28

ae i iiincin cece ste cen, 28

BE Th © BU II ao oscscenceccseveeonceserecscseeeessnc.2.. 28

celal ci tL... , eae ee ea 28

vu

N.Y. Gen. Bus. L. § 518 .......... oo 5, 8,9

Other

Fumiko Hayashi, Discounts and Surcharges:

Implications for Consumer Payment Choice,

Fed. Reserve Bank of Kan. City (June 2012),

https://www.kansascityfed.org/publicat/psr/

briefings/psr-briefingjune2012.pdf ..................... 11

Tamara Piety, The First Amendment and the

Corporate Civil Rights Movement,

11 J. Bus. & Tech. L. 1, 20 (2016) ........0000000000..... 27

Allen Rosenfield, Point-of-Purchase Bank Card

Surcharges: The Economic Impact on

Consumers, New America Found. (May 2010),

https://na-production.s3.amazonaws.com/

eal eas ee

DO ee ee eer ae

Scott Schuh, Oz Shy & Joanna Stavins, Who

Gains and Who Loses from Credit Card

Payments? Theory and Calibrations,

Fed. Reserve Bank of Boston (Aug. 2010),

https://www.bostonfed.org/-/media/

Documents/Workingpapers/PDF/

RUS Pena eset ig

INTEREST OF AMICI CURIAE!

Founded in 1971, amicus curiae Public Citizen,

Inc., is a nonprofit consumer advocacy organization

that appears on behalf of its nationwide members

and supporters before Congress, administrative

agencies, and courts on a wide range of issues. Public

Citizen has long played a role in the development of

commercial-speech doctrine. Public Citizen has de-

fended commercial-speech regulations in cases where

those regulations were important to protecting public

health or served other important public interests,

such as in Lorillard Tobacco Co. v. Reilly, 533 U.S.

525 (2001), and POM Wonderful, LLC v. FTC, 777

F.3d 478 (D.C. Cir. 2015). Its attorneys have also

represented parties seeking to invalidate overbroad

commercial-speech restraints that harmed competi-

tion and injured consumers, including in Virginia

State Board of Pharmacy v. Virginia Citizens Con-

sumer Council, Inc., 425 U.S. 748 (1976).

Consumers Union is the policy and mobilization

arm of Consumer Reports, an independent, nonprofit

organization that works side by side with consumers

to create a fairer, safer, and healthier world. As the

world’s largest independent product-testing organi-

zation, Consumer Reports uses its more than 50 labs,

auto test center, and survey research center to rate

thousands of products and services annually. Found-

ed in 1936, Consumer Reports has over 7 million

1 This brief was not authored in whole or part by counsel for

a party. No one other than amici curiae or their counsel made a

monetary contribution to preparation or submission of this

brief. Letters of consent to filing from counsel for all parties are

on file with the Clerk.

2

subscribers to its magazine, website, and other pub-

lications. Consumers Union has been active over the

years in numerous policy issues affecting consumer

rights in the marketplace, including credit card fees

and credit card surcharge bans.

National Consumer Law Center (NCLC) is a na-

tional research and advocacy organization focusing

on justice in consumer financial transactions, espe-

cially for low income and elderly consumers. Since its

founding as a nonprofit corporation in 1969 at Bos-

ton College School of Law, NCLC has been a resource

center addressing issues such :: ‘llicit contract terms

and charges, home improvement frauds, debt collec-

tion abuses, and fuel assistance benefit programs.

NCLC publishes a 20-volume Consumer Credit and

Sales Legal Practice Series, and members of its staff

have served on the Federal Reserve System Consum-

er-Industry Advisory Committee and committees of

the National Conference of Commissioners on Uni-

form State Laws, and acted as the Federal Trade

Commission’s designated consumer representative in

promulgating important consumer-protection regula-

tions.

The Campaign for Tobacco-Free Kids (CTFK) is a

tax-exempt nonprofit corporation under section

501(c)(3) of the Internal Revenue Code, organized

under the laws of the District of Columbia. CTFK

works to reduce tobacco use and its deadly toll in the

United States and around the world. CTFK engages

in public education about the dangers of cigarettes,

as well as advocating public policies and sponsoring

activities to prevent kids from smoking, help smok-

ers quit and protect everyone from secondhand

smoke. CTFK has frequently participated as an ami-

cus curiae in defense of the validity of state, local,

3

and federal regulations against attacks based on al-

legations that such regulations unconstitutionally

infringe commercial speech, and 1m has a strong in-

terest in ensuring that the ability of state, local and

federal governmental agencies to protect the public

health by appropriate regulation of the tobacco in-

dustry is not weakened.

INTRODUCTION AND

SUMMARY OF ARGUMENT

Amici submit this brief because petitioners’ ar-

g.iuments that New York’s ban on the imposition of

credit card surcharges is a restriction on commercial

specch that violates the First Amendment, if accept-

ed, would create new and serious barriers to regula-

tion in the interest of consumers. Petitioners’ argu-

ment is but one example of the increasing use of

First Amendment arguments as tools to challenge

economic and regulatory policies that pose no real

burden on expressive interests and that, to the ex-

tent they implicate speech at all, involve only com-

mercial speech. The misuse of the First Amendment

to undermine types of government activity that,

since the Lochner era, have appropriately been sub-

ject to very limited scrutiny has two argumentative

strands: first, the characterization of a regulation of

commercial conduct as a restriction on speech; and

second, the attempt to subject regulation of commer-

cial speech to the strict scrutiny that has until now

heen reserved for laws affecting fully protected, non-

commercial speech.

This case implicates both concerns. First. peti-

tioners’ argument that New York’s surcharge prohi-

bition is a speech regulation erases the line between

protected speech and commercial conduct, and would

4

advance the creep of First Amendment analysis into

the sphere of economic regulatory activity that is

properly subject to only the most deferentia! judicial

review. Second, petitioners’ request that the Court

treat the statute as a “content-based” speech re-

striction, together with the explicit argument of some

of their amici that all such restrictions should be

subject to strict scrutiny, threatens decades of this

Court’s precedents giving only limited protection to

commercial speech against government regulation in

the public interest. We therefore submit this brief to

explain that the statute is not a speech restriction

subject to First Amendment scrutiny, and to urge the

Court to reject application of strict scrutiny to the

statute even should the Court conclude that it does

restrict speech.

Our arguments are not based on our views re-

garding the policies underlying New York’s no-

surcharge statute. This brief takes no position on

whether the statute reflects sound policy. One of the

opposed such a ban when it was proposed in Califor-

nia, and might very well oppose such a ban again, on

policy grounds, if the opportunity should arise as a

result of a new proposal to enact or repeal a sur-

charge ban. Amici Public Citizen, NCLC, and CTFK

have not taken formal positions on such statutes. All

the organizations, however, are sensitive to concerns

that bans on surcharges may perpetuate subsidiza-

tion of credit-card users by cash purchasers and re-

duce economic incentives for card issuers and net-

works to reduce swipe fees. These policy concerns

about New York’s law are cogently expressed by a

5

number of petitioners’ amici.2 Such policy concerns,

however, are properly matters for legislative judg-

ment, not constitutional adjudication.

ARGUMENT

|. Prohibiting imposition of surcharges on

credit-card users regulates conduct, not

speech.

A. Imposing higher prices on particular

purchasers is commercial conduct.

The statute challenged in this case provides suc-

cinctly that “[n]o 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 simi-

lar means.” N.Y. Gen. Bus. L. § 518. On its face, the

provision is not, as petitioners characterize it, a

“speech code.” Pet. Br. 5. Nor is it, as one of petition-

ers amici characterizes it, a speech restriction “dis-

guised as a mere business regulation.”? Rather, the

statute is what it appears to be: a prohibition on im-

posing an additional charge on cardholders at the

register when a seller has stated a standard price for

an item.

As the Second Circuit explained, insofar as the

statute might be applied to the conduct of petition-

ers, it provides that if a seller identifies only a single

price for a product (what the court referred to as a

-_

2 See. v.c., Br. for Consumer Action & Nat'l Ass'n of Con-

sumer Advocates as Amici Cumse in Support of Pet’rs; Br. of

Amicus Curiae U.S. Pub. Interest Research Group Educ. Fund,

Inc. in Support of Pet’rs (U.S. PIRG Br.).

’ Br. of Amici Curiae First Amdmt. Scholars & First

Amdmt. Lawyers Ass’n in Support of Pet’rs 4.

6

“single-sticker price”), the seller may not “chargje]

credit-card customers an additional amount above its

sticker price that it is not charging to cash custom-

ers.” Pet. App. 21a. Thus, the statute functions as a

regulation of the pricing of goods and services, not as

a regulation cf speech.

Petitioners and their supporting amici do not ap-

pear to dispute the precedents holding that charging

a price to a customer is commercial conduct, and that

regulation of such conduct is subject only to the ex-

tremely limited judicial review generally applicable

to economic regulation. See, e.g., 44 Liquormart, Inc.

uv. Rhode Island, 517 U.S. 484, 504-08 (1996) (plural-

ity opinion); Munn uv. Illinois, 94 U.S. 113, 125

(1876). As the First Circuit has put it, “price regula-

tions and other forms of direct economic regulation

do not implicate First Amendment concerns.” Nat7

Ass'n of Tobacco Outlets, Inc. v. City of Providence,

731 F.3d 71, 77 (1st Cir. 2013).

Regulation of prices does not implicate the First

Amendment even though charging a price typically

involves a communication to the buyer of the price

being charged. As this Court has explained, “re-

strictions on protected expression are distinct from

restrictions on economic activity or, more generally,

on nonexpressive conduct,” and the “First Amend-

ment does not prevent restrictions directed at com-

merce or conduct from imposing incidental burdens

on speech.” Sorrell v. IMS Health Inc., 564 U.S. 552,

567 (2011). Thus, preventing a merchant from charg-

ing a credit-card holder $103 for an item marked

$100 does not itself have any cognizable First

Amendment impact, notwithstanding that it might

also, incidentally, prevent the merchant from telling

the consumer that she will be charged $103. In the

7

Second Circuit’s words, “prices, although necessarily

communicated through language, do not rank as

‘speech’ within the meaning of the First Amend-

ment.” Pet. App. 19a.

The United States argues that a law requiring

merchants who post a single price to charge credit-

card purchasers no more than that price should be

treated as a regulation of speech because the re-

quirement “addresses the communication of an oth-

erwise-permissible pricing scheme rather than the

pricing scheme itself.” U.S. Br. 19. But the New York

statute does not address communication any more

than any price regulation inherently affects the

communication of the price being charged. The Unit-

ed States’ argument implies, for example, that a law

prohibiting merchants from charging any purchaser

more than a product’s posted price would be a speech

regulation on the theory that, had the merchant

communicated a different price, it could lawfully

have charged it. If accepted, the argument could even

suggest that prohibitions on price-fixing are speech

regulations because they address communications

that affected the prices charged.

The consequences of the United States’ position

thus contradict the United States’ proper recognition

that “the government may attach legal consequences

to speech without triggering First Amendment con-

cerns.” U.S. Br. 18. As the government acknowledg-

es, contract law principles that prevent a person

from charging more than the price stated in a con-

tract are enforceable, although the higher price

would have been lawful if it had been communicated

in the contract. U.S. Br. 18. Just as “[a] law that

simply requires a merchant to honor particular rep-

resentations if he chooses to make them is properly

8

viewed as regulating economic conduct rather than

speech,” id., a law that requires a merchant to honor

standard posted prices if he chooses to post them reg-

ulates economic conduct, not speech.

B. The New York statute addresses prices,

not semantics.

Offering a different argument from that of the

United States, petitioners assert that because the

New York law does not prohibit merchants from of-

fering discounts from standard prices to those who

use forms of payment other than credit cards, the

distinction it draws between what is lawful and what

is unlawful is purely semantic. In other words, peti-

tioners contend that, because the price consequence

of a 3 percent credit card surcharge on a product

priced at $100 is the same as that of a 2.9 percent

cash discount on a product priced at $103—either

way, a cash purchaser gets the product for $100 and

a credit-card customer pays $103—the law is really

regulating the way merchants describe their pricing,

not regulating their conduct.

As the Second Circuit pointed out, however, the

law does not turn on how merchants characterize

their charges, but on whether they charge credit-card

customers a higher price than a posted standard

price:

What Section 518 regulates—all that it regu-

lates—is the difference between a seller’s sticker

price and the ultimate price that it charges to

credit-card customers. A seller imposing a sur-

charge (an additional amount above its sticker

price) on credit-card customers could choose to

“characterize” that additional charge as whatev-

er it wants, but that would not change the fact

9

that it would be violating Section 518. Converse-

ly, a seller offering a discount (a reduction from

its sticker price) to cash customers could choose

to “characterize” that reduction as whatever it

wants (including as a “credit-card surcharge”),

but that would not change the fact that the sell-

er would not be violating Section 518.

Pet. App. 21a—-22a.

in short, charging a customer more than a posted

price is different conduct from charging her less than

that price. Although the distinction between saying

“1 am charging you more than I am charging him”

and saying “I am charging him less than I am charg-

ing you” may be semantic, the difference between

charging someone a higher price than the one posted

and charging someone a lower price than the one

posted is not. Those two distinct forms of conduct al-

so have different names—surcharges and dis-

counts—but, as the Second Circuit noted, “the fact

that these pricing schemes have different labels (and

thus that sellers are likely to refer to them using dif-

ferent words) obviously does not mean that all they

are is labels.” Pet. App. 22a. The statute’s application

depends on a merchant’s pricing conduct, not on how

the merchant labels, characterizes, or explains it.

Accordingly, the statute is not like the commer-

cial-speech restrictions that this Court has found to

violate the First Amendment. It does not function by

depriving customers of information. It does not pre-

vent merchants from telling customers that their

posted prices build in the costs of credit card usage or

that customers are “already effectively paying sur-

10

charges in the form of higher base prices.”* Nor does

the statute prohibit merchants who discount their

standard prices for non-credit purchasers (or employ

“dual-pricing” systems involving separately marked

cash and credit prices) from stating factually that

credit-card users will pay more than cash purchas-

ers, or from explaining the reasons for the differen-

tials. A statute that prohibited such speech would

properly be subject to review as a restriction on

commercial speech. The New York statute, however,

cnly prohibits merchants from charging credit-card

purchasers prices that exceed stated standard prices.

That prohibition does not implicate First Amend-

ment concerns.

C. The statute reflects economic regulatory

policies that, whether wise or misguided,

are subject to rational-basis review.

1. Many of the arguments against surcharge

prohibitions rest on theories that, because of con-

sumers’ cognitive biases, surcharges may have more

impact than discounts on consumer choices—and

therefore on the incentives of merchants to offer dif-

ferent cash and credit prices, and ultimately on in-

centives for card issuers to cut swipe fees. That the

impact of pricing behavior is mediated through con-

sumers cognitive biases, however, does not trans-

form regulation of merchants’ pricing conduct into

regulation of speech. The different effects that peti-

tioners and their amici ascribe to discounts and sur-

charges are not the result of limitations on what

merchants may tell consumers about the conse-

quences of credit-card fees; rather, those effects ap-

*U.S. PIRG Br. 8.

11

pear to be attributable to consumers valuing dis-

counts less than they resent paying surcharges.®

That phenomenon is one of many that policymak-

ers are entitled to consider in regulating commercial

practices respecting credit card fees. Whether ban-

ning surcharges is good or bad public policy depends

on judgments both about policy goals and about the

likely effects of various policy options on consumer

choices and merchant incentives. Legislators might

choose, for example, to seek to reduce subsidization

of credit-card users by cash purchasers; to deter (or

encourage) credit-card use; to provide customers with

motivation to push back against high swipe fees

charged by card issuers and networks; and/or to ena-

ble consumers to engage in comparison shopping

among cards with different swipe fees. Whether and

to what extent particular policies, such as permitting

surcharges, would achieve those goals might depend

on how likely it was that merchants would risk the

displeasure of card-using customers by instituting

surcharges, whether surcharges would actually re-

duce prices paid by cash purchasers, and whether

further regulation might be required to prevent ex-

cessive surcharges.®

5 See, e.g., Br. of Amicus Curiae Prof. Adam J. Levitin in

Support of Pet’rs; Br. of Scholars of Behavioral Econ. as Amici

Curiae in Support of Pet’rs.

6 Some of the competing considerations are discussed in

Fumiko Hayashi, Discounts and Surcharges: Implications for

Consumer Payment Choice, Fed. Reserve Bank of Kan. City

(June 2012), https://www.kansascityfed.org/publicat/psr/brief

ings/psr-briefingjune2012.pdf; Scott Schuh, Oz Shy & Joanna

Stavins, Who Gains and Who Loses from Credit Card Pay-

ments? Theory and Calibrations, Fed. Reserve Bank of Boston

(Footnote continued)

12

Such judgments about ends and means are ap-

propriately within the province of legislatures, not

courts. Choices of this nature, concerning the im-

pacts of regulations of pricing and other commercial

practices, are quintessentially matters of economic

policy, having nothing to do with regulating speech.

One need not endorse the choice New York has made

to recognize that such choices should not be made by

courts as an imperative of constitutional adjudica-

tion.

2. In the Lochner era, this Court struck down a

number of economic regulatory measures as violative

of broad notions of economic liberty. See Lochner v.

New York, 198 U.S. 45 (1905). But in the modern era,

in the 80 years since Lochner’s demise, this Court

has strongly adhered to the principle that where

regulations of economic activity are concerned, courts

are “both incompetent and unauthorized” to second-

guess “the wisdom of the policy adopted, [and] the

adequacy or practicability of the law enacted to for-

ward it.” W. Coast Hotel Corp. v. Parrish, 300 U.S.

379, 398 (1937) (citation omitted).

This principle of judicial restraint quickly found

expression in an appropriately deferential standard

for evaluating the constitutionality of economic regu-

latory laws: “[Rjegulatory legislation affecting ordi-

nary commercial transactions is not to be pro-

———_

(Aug. 2010), https://www.bostonfed.org/-/media/Documents/Wor

kingpapers/PDF/ppdp1003.pdf; Allen Rosenfield, Point-of-Pur-

chase Bank Card Surcharges: The Economic Impact on Con-

sumers, New America Found. (May 2010), https://na-produc

tion.s3.amazonaws.com/documents/point-of-purchase-bank-card

-surcharges.

13

nounced unconstitutional unless ... it is of such a

character as to preclude the assumption that it rests

upon some rational basis within the knowledge and

experience of the legislators.” United States v. Caro-

lene Prods. Co., 304 U.S. 144, 152 (1938). Under the

rational-basis standard, courts may not “strike down

state laws, regulatory of business and industrial

conditions, because they may be unwise, improvi-

dent, or out of harmony with a particular school of

thought.” Williamson v. Lee Optical of Ohkla., Inc.,

348 U.S. 483, 488 (1955). Even a statute that a court

may view as “needless” and “wasteful” must be up-

held if a legislature “might [have] thought” that it

was “a rational way” to pursue some legitimate goal.

Id. at 487-88.

The Court has repeatedly adhered to the view

that review of economic regulatory measures under

the rational-basis test “is true to the principle that

the Fourteenth Amendment gives the federal courts

no power to impose upon the States their views of

what constitutes wise economic or social policy.”

Dandridge v. Williams, 397 U.S. 471, 486 (1970).

Moreover, “States are not required to convince the

courts of the correctness of their legislative judg-

ments.” Minnesota v. Clover Leaf Creamery Co., 449

U.S. 456, 464 (1981). Rather, “this Court consistently

defers to legislative determinations as to the desira-

bility of particular statutory discriminations,” and

accords States “wide latitude in the regulation of

their local economies.” City of New Orleans v. Dukes,

427 U.S. 297, 303 (1976); accord, e.g., FCC v. Beach

Comme'ns, Inc., 508 U.S. 307, 314-15 (1993); U.S.

R.R. Retirement Bd. v. Fritz, 449 U.S. 166, 174-79

(1980).

14

These limits on judicial review of economic regu-

lation reflect recognition that the Constitution gen-

erally does not address matters of substantive eco-

nomic policy, see Ferguson v. Skrupa, 372 U.S. 726,

731—32 (1963), as well as adherence to the bounda-

ries between the institutional competencies of courts

and legislatures. The deferential review of economic

regulatory laws both preserves legislatures’ “rightful

independence” and “ability to function,” Beach

Comme’ns, 508 U.S. at 315 (citation omitted), and

denies to the courts the unchecked authority of a

“superlegislature.” Dukes, 427 U.S. at 303. Adher-

ence to those boundaries is an essential hallmark of

the important but not unlimited role of courts in our

democratic system.

Of course, when laws regulating economic activi-

ties employ suspect classifications or impinge on

fundamental rights, rational-basis review gives way.

See Carolene Prods., 304 U.S. at 152 n.4. But calling

a regulation of commerce a speech regulation does

not make the “speech” label valid. As discussed

above, the law at issue here regulates what mer-

chants “must do ..., not what they may or may not

say.” Rumsfeld v. Forum for Acad. & Inst. Rights,

Inc., 547 U.S. 47, 60 (2006). The Court should not

lightly treat regulations of commercial conduct as

regulations of commercial speech. Doing so threatens

to erode the integrity of legislative authority and to

entangle the courts in judgments about economic pol-

icy that they are ill-equipped to form and lack legit-

imate authority to make.

Petitioners assert that “[t]his case in no way

threatens the bedrock proposition that states have

broad authority to regulate economic conduct, unen-

cumbered by the First Amendment,” Pet. Br. 35, be-

15

cause the Court’s decision will, they say, directly af-

fect only a handful of credit-card surcharge laws. But

the precedential impact of treating this regulation of

commercial conduct—-the imposition of a charge—as

a regulation of speech would have far-reaching and

potentially destabilizing effects on our democratic

system, well beyond the particular facts of this case.

Il. If the Court decides First Amendment

scrutiny is warranted in this case, the

Court should apply its precedents con-

cerning regulation of commercial speech.

As explained above, the New York statute does

not regulate speech in any respect that implicates

the First Amendment. But no party disputes that, to

whatever extent the New York law might be deemed

to implicate speech, the speech is nothing more than

what this Court has described as “commercial

speech” in a line of cases now dating back 40 years.

The only “speech” that petitioners claim has been

“regulated” here is speech stating the prices at which

their goods and services are offered for sale to the

public. Such speech falls squarely within the defini-

tion of commercial speech. See 44 Liquormart, 517

U.S. 484.

This Court first extended First Amendment pro-

tection to commercial speech in Virginia State Board

of Pharmacy v. Virginia Citizens Consumer Council,

Inc., 425 U.S. at 762. Since then, the Court has re-

peatedly held that commercial speech receives less

protection against regulation than noncommercial

speech. Restrictions of commercial speech, even if

content-based, are subject not to the strict scrutiny

ordinarily applied to content-based restrictions on

fully protected speech, but to a lesser, intermediate

16

scrutiny. See Cent. Hudson Gas & Elec. Corp. v. Pub.

Serv. Comm’n, 447 U.S. 557, 564 (1980). Moreover,

disclosure requirements applicable to commercial

messages are subject to an even more lenient stand-

ard of review, akin to the rational-basis test applica-

ble to commercial regulation generally. See Zauderer

v. Office of Disciplinary Counsel, 471 U.S. 626, 651

(1985).

Here, petitioners not only argue that New York’s

statute regulates speech and not conduct, but also

hint that because it is in their view a content- and

viewpoint-based regulation, Pet. Br. 33, it might be

subject to strict scrutiny. see Pet. Br. 36. They argue,

however, that the Court can strike down the law

without applying such scrutiny because the law can-

not survive “even” the intermediate scrutiny the

Yourt has long used to evaluate restrictions on com-

mercial speech under Central Hudson. Id.

Some of petitioners’ amici do not pull their

punches: They expressly call on the Court to use this

case to dispense with Central Hudson's intermediate

scrutiny and impose strict scrutiny on all “content-

based” commercial-speech regulations—that is, all

commercial-speech regulations.’ Should this Court

determine that the statute is subject to any form of

First Amendment analysis, it should reject the sug-

gestion that strict scrutiny should apply and review

the statute under the firmly grounded principles it

has previously applied to commercial speech regula-

tions in such cases as Central Hudson and Zauderer.

7 See, e.g., Br. for Amici Curiae Ahold U.S.A., Inc., et al., in

Support of Pet’rs; Br. of Amici Curiae Cato Inst. & Pac. Legal

Found. in Support of Pet’rs.

17

A. To the extent the statute merely regu-

lates disclosure of differential cash and

credit-card pricing, it may be subject on-

ly to Zauderer’s rational-basis standard.

Having concluded that the New York law regu-

lates speech, petitioners and their supporting amici

jump directly to assessing it under standards of re-

view applicable to prohibitions on speech. As the

United States points out, however, U.S. Br. 14, 21—

23, commercial-speech regulations that impose only

disclosure requirements rather than prohibitions on

speech are subject to a form of review considerably

more deferential even than Central Hudson’s inter-

mediate scrutiny: Zauderer’s rational-relationship

standard. See 471 U.S. at 651.

Thus, before addressing whether some height-

ened form of scrutiny applies, this Court—if it were

to accept the assertion that the statute regulates

speech at all—should first consider the nature of the

regulation involved here. The Second Circuit did not

delve into that question, because it determined that

the statute regulates conduct and not speech, and

that issues about the statute’s possible application to

dual-pricing structures were not properly before the

court. If this Court accepts the contention that the

statute implicates the First Amendment, however, it

cannot avoid addressing the nature of any regulation

of speech that the statute imposes. As the United

States points out, if the statute does regulate speech,

the proper First Amendment analysis hinges on

whether it merely requires that price differentials for

cash and credit transactions be disclosed in particu-

lar ways (as the United States says was the case

with the former federal statutory prohibition on sur-

charges, which the United States argues was con-

18

sistent with the First Amendment), or whether it ac-

tually imposes prohibitions on the way merchants

may characterize their prices. U.S. Br 14-15, 23-35.

If the statute merely regulates disclosure of price dif-

ferentials, the proper First Amendment analysis

would be the Zauderer standard.

Zauderer rests on a fundamental principle gov-

erning First Amendment review of commercial-

speech regulations: The constitutionally protected

interests implicated by commercial-speech regula-

tions that involve disclosure are much less substan-

tial than those implicated by prohibitions on com-

mercial speech. Thus, while prohibitions on commer-

cial speech are subject to a form of “heightened scru-

tiny’—under the intermediate scrutiny framework

articulated in Central Hudson—commercial disclo-

sure requirements are subject to rational-basis re-

view, under which they are sustained if they are

“reasonably related” to a legitimate government in-

terest. Zauderer, 471 U.S. at 651.

This Court explained in Zauderer that this differ-

ence in standards of review rests on “material differ-

ences between disclosure requirements and outright

prohibitions on speech.” /d. at 650. Zauderer recog-

nized that, outside the realm of commercial speech,

laws compelling individuals to profess views on “pol-

itics, nationalism, religion, or other matters of opin-

ion” raise the most fundamental First Amendment

concerns. Jd. at 651 (quoting W. Va. State Bd. of

Educ. v. Barnette, 319 U.S. 624, 642 (1943)). But

when commercial speakers are required to disclose

information about their products or businesses, “the

interests at stake ... are not of the same order.” Jd.

“Because the extension of First Amendment protec-

tion to commercial speech is justified principally by

19

the value to consumers of the information such

speech provides, [a commercial speaker's] constitu-

tionally protected interest in not providing any par-

ticular factual information in his advertising is min-

imal.” Jd.

Disclosure requirements are a preferred form of

regulating commercial speech precisely because they

“trench much more narrowly on an advertiser’s in-

terests than do flat prohibitions on speech.” Jd. These

considerations led the Court in Zauderer to hold

heightened scrutiny in any form inapplicable to re-

quirements of factual disclosures in advertising, and

to limit its review to the most deferential level of

constitutional scrutiny. /d.

In Zauderer, and in the Court’s later decision in

Milavetz, Gallop & Milavetz, P.A. v. United States,

559 U.S. 229 (2010), the legitimate interest that suf-

ficed to justify regulating disclosure was the “interest

in preventing deception of consumers.” Jd. at 253;

Zauderer, 471 U.S. at 651. But Zauderer did not lim-

it its holding to cases where the government interest

is related to protecting consumers against deception.

The Court determined rational! basis to be the appro-

priate level of review because commercial speakers

have only a very minimal constitutionally protected

interest in not disclosing factual information about

their products, services or businesses. Zauderer’s

reasoning thus suggests that it applies more broadly,

and that whenever a law “requires the disclosure of

beneficial consumer information, the purpose of its

regulation is consistent with the reasons for accord-

ing constitutional protection to commercial speech[.]”

44 Liquormart, 517 U.S. at 501 (plurality).

20

Application of Zauderer necessitates analysis of

what form of disclosure the statute requires and

whether that disclosure could be viewed as rationally

related to some government interest in protecting

consumers. Because the Second Circuit did not per-

form such an analysis, and additional evidence may

be required to make the proper determination, a re-

mand is appropriate, as the United States recom-

mends, if the potential problem with the statute re-

lates to disclosure requirements.

B. If deemed a commercial-speech prohibi-

tion, the no-surcharge statute would be

subject to intermediate scrutiny.

Whether analyzed as a regulation of commercial

conduct or as a regulation of the manner in which

prices are disclosed, New York’s surcharge prohibi-

tion is subject only to minimal, rational-basis judicial

scrutiny. But even if the Court were to accept peti-

tioners’ assertion that prohibiting surcharges is

properly viewed as prohibiting commercial speech

about price differentials, the New York law would be

subject only to intermediate scrutiny.

1. This Court has long applied intermedi-

ate scrutiny to content-based commer-

cial-speech regulations.

The First Amendment standard that applies to

restrictions on commercial speech is firmly estab-

lished: The government may restrict such speech

where it has “substantial” interests in the regulation,

the regulation “advances these interests in a direct

and material way,” and “the extent of the restriction

on protected speech is in reasonable proportion to the

interests served.” Edenfield v. Fane, 507 U.S. 761,

767 (1993) (citing Cent. Hudson, 447 U.S. at 564).

21

This standard affords less protection for commercial

speech than the strict scrutiny ordinarily applicable

to fully protected speech, such as political, literary,

artistic or religious expression. This “common-sense

distinction” between commercial and noncommercial

speech stems from commercial speech’s “subordinate

position in the scale of First Amendment values.”

Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 455-

56 (1978) Gnternal quotation marks omitted).

Certain of petitioners’ amici contend that the New

York statute restricts the “content” of a merchant's

speech about prices, and that the Court therefore

should apply the strict scrutiny normally applicable

to content-based restrictions on fully protected

speech. Those amici argue that content-based re-

strictions on commercial speech should be treated

the same as content-based restrictions on speech

about religious or political views. But as this Court’s

decisions recognize, “regulation of commercial speech

based on content is less problematic” than content-

based regulation of noncommercial speech. Bolger v.

Youngs Drug Prods. Corp., 463 U.S. 60, 65 (1983).

The Court has explained that “regulation of [com-

mercial speech’s] content” is permissible in part be-

cause such “speech, the offspring of economic self-

interest, is a hardy breed of expression that is not

‘particularly susceptible to being crushed by over-

broad regulation.” Cent. Hudson, 447 U.S. at 564 n.6

(citation omitted).

The argument for strict scrutiny of content-based

commercial-speech regulations also runs counter to a

long line of cases in which this Court has consistent-

ly applied intermediate scrutiny to restrictions on

the content of lawful, non-misleading commercial

speech. See, e.g., Greater New Orleans Broad. Ass'n,

22

Inc. v. United States, 527 U.S. 173, 176, 183-84

(1999) (striking down a statute that forbade broad-

cast advertising of casino gambling, as applied to ad-

vertisements in jurisdictions where such gambling

was legal); Rubin v. Coors Brewing Co., 514 U.S. 476,

478, 482, 488 (1995) (invalidating federal law that

prohibited beer labels from displaying alcohol con-

tent); Fla. Bar v. Went For It, Inc., 515 U.S. 618, 620,

635 (1995) (upholding rule prohibiting attorneys

from sending certain written solicitations to accident

or disaster victims); Bolger, 463 1'.S. at 61, 68-69

(holding unconstitutional as applied a statute that

prohibited unsolicited advertisements for contracep-

tives); In re R.M.J., 455 U.S. 191, 194, 205-07 (1982)

(holding unconstitutional a rule that barred attorney

advertisements from identifying jurisdictions in

which attorneys were licensed). In each case, the re-

strictions turned on the “subject matter” of the

speech and the identity of the speaker. Yet in each

case, the Court held that the restrictions were sub-

ject only to intermediate scrutiny.

Indeed, Central Hudson itself struck down a regu-

lation that banned all “advertising intended to stim-

ulate the purchase of utility services,” an overtly con-

tent- and viewpoint-based restriction. Cent. Hudson,

447 U.S. at 559 (internal quotation marks omitted).

Thus, the argument for strict scrutiny of content-

based commercial-speech restrictions posits that the

Court applied the wrong standard in the very case

that gave First Amendment intermediate scrutiny its

name.

23

2. Sorrell and Reed do not alter the inter-

mediate scrutiny standard for re-

strictions on commercial! speech.

The argument for strict scrutiny hinges on this

Court’s recent decisions in Reed v. Town of Gilbert,

135 S. Ct. 2218 (2015), and Sorrell v. IMS Health,

564 U.S. 552. Those decisions, however, do not step

back from the Court’s well-established distinction

between commercial and noncommercial! speech,

even for restrictions that are content-based.

In Sorrell, the Court struck down on First

Amendment grounds a Vermont law that prohibited,

with limited exceptions, “pharmacies, health insur-

ers, and similar entities from disclosing or otherwise

allowing prescriber-identifying information to be

used for marketing” and “pharmaceutical manufac-

turers and detailers from using the information for

marketing.” Jd. at 563. The Court held that the law

imposed a “speaker- and content-based burden on

protected expression,” id. at 571, by allowing the use

of information by other entities, such as “private or

academic researchers,” and for non-marketing pur-

poses, such as “educational communications.” Id. at

563-64. The Court therefore concluded that “height-

ened judicial scrutiny is warranted.” Id. at 565.

Importantly, however, the Court went on to reaf-

firm that there are two forms of “heightened” scruti-

ny that may apply to content-based speech re-

strictions: “a special commercial speech inquiry or a

stricter form of judicial scrutiny” for noncommercial

speech. Jd. at 571. The Court concluded that it was

unnecessary to decide whether the speech at issue

was commercial or noncommercial because, even un-

der the less stringent “commercial speech inquiry,”

24

the law was unconstitutional. See id. at 571—72 (cit-

ing Cent. Hudson, 447 U.S. at 566). Far from an-

nouncing a new rule, Sorrell’s repeated distinction

between the review standard for commercial speech

and the “stricter” standard for noncommercial speech

supports the continued application of intermediate

scrutiny to commercial speech.

As the Sorrell opinion makes clear, the phrase

“heightened scrutiny” does not refer to strict scruti-

ny. Sorrell’s application of intermediate scrutiny con-

tradicts any such reading, and many of the Court’s

other opinions demonstrate that “heightened scruti-

ny” is a generic term indicating a level of scrutiny

higher than rational-basis scrutiny, including both

intermediate scrutiny and strict scrutiny. For exam-

ple, the Court’s equal protection precedents frequent-

ly use the term “heightened scrutiny” to describe the

intermediate scrutiny applicable to gender classifica-

tions. See, e.g., United States v. Virginia, 518 U.S.

515, 533, 555 (1996); Clark v. Jeter, 486 U.S. 456,

463, 465 (1988). In the First Amendment area, the

Court has likewise referred to the intermediate scru-

tiny applied to limits on political contributions as a

form of “heightened judicial scrutiny.” Nixon ov.

Shrink Mo. Gov’t PAC, 528 U.S. 377, 391 (2000). The

Court’s opinion in Sorrell uses the term “heightened

scrutiny” in the same way—as a general description

of scrutiny beyond a rational-basis test—not as an-

other way of saying strict scrutiny.

Nor does Reed offer any support for application of

strict scrutiny to commercial-speech regulations.

Reed struck down a local law that prohibited outdoor

signs without a permit but exempted twenty-three

categories of signs, including political and ideological

signs and temporary directional signs of short dura-

25

tion. See 135 S. Ct. at 2224-25. The law did not,

however, exempt signs that the plaintiffs—a church

and its pastor—sought to display for more extended

periods to publicize the time and location of upcom-

ing church services. Jd. at 2225. The Court cited non-

commercial-speech cases for the proposition that

“Iclontent-based laws—those that target speech

based on its communicative content—are presump-

tively unconstitutional and may be justified only if

the government proves that they are narrowly tai-

lored to serve compelling state interests.” Id. at 2226.

The Court cited Sorrell, a commercial-speech case,

only in defining the “commonsense meaning of the

phrase ‘content based.” Jd. at 2227. The Court ex-

plained that “[glovernment regulation of speech is

content based if a law applies to particular speech

because of the topic discussed or the idea or message

expressed.” Jd. (citing Sorrell, 564 U.S. at 565). The

Court thus found that the town ordinance in Reed

was content-based because it “single[d] out specific

subject matter for differential treatment.” Jd. at

2230. The Court then applied strict scrutiny to the

ordinance as a content-based regulation of noncom-

mercial speech. /d. at 2231.

Critically, Reed did not hold—or even discuss the

possibility—that strict scrutiny would apply to con-

tent-based commercial-speech restrictions. Surely if

the Court intended to overrule its many decisions

distinguishing commercial speech from noncommer-

cial speech, its opinion would have acknowledged

such a momentous decision. Reed does not do so. In-

deed, the Court’s opinion does not use the term

“commercial speech” even once.

Likewise, to the extent that New York’s law

might be viewed as regulating the way differences in

26

cash and credit prices are disclosed, see supra at 17—

20, neither Reed nor Sorrell suggests retreat from

Zauderer’s standard of review for content-based

commercial-speech disclosure requirements. Neither

case involved disclosure requirements, and neither

opinion mentions Zauderer, let alone alters the

standard of review for disclosure requirements. Sor-

rell and Reed plainly did not silently overrule Zau-

derer.

3. Applying strict scrutiny to content-

based commercial-speech regulations is

neither necessary nor proper.

The view that content- or speaker-based commer-

cial-speech restrictions are subject to strict scrutiny

would have exceptionally far-reaching implications,

because commercial-speech restrictions are always,

or virtually always, content- or speaker-based in the

broad, general sense in which the Court has used the

term in Reed and Sorrell. Commercial-speech re-

strictions, by definition, apply to commercial mes-

sages and commercial speakers, and usually to par-

ticular types of speakers and messages (for example,

the written solicitations from attorneys that were at

issue in Went for It, see 515 U.S. at 620). More broad-

ly, “the classification of speech between commercial

and noncommercial is itself a content-based distinc-

tion.” CTIA—The Wireless Ass’n v. City of Berkeley,

139 F. Supp. 3d 1048, 1061 n.9 (N.D. Cal. 2015), app.

filed, No. 16-15141 (9th Cir. Feb. 1, 2016). As one

scholar has observed, “this argument, that a statute

which treats marketing differently than other

speech, is constitutionally infirm on that ground,

makes a hash of the commercial-speech doctrine be-

cause, by definition, the commercial-speech doctrine

is applicable only to a specific type of content—

27

commercial content.” Tamara Piety, The First

Amendment and the Corporate Civil Rights Move-

ment, 11 J. Bus. & Tech. L. 1, 20 (2016).

Sim:larly, commercial-speech disclosure require-

ments are necessarily content- and speaker-based in

the broad, general sense in which petitioners and

their amici use those terms. That is, they are trig-

gered by advertisements or other commercial speech

with specific content, made by particular types of

speakers. In Zauderer, for example, the disclosure

requirement applied only to particular speakers (at-

torneys) and only to speech with particular content

(advertisements mentioning contingent-fee represen-

tation). See 471 U.S. at 650. Such content- and

speaker-specificity is an inherent feature of commer-

cial-speech disclosure requirements: It would make

no sense, for example, to require companies advertis-

ing shoes to warn that smoking cigarettes causes

cancer. Likewise, cigarette companies are not re-

quired to include warnings about the dangers of sug-

ary drinks in their advertisements, and soft-drink

advertisements need not disclose EPA-estimated

miles-per-gallon figures for cars. Thus, if content-

and speaker-based commercial disclosure require-

ments were subject to heightened scrutiny, all disclo-

sure requirements would have to face such scrutiny,

and Zauderer would be a dead letter.

a. Applying strict scrutiny to commercial

speech would threaten a broad range

of commonsense regulations.

Applying strict scrutiny to content-based com-

mercial-speech restrictions—in addition to making a

mess of the case law—would risk devastating conse-

quences for the government’s ability to adopt com-

28

monsense marketplace regulations. Regulations of

commercial speech typically apply to specific market

participants, such as food manufacturers, debt collec-

tors, or drug companies, and they deal with problems

unique to industries in which those participants op-

erate. For example, federal law limits the circum-

stances in which food manufacturers can make

claims about health benefits of their products, 21

C.F.R. § 101.14, or advertise the addition of vitamins

to infant formula, id. § 107.10(b). It forbids debt col-

lectors from advertising the sale of a debt to coerce a

debtor to pay it, and from publishing lists of consum-

ers who refuse to pay debts. 15 U.S.C. § 1692d(3)—(4).

If content-based commercial-speech restrictions are

subject to strict scrutiny, all these restrictions might

have to satisfy such scrutiny, on the theory that they

apply “to particular speech because of the topic dis-

cussed or the idea or message expressed.” Reed, 135

S. Ct. at 2227.

In the disclosure context, too, the government

frequently mandates speech on a particular subject

and requires that commercial actors use specific lan-

guage. For example, vehicle manufacturers must la-

bel, in accordance with Environmental Protection

Agency rules, each vehicle with its average miles per

gallon of fuel. 49 U.S.C. § 32908(b). Drug manufac-

turers must include “black box” warnings on labels of

certain drugs to emphasize particular hazards. 21

C.F.R. § 201.57. And food manufacturers must dis-

close nutritional information about their products.

Id. § 101.9.

The government would have a much higher bur-

den to justify basic rules like these if they were sub-

jected to strict scrutiny. It “is the rare case” in which

the government “demonstrates that a speech re-

29

striction is narrowly tailored to serve a compelling

interest,” as required to satisfy strict scrutiny. Wil-

liams-Yulee v. Fla. Bar, 135 S. Ct. 1656, 1665--66

(2015) (citation omitted). Indeed, in the noncommer-

cial-speech context, the Court has described content-

based restrictions as “presumptively invalid.” R.A.V.

v. City of St. Paul, 505 U.S. 377, 382 (1992). Applying

strict scrutiny to content-based commercial-speech

restrictions could obliterate many laws and regula-

tions that are longstanding and critical to the protec-

tion of consumers. The crippling effects would be

even more far-reaching if the notion of what is “con-

tent-based” were conceived as broadly as petitioners

and their amici propose.

b. Applying strict scrutiny to commercial

speech would harm protection of pure

speech and is unnecessary to protect

commercial speech.

Applying strict scrutiny to content-based com-

mercial-speech restrictions could also unnecessarily

create unintended, harmful consequences for the pro-

tection of religious, political, literary, artistic and

other noncommercial speech at the heart of the First

Amendment. “To require a parity of constitutional

protection for commercial and noncommercial speech

alike could invite dilution, simply by a leveling pro-

cess, of the force of the [First] Amendment’s guaran-

tee with respect to the latter kind of speech.”

Ohralik, 436 U.S. at 456. That is, if strict scrutiny

were applied to commercial-speech regulations—

including fundamental protections on which the pub-

lic has depended for decades—the inclination of

courts to uphold sensible marketplace rules might

lead them to relax strict First Amendment scrutiny

as we know it, to the detriment of speakers engaged

30

in the kinds of fully protected expression that under-

gird American liberty and democracy.

That result would be all the more unfortunate be-

cause application of strict scrutiny is not necessary to

curb any actual government excesses in the realm of

commercial speech. Central Hudson intermediate

scrutiny is already quite protective, perhaps in some

cases overly protective, of commercial-speech inter-

ests. For example, in this case, assuming that the

statute were deemed to prohibit speech, it could be

sustained under Central Hudson only if the interests

identified by the state are not only legitimate, but

also “substantial,” and if the statute advances them

“directly” and in a “reasonablly] proportion|ate]”

way. Edenfield, 507 U.S. at 767. As demonstrated by

petitioners’ brief, and that of a number of its other

amici who do not advocate strict scrutiny,’ the proh:-

bition on surcharges may be difficult to support if it

must survive any degree of heightened scrutiny.

Thus, should the Court conclude that the New York

statute imposes commercial-speech prohibitions, it

should expressly reaffirm that the Central Hudson

test is the appropriate standard of review for such

restrictions, and should assess the law under that

test.

CONCLUSION

Whatever the merits of New York’s ban on credit

surcharges as a matter of policy—and they are dubi-

ous—the Second Circuit correctly concluded that the

ban regulates commercial conduct, not speech. Be-

cause petitioners make no claim that the law iacks

® See, e.g., U.S. PIRG Br.

31

the rational basis required to sustain an economic

regulatory measure, the Second Circuit’s judgment

should be affirmed.

If the Court nonetheless concludes that the stat-

ute does regulate speech in some cognizable fashion,

it should assess the statute under Zauderer’s ration-

al-relationship standard to the extent the statute

merely regulates disclosure—or should remand for

consideration of that issue.

Finally, if the Court were to conclude that the

statute actually embodies some prohibition on pro-

tected commercial speech, it should hold that the

statute is subject to review under Central Hudson’s

intermediate scrutiny standard.

GEORGE P. SLOVER

CONSUMERS UNION

1101 17th Street NW

Suite 500

Washington, DC 20036

(202) 462-6262

STUART T. ROSSMAN

NATIONAL CONSUMER

LAW CENTER

7 Winthrop Square

Ath Floor

Boston, MA 02110

(617) 542-8010

MARK EF. GREENWOLD

CAMPAIGN FOR TOBACCO-

FREE Kips

1400 Eye Street NW

Suite 1200

Washington, DC 20005

(202) 296-5469

32

Respectfully submitted,

Scorer L. N&LSON

Counsel of Record

ALLISON M. ZIEVE

JULIE A. MURRAY

PUBLIC CITIZEN

LITIGATION GROUP

1600 20th Street NW

Washington, DC 20009

(202) 588-1000

snelson@citizen.org

ALAN B. MORRISON

GEORGE WASHINGTON

UNIVERSITY LAW SCHOOL

2000 H Street NW

Washington, DC 20052

(202) 994-7120

Attorneys for Amici Curiae

December 2016