Expressions Hair Design v. Schneiderman

Background

Five New York small businesses and their owners want to charge customers who pay with credit cards a small extra amount to cover card-processing fees. New York law, Section 518, bans merchants from imposing such "surcharges." The merchants sued state prosecutors arguing the law limits how they may display prices and is too vague. A district court sided with the merchants, but the federal appeals court read the law as a price rule in one context and sent part of the case back without resolving every claim. The highest court agreed to review the issue.

Reasoning

The legal question was whether Section 518 controls prices or instead controls how merchants talk about prices. The Court concluded the law regulates speech because it limits how a seller may communicate a credit charge (for example, posting "$10 with a $0.30 credit-card surcharge"). Because the law governs price communication rather than setting the price itself, the Court held it regulates speech and sent the case back for the appeals court to examine whether that speech regulation violates the First Amendment. The Court did not decide whether the law survives First Amendment tests.

Real world impact

As applied here, Section 518 prevents merchants from posting a single sticker price and separately stating a credit-card surcharge. The ruling directly affects vendors who want to pass processing fees only to card users and to label the difference a "surcharge." The decision is not a final ruling on constitutionality; lower courts must now determine if and how First Amendment rules allow the law to stand.

Dissents or concurrances

Two Justices agreed with the result but differed about next steps: one emphasized flexible review standards for commercial rules, and another urged sending questions to New York's highest court to clarify the law's meaning before deciding constitutional issues.