Expressions Hair Design v. Schneiderman
975 F. Supp. 2d 430
S.D.N.Y.2013Background
- Plaintiffs—five NY retailers and principals—challenge NY Gen. Bus. Law § 518 banning credit-card surcharges and restricting disclosure of card fees.
- §518 imposes criminal penalties for surcharges and authorizes civil enforcement by the AG and district attorneys.
- Plaintiffs want to impose surcharges and inform customers, but §518 bars labeling price differences as surcharges.
- Statutory history shows Congress once defined discount, surcharge, and regular price; NY copied the no-surcharge ban without definitions.
- Some plaintiffs charge the same price for cash and credit; one charges different prices but cannot label it a surcharge due to §518.
- Court grants preliminary injunction, finding §518 unconstitutional under First Amendment and void-for-vagueness; standing and ripeness addressed; preemption discussed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| First Amendment: is §518 unconstitutional as content-based? | Fiacco et al. argue labeling as a surcharge is protected speech. | Defendants contend §518 regulates conduct or disclosures, not speech. | Unconstitutional; §518 bans speech based on content. |
| Vagueness: does §518 violate due process for vagueness? | Chills speech; labels and price descriptions are vague. | Statute merely bans surcharges, not labeling; interpretation narrow. | Void-for-vagueness; statute overly vague as interpreted. |
| Standing and ripeness: do plaintiffs have standing pre-enforcement? | Plaintiffs fear enforcement and burdens on speech. | Some lack immediate enforcement risk; pre-enforcement not ripe. | All plaintiffs have standing; claims ripe for review. |
| Preemption under Sherman Act: does §518 preempt or conflict with federal antitrust law? | No-surcharge law constrains competition and mirrors antitrust issues. | Law informs consumer choice and could be pro-competitive; fit for rule of reason. | Preemption claim survives; requires full rule-of-reason analysis at later stage. |
Key Cases Cited
- Sorrell v. IMS Health Inc., 131 S. Ct. 2653 (U.S. 2011) (content-based scrutiny for commercial speech)
- Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626 (U.S. 1985) (disclosure requirements may be permissible)
- Central Hudson Gas & Electric Corp. v. Public Service Commission of N.Y., 447 U.S. 557 (U.S. 1980) (intermediate scrutiny for commercial speech)
- United States v. Caronia, 703 F.3d 149 (2d Cir. 2012) (commercial speech protection in criminal context)
- Fulvio II (People v. Fulvio), 517 N.Y.S.2d 1008 (N.Y. Crim. Ct. 1987) (statutory wording can create framing without substantive difference)
- National Organization for Marriage, Inc. v. Walsh, 714 F.3d 682 (2d Cir. 2013) (relaxed standing/ripeness for pre-enforcement challenges)
- VIP of Berlin, LLC v. Town of Berlin, 593 F.3d 179 (2d Cir. 2010) (strict vagueness scrutiny for rights-related statutes)
- Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (U.S. 2007) (rule-of-reason under antitrust analysis)
- Fisher v. City of Berkeley, 475 U.S. 260 (U.S. 1986) (anticompetitive effects inquiry in preemption context)