816 F.3d 73
5th Cir.2016Background
- Texas Finance Code § 339.001 (1985) prohibits sellers from imposing a surcharge on buyers who use credit cards; the statute is silent about discounts or dual pricing.
- Federal anti-surcharge provisions existed in the 1970s–1980s and defined surcharge as an amount above the seller’s regular price; those federal provisions lapsed in 1984.
- Merchants want to post dual prices (cash vs. credit) and label the difference a “surcharge”; they sued claiming the Texas ban on using the label “surcharge” (while allowing “discount”) violates the First Amendment and is vague.
- The Texas Office of Consumer Credit Commissioner defends the law as a permissible economic pricing regulation that bans imposing additional fees for credit-card use and only incidentally affects speech.
- The district court dismissed the merchants’ complaint under Fed. R. Civ. P. 12(b)(6); the Fifth Circuit affirmed, holding the statute regulates conduct (pricing), not speech, and is not unconstitutionally vague.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 339.001 is a content-based restriction on speech | The law forbids merchants from labeling legal price differentials as a “surcharge,” burdening truthful commercial speech | The statute regulates economic conduct (imposing an extra charge above the regular price), not speech; any speech impact is incidental | Court: Regulates conduct (pricing), not speech; First Amendment not implicated |
| Whether the statute is unconstitutionally vague | The surcharge/discount distinction is semantic and unclear, leaving merchants unsure what labels violate the law | The statute has a core, plain meaning: it bans adding an extra charge for credit-card purchases and is susceptible to a reading that avoids vagueness | Court: Not unconstitutionally vague for civil enforcement; ordinary meanings suffice |
| Whether dual pricing is prohibited or implicated | Merchants fear dual pricing will trigger liability if they call the difference a “surcharge” | Defendant concedes dual pricing and discounts are permitted; the ban targets imposing an additional fee above a posted price | Court: Dual pricing is allowed; the law forbids adding an extra charge above the regular price |
| Appropriate standard of review for commercial-speech claim | Plaintiffs urge First Amendment review (content-based or at least Central Hudson) | Defendant urges no First Amendment scrutiny because statute regulates conduct/prices | Court: No First Amendment scrutiny needed because statute regulates pricing conduct, not speech |
Key Cases Cited
- Expressions Hair Design v. Schneiderman, 808 F.3d 118 (2d Cir. 2015) (upholding New York anti-surcharge law as economic regulation and finding prices are not First Amendment speech)
- Dana’s R.R. Supply v. Attorney General of Florida, 807 F.3d 1235 (11th Cir. 2015) (striking down Florida anti-surcharge law as a content-based restriction on merchants’ speech)
- Rumsfeld v. FAIR, 547 U.S. 47 (2006) (distinguishing regulation of conduct from restriction on speech)
- Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980) (commercial-speech intermediate-scrutiny framework)
- Nebbia v. People of N.Y., 291 U.S. 502 (1934) (broad state authority to regulate economic policy and pricing)