Expressions Hair Design v. Schneiderman , 137 S. Ct. 1144 ( 2017 )

(Slip Opinion) OCTOBER TERM, 2016 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
EXPRESSIONS HAIR DESIGN ET AL. v.
SCHNEIDERMAN, ATTORNEY GENERAL OF NEW
YORK, ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE SECOND CIRCUIT
No. 15–1391. Argued January 10, 2017—Decided March 29, 2017
New York General Business Law §518 provides 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 similar means.”
Petitioners, five New York businesses and their owners who wish to
impose surcharges for credit card use, filed suit against state offi-
cials, arguing that the law violates the First Amendment by regulat-
ing how they communicate their prices, and that it is unconstitution-
ally vague. The District Court ruled in favor of the merchants, but
the Court of Appeals vacated the judgment with instructions to dis-
miss. The Court of Appeals concluded that in the context of single-
sticker pricing—where merchants post one price and would like to
charge more to customers who pay by credit card—the law required
that the sticker price be the same as the price charged to credit card
users. In that context, the law regulated a relationship between two
prices. Relying on this Court’s precedent holding that price regula-
tion alone regulates conduct, not speech, the Court of Appeals con-
cluded that §518 did not violate the First Amendment. The Court of
Appeals abstained from reaching the merits of the constitutional
challenge to pricing practices outside the single-sticker context.
Held:
1. This Court’s review is limited to whether §518 is unconstitution-
al as applied to the particular pricing scheme that, before this Court,
petitioners have argued they seek to employ: a single-sticker regime,
in which merchants post a cash price and an additional credit card
surcharge. Pp. 5–6.
2 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
Syllabus
2. Section 518 prohibits the pricing regime petitioners wish to em-
ploy. Section 518 does not define “surcharge.” Relying on the term’s
ordinary meaning, the Court of Appeals concluded that a merchant
imposes a surcharge when he posts a single sticker price and charges
a credit card user more than that sticker price. This Court “generally
accord[s] great deference to the interpretation and application of
state law by the courts of appeals.” Pembaur v. Cincinnati, 475 U.S.
469, 484, n. 13. Because the interpretation of the Court of Appeals is
not “clearly wrong,” Brockett v. Spokane Arcades, Inc., 472 U.S. 491,
500, n. 9, this Court follows that interpretation. Pp. 6–8.
3. Section 518 regulates speech. The Court of Appeals concluded
that §518 posed no First Amendment problem because price controls
regulate conduct, not speech. Section 518, however, is not like a typi-
cal price regulation, which simply regulates the amount a store can
collect. The law tells merchants nothing about the amount they are
allowed to collect from a cash or credit card payer. Instead, it regu-
lates how sellers may communicate their prices. In regulating the
communication of prices rather than prices themselves, §518 regu-
lates speech.
Because the Court of Appeals concluded otherwise, it did not de-
termine whether §518 survives First Amendment scrutiny. On re-
mand the Court of Appeals should analyze §518 as a speech regula-
tion. Pp. 8–10.
4. Section 518 is not vague as applied to petitioners. As explained,
§518 bans the single-sticker pricing petitioners argue they wish to
employ, and “a plaintiff whose speech is clearly proscribed cannot
raise a successful vagueness claim,” Holder v. Humanitarian Law
Project, 561 U.S. 1, 20. Pp. 10–11.
808 F.3d 118, vacated and remanded.
ROBERTS, C. J., delivered the opinion of the Court, in which KENNEDY,
THOMAS, GINSBURG, and KAGAN, JJ., joined. BREYER, J., filed an opinion
concurring in the judgment. SOTOMAYOR, J., filed an opinion concurring
in the judgment, in which ALITO, J., joined.
Cite as: 581 U. S. ____ (2017) 1
Opinion of the Court
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SUPREME COURT OF THE UNITED STATES
_________________
No. 15–1391
_________________
EXPRESSIONS HAIR DESIGN, ET AL., PETITIONERS v.
ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL OF
NEW YORK, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT
[March 29, 2017]
CHIEF JUSTICE ROBERTS delivered the opinion of the
Court.
Each time a customer pays for an item with a credit
card, the merchant selling that item must pay a transac­
tion fee to the credit card issuer. Some merchants balk at
paying the fees and want to discourage the use of credit
cards, or at least pass on the fees to customers who use
them. One method of achieving those ends is through
differential pricing—charging credit card users more than
customers using cash. Merchants who wish to employ
differential pricing may do so in two ways relevant here:
impose a surcharge for the use of a credit card, or offer a
discount for the use of cash. In N. Y. Gen. Bus. Law §518,
New York has banned the former practice. The question
presented is whether §518 regulates merchants’ speech
and—if so—whether the statute violates the First
Amendment. We conclude that §518 does regulate speech
and remand for the Court of Appeals to determine in the
first instance whether that regulation is unconstitutional.
2 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
Opinion of the Court
I
A
When credit cards were first introduced, contracts be­
tween card issuers and merchants barred merchants from
charging credit card users higher prices than cash cus­
tomers. Congress put a partial stop to this practice in the
1974 amendments to the Truth in Lending Act (TILA).
The amendments prohibited card issuers from contractu­
ally preventing merchants from giving discounts to cus­
tomers who paid in cash. See §306, 88 Stat. 1515. The
law, however, said nothing about surcharges for the use of
credit.
Two years later, Congress refined its dissimilar treat­
ment of discounts and surcharges. First, the 1976 version
of TILA barred merchants from imposing surcharges on
customers who use credit cards. Act of Feb. 27, 1976,
§3(c)(1), 90 Stat. 197. Second, Congress added definitions
of the two terms. A discount was “a reduction made from
the regular price,” while a surcharge was “any means of
increasing the regular price to a cardholder which is not
imposed upon customers paying by cash, check, or similar
means.” §3(a), ibid.
In 1981, Congress further delineated the distinction
between discounts and surcharges by defining “regular
price.” Where a merchant “tagged or posted” a single
price, the regular price was that single price. Cash Dis­
count Act, §102(a), 95 Stat. 144. If no price was tagged or
posted, or if a merchant employed a two-tag approach—
posting one price for credit and another for cash—the
regular price was whatever was charged to credit card
users. Ibid. Because a surcharge was defined as an in­
crease from the regular price, there could be no credit card
surcharge where the regular price was the same as the
amount charged to customers using credit cards. The
effect of all this was that a merchant could violate the
surcharge ban only by posting a single price and charging
Cite as: 581 U. S. ____ (2017) 3
Opinion of the Court
credit card users more than that posted price.
The federal surcharge ban was short lived. Congress
allowed it to expire in 1984 and has not renewed the ban
since. See §201, ibid. The provision preventing credit
card issuers from contractually barring discounts for cash,
however, remained in place. With the lapse of the federal
surcharge ban, several States, New York among them,
immediately enacted their own surcharge bans. Passed in
1984, N. Y. Gen. Bus. Law §518 adopted the operative
language of the federal ban verbatim, providing 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 similar means.” N. Y. Gen. Bus. Law
Ann. §518 (West 2012); see also 15 U.S. C. §1666f(a)(2)
(1982 ed.). Unlike the federal ban, the New York legisla­
tion included no definition of “surcharge.”
In addition to these state legislative bans, credit card
companies—though barred from prohibiting discounts for
cash—included provisions in their contracts prohibiting
merchants from imposing surcharges for credit card use.
For most of its history, the New York law was essentially
coextensive with these contractual prohibitions. In recent
years, however, merchants have brought antitrust chal­
lenges to contractual no-surcharge provisions. Those suits
have created uncertainty about the legal validity of such
contractual surcharge bans. The result is that otherwise
redundant legislative surcharge bans like §518 have in­
creasingly gained importance, and increasingly come
under scrutiny.
B
Petitioners, five New York businesses and their owners,
wish to impose surcharges on customers who use credit
cards. Each time one of their customers pays with a credit
card, these merchants must pay some transaction fee to
the company that issued the credit card. The fee is gener­
4 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
Opinion of the Court
ally two to three percent of the purchase price. Those fees
add up, and the merchants allege that they pay tens of
thousands of dollars every year to credit card companies.
Rather than increase prices across the board to absorb
those costs, the merchants want to pass the fees along
only to their customers who choose to use credit cards.
They also want to make clear that they are not the bad
guys—that the credit card companies, not the merchants,
are responsible for the higher prices. The merchants
believe that surcharges for credit are more effective than
discounts for cash in accomplishing these goals.
In 2013, after several major credit card issuers agreed to
drop their contractual surcharge prohibitions, the mer­
chants filed suit against the New York Attorney General
and three New York District Attorneys to challenge
§518—the only remaining obstacle to their charging sur­
charges for credit card use. As relevant here, they argued
that the law violated the First Amendment by regulating
how they communicated their prices, and that it was
unconstitutionally vague because liability under the law
“turn[ed] on the blurry difference” between surcharges
and discounts. App. 39, Complaint ¶51.
The District Court ruled in favor of the merchants. It
read the statute as “draw[ing a] line between prohibited
‘surcharges’ and permissible ‘discounts’ based on words
and labels, rather than economic realities.” 975 F. Supp.
2d 430, 444 (SDNY 2013). The court concluded that the
law therefore regulated speech, and violated the First
Amendment under this Court’s commercial speech doc­
trine. In addition, because the law turned on the “virtually
incomprehensible distinction between what a vendor can
and cannot tell its customers,” the District Court found
that the law was unconstitutionally vague. Id., at 436.
The Court of Appeals for the Second Circuit vacated the
judgment of the District Court with instructions to dismiss
the merchants’ claims. It began by considering single­
Cite as: 581 U. S. ____ (2017) 5
Opinion of the Court
sticker pricing, where merchants post one price and would
like to charge more to customers who pay by credit card.
All the law did in this context, the Court of Appeals ex­
plained, was regulate a relationship between two prices—
the sticker price and the price charged to a credit card
user—by requiring that the two prices be equal. Relying
on our precedent holding that price regulation alone regu­
lates conduct, not speech, the Court of Appeals concluded
that §518 did not violate the First Amendment.
The court also considered other types of pricing re­
gimes—for example, posting separate cash and credit
prices. The Court of Appeals thought it “far from clear”
that §518 prohibited such pricing schemes. 808 F.3d 118,
137 (CA2 2015). The federal surcharge ban on which §518
was modeled did not apply outside the single-sticker con­
text, and the merchants had not clearly shown that §518
had a “broader reach” than the federal law. Ibid. Decid­
ing that petitioners’ challenge in this regard “turn[ed] on
an unsettled question of state law,” the Court of Appeals
abstained from reaching the merits of the constitutional
question beyond the single-sticker context. Id., at 135
(citing Railroad Comm’n of Tex. v. Pullman Co., 312 U.S.
496 (1941)).
We granted certiorari. 579 U. S. ___ (2016).
II
As a preliminary matter, we note that petitioners pre­
sent us with a limited challenge. Observing that the
merchants were not always particularly clear about the
scope of their suit, the Court of Appeals deemed them to
be bringing a facial attack on §518 as well as a challenge
to the application of the statute to two particular pricing
regimes: single-sticker pricing and two-sticker pricing.
Before us, however, the merchants have disclaimed a
facial challenge, assuring us that theirs is an as-applied
challenge only. See Tr. of Oral Arg. 4–5, 18.
6 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
Opinion of the Court
There remains the question of what precise application
of the law they seek to challenge. Although the merchants
have presented a wide array of hypothetical pricing re­
gimes, they have expressly identified only one pricing
scheme that they seek to employ: posting a cash price and
an additional credit card surcharge, expressed either as a
percentage surcharge or a “dollars-and-cents” additional
amount. See, e.g., App. 101–102, 104; Tr. of Oral Arg. 4–5,
18. Under this pricing approach, petitioner Expressions
Hair Design might, for example, post a sign outside its
salon reading “Haircuts $10 (we add a 3% surcharge if you
pay by credit card).” Or, petitioner Brooklyn Farmacy &
Soda Fountain might list one of the sundaes on its menu
as costing “$10 (with a $0.30 surcharge for credit card
users).” We take petitioners at their word and limit our
review to the question whether §518 is unconstitutional as
applied to this particular pricing practice.1
III
The next question is whether §518 prohibits the pricing
regime petitioners wish to employ. The Court of Appeals
concluded that it does. The court read “surcharge” in §518
to mean “an additional amount above the seller’s regular
——————
1 Petitioner
Expressions Hair Design currently posts separate dollars­
and-cents prices for cash and credit—that is, it posts something like
“$10 cash, $10.30 credit.” It displays its prices in this way, however,
only because it considers itself compelled to do so by the challenged law
if it wants to charge different prices. Prior to becoming aware of the
law, Expressions posted single prices along with a notice informing
customers that a three percent surcharge would be added to their bill if
they paid by credit card. Expressions has indicated that it would prefer
to return to its prior practice. See App. 19, Complaint ¶3; id., at 103–
104. Given petitioners’ representations about the narrow scope of their
as-applied challenge, we limit our consideration to the single-sticker
pricing regime for present purposes. Petitioners’ affidavits and briefing
reference other potential pricing schemes, which may be considered by
the Court of Appeals to the extent it deems appropriate. See, e.g., id.,
at 56; Brief for Petitioners 50.
Cite as: 581 U. S. ____ (2017) 7
Opinion of the Court
price,” and found it “basically self-evident” how §518
applies to sellers who post a single sticker price: “the
sticker price is the ‘regular’ price, so sellers may not
charge credit-card customers an additional amount above
the sticker price that is not also charged to cash custom­
ers.” 808 F.3d, at 128. Under this interpretation, signs of
the kind that the merchants wish to post—“$10, with a
$0.30 surcharge for credit card users”—violate §518 be­
cause they identify one sticker price—$10—and indicate
that credit card users are charged more than that amount.
“We generally accord great deference to the interpreta­
tion and application of state law by the courts of appeals.”
Pembaur v. Cincinnati, 475 U.S. 469, 484, n. 13 (1986).
This deference is warranted to “render unnecessary review
of their decisions in this respect” and because lower fed­
eral courts “are better schooled in and more able to interpret
the laws of their respective States.” Brockett v. Spokane
Arcades, Inc., 472 U.S. 491, 500 (1985) (quoting Cort v.
Ash, 422 U.S. 66, 73, n. 6 (1975); internal quotation
marks omitted). “[W]e surely have the authority to differ
with the lower federal courts as to the meaning of a state
statute,” and have done so in instances where the lower
court’s construction was “clearly wrong” or “plain error.”
472 U.S., at 500, and n. 9 (internal quotation marks
omitted). But that is not the case here. Section 518 does
not define “surcharge,” but the Court of Appeals looked to
the ordinary meaning of the term: “a charge in excess of
the usual or normal amount.” 808 F.3d, at 127 (quoting
Webster’s Third New International Dictionary 2299
(2002); internal quotation marks omitted). Where a seller
posts a single sticker price, it is reasonable to treat that
sticker price as the “usual or normal amount” and con­
clude, as the court below did, that a merchant imposes a
surcharge when he charges a credit card user more than
that sticker price. In short, we cannot dismiss the Court
of Appeals’ interpretation of §518 as “clearly wrong.”
8 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
Opinion of the Court
Accordingly, consistent with our customary practice, we
follow that interpretation.
IV
Having concluded that §518 bars the pricing regime
petitioners wish to employ, we turn to their constitutional
arguments: that the law unconstitutionally regulates
speech and is impermissibly vague.
A
The Court of Appeals concluded that §518 posed no First
Amendment problem because the law regulated conduct,
not speech.2 In reaching this conclusion, the Court of
Appeals began with the premise that price controls regu­
late conduct alone. See 44 Liquormart, Inc. v. Rhode
Island, 517 U.S. 484, 507 (1996) (plurality opinion); id., at
524 (THOMAS, J., concurring in part and concurring in
judgment); id., at 530 (O’Connor, J., concurring in judg­
ment). Section 518 regulates the relationship between
“(1) the seller’s sticker price and (2) the price the seller
charges to credit card customers,” requiring that these two
amounts be equal. 808 F.3d, at 131. A law regulating the
relationship between two prices regulates speech no
more than a law regulating a single price. The Court of Ap-
peals concluded that §518 was therefore simply a conduct
regulation.
But §518 is not like a typical price regulation. Such a
regulation—for example, a law requiring all New York
delis to charge $10 for their sandwiches—would simply
regulate the amount that a store could collect. In other
——————
2 Relying fully on their claim that §518 regulated speech, petitioners
did not advance any argument before the Court of Appeals that §518
was constitutionally problematic even if deemed a regulation of con­
duct. See 808 F.3d 118, 135 (CA2 2015) (noting that petitioners had
not challenged §518 under United States v. O’Brien, 391 U.S. 367
(1968)).
Cite as: 581 U. S. ____ (2017) 9
Opinion of the Court
words, it would regulate the sandwich seller’s conduct. To
be sure, in order to actually collect that money, a store
would likely have to put “$10” on its menus or have its
employees tell customers that price. Those written or oral
communications would be speech, and the law—by deter­
mining the amount charged—would indirectly dictate the
content of that speech. But the law’s effect on speech
would be only incidental to its primary effect on conduct,
and “it has never been deemed an abridgment of freedom
of speech or press to make a course of conduct illegal
merely because the conduct was in part initiated, evi­
denced, or carried out by means of language, either spo­
ken, written, or printed.” Rumsfeld v. Forum for Aca-
demic and Institutional Rights, Inc., 547 U.S. 47, 62 (2006)
(quoting Giboney v. Empire Storage & Ice Co., 336 U.S.
490, 502 (1949); internal quotation marks omitted); see
also Sorrell v. IMS Health Inc., 564 U.S. 552, 567 (2011).
Section 518 is different. The law tells merchants noth­
ing about the amount they are allowed to collect from a
cash or credit card payer. Sellers are free to charge $10
for cash and $9.70, $10, $10.30, or any other amount for
credit. What the law does regulate is how sellers may
communicate their prices. A merchant who wants to
charge $10 for cash and $10.30 for credit may not convey
that price any way he pleases. He is not free to say “$10,
with a 3% credit card surcharge” or “$10, plus $0.30 for
credit” because both of those displays identify a single
sticker price—$10—that is less than the amount credit
card users will be charged. Instead, if the merchant wishes
to post a single sticker price, he must display $10.30 as
his sticker price. Accordingly, while we agree with the
Court of Appeals that §518 regulates a relationship be­
tween a sticker price and the price charged to credit card
users, we cannot accept its conclusion that §518 is nothing
more than a mine-run price regulation. In regulating the
communication of prices rather than prices themselves,
10 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
Opinion of the Court
§518 regulates speech.
Because it concluded otherwise, the Court of Appeals
had no occasion to conduct a further inquiry into whether
§518, as a speech regulation, survived First Amendment
scrutiny. On that question, the parties dispute whether
§518 is a valid commercial speech regulation under Cen-
tral Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of
N. Y., 447 U.S. 557 (1980), and whether the law can be
upheld as a valid disclosure requirement under Zauderer
v. Office of Disciplinary Counsel of Supreme Court of Ohio,
471 U.S. 626 (1985).
“[W]e are a court of review, not of first view.” Nautilus,
Inc. v. Biosig Instruments, Inc., 572 U. S. ___, ___ (2014)
(slip op., at 14) (internal quotation marks omitted). Ac­
cordingly, we decline to consider those questions in the
first instance. Instead, we remand for the Court of Ap­
peals to analyze §518 as a speech regulation.3
B
Given the way the merchants have presented their case,
their vagueness challenge gives us little pause. Before
this Court, the only pricing practice they express an inter­
est in employing is a single-sticker regime, listing one
price and a separate surcharge amount. As we have ex­
plained, §518 bars them from doing so. “[A] plaintiff
whose speech is clearly proscribed cannot raise a success­
ful vagueness claim.” Holder v. Humanitarian Law Pro-
ject, 561 U.S. 1, 20 (2010). Although the merchants argue
that “no one can seem to put a finger on just how far the
law sweeps,” Brief for Petitioners 51, it is at least clear
——————
3 To assess the statute’s constitutionality, the Court of Appeals may
need to consider a question we need not answer here: whether the
statute permits two-sticker pricing schemes like the one petitioner
Expressions currently uses, see n. 1, supra. Respondents’ argument
that §518 is a constitutionally valid disclosure requirement rests on an
interpretation of the statute that allows such two-sticker schemes.
Cite as: 581 U. S. ____ (2017) 11
Opinion of the Court
that §518 proscribes their intended speech. Accordingly,
the law is not vague as applied to them.4
C
The judgment of the Court of Appeals for the Second
Circuit is vacated, and the case is remanded for further
proceedings consistent with this opinion.
It is so ordered.
——————
4 For similar reasons, petitioners’ related argument regarding absten­
tion is no longer at issue. The Court of Appeals abstained from decid­
ing whether §518 was constitutional outside of the single-sticker
context, but the merchants have disavowed any intent to challenge the
law outside of this context.
Cite as: 581 U. S. ____ (2017) 1
BREYER, J., concurring in judgment
SUPREME COURT OF THE UNITED STATES
_________________
No. 15–1391
_________________
EXPRESSIONS HAIR DESIGN, ET AL., PETITIONERS v.
ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL OF
NEW YORK, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT
[March 29, 2017]
JUSTICE BREYER, concurring in the judgment.
I agree with the Court that New York’s statute regu-
lates speech. But that is because virtually all government
regulation affects speech. Human relations take place
through speech. And human relations include community
activities of all kinds—commercial and otherwise.
When the government seeks to regulate those activities,
it is often wiser not to try to distinguish between “speech”
and “conduct.” See R. Post, Democracy, Expertise, and
Academic Freedom 3–4 (2012). Instead, we can, and
normally do, simply ask whether, or how, a challenged
statute, rule, or regulation affects an interest that the
First Amendment protects. If, for example, a challenged
government regulation negatively affects the processes
through which political discourse or public opinion is
formed or expressed (interests close to the First Amend-
ment’s protective core), courts normally scrutinize that
regulation with great care. See, e.g., Boos v. Barry, 485
U.S. 312, 321 (1988). If the challenged regulation re-
stricts the “informational function” provided by truthful
commercial speech, courts will apply a “lesser” (but still
elevated) form of scrutiny. Central Hudson Gas & Elec.
Corp. v. Public Serv. Comm’n of N. Y., 447 U.S. 557, 563–
564 (1980). If, however, a challenged regulation simply
2 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
BREYER, J., concurring in judgment
requires a commercial speaker to disclose “purely factual
and uncontroversial information,” courts will apply a more
permissive standard of review. Zauderer v. Office of Dis-
ciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626,
651 (1985). Because that kind of regulation normally has
only a “minimal” effect on First Amendment interests, it
normally need only be “reasonably related to the State’s
interest in preventing deception of consumers.” Ibid.
Courts apply a similarly permissive standard of review to
“regulatory legislation affecting ordinary commercial
transactions.” United States v. Carolene Products Co., 304
U.S. 144, 152 (1938). Since that legislation normally does
not significantly affect the interests that the First
Amendment protects, we normally look only for assurance
that the legislation “rests upon some rational basis.” Ibid.
I repeat these well-known general standards or judicial
approaches both because I believe that determining the
proper approach is typically more important than trying to
distinguish “speech” from “conduct,” see Sorrell v. IMS
Health Inc., 564 U.S. 552, 582 (2011) (BREYER, J., dissent-
ing), and because the parties here differ as to which ap-
proach applies. That difference reflects the fact that it is
not clear just what New York’s law does. On its face, the
law seems simply to tell merchants that they cannot
charge higher prices to credit-card users. If so, then it is
an ordinary piece of commercial legislation subject to
“rational basis” review. See 44 Liquormart, Inc. v. Rhode
Island, 517 U.S. 484, 507 (1996) (opinion of Stevens, J.).
It may, however, make more sense to interpret the statute
as working like the expired federal law that it replaced. If
so, it would require a merchant, who posts prices and who
wants to charge a higher credit-card price, simply to dis-
close that credit-card price. See 15 U.S. C. §§1602(q), (x),
1666f(a)(2) (1982 ed.); see also post, at 9 (SOTOMAYOR, J.,
concurring in judgment). In that case, though affecting
the merchant’s “speech,” it would not hinder the transmis-
Cite as: 581 U. S. ____ (2017) 3
BREYER, J., concurring in judgment
sion of information to the public; the merchant would
remain free to say whatever it wanted so long as it also
revealed its credit-card price to customers. Accordingly,
the law would still receive a deferential form of review.
See Zauderer, supra, at 651.
Nonetheless, petitioners suggest that the statute does
more. See, e.g., Brief for Petitioners 28 (arguing that the
statute forbids “[f ]raming the price difference . . . as a
credit surcharge”). Because the statute’s operation is
unclear and because its interpretation is a matter of state
law, I agree with the majority that we should remand the
case to the Second Circuit. I also agree with JUSTICE
SOTOMAYOR that on remand, it may well be helpful for the
Second Circuit to ask the New York Court of Appeals to
clarify the nature of the obligations the statute imposes.
See N. Y. Comp. Code, Rules & Regs., tit. 22, Rule
500.27(a) (2016) (permitting “any United States Court of
Appeals” to certify “dispositive questions of [New York]
law to the [New York] Court of Appeals”).
Cite as: 581 U. S. ____ (2017) 1
SOTOMAYOR, J., concurring in judgment
SUPREME COURT OF THE UNITED STATES
_________________
No. 15–1391
_________________
EXPRESSIONS HAIR DESIGN, ET AL., PETITIONERS v.
ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL OF
NEW YORK, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT
[March 29, 2017]
JUSTICE SOTOMAYOR, with whom JUSTICE ALITO joins,
concurring in the judgment.
The Court addresses only one part of one half of peti-
tioners’ First Amendment challenge to the New York
statute at issue here. This quarter-loaf outcome is worse
than none. I would vacate the judgment below and re-
mand with directions to certify the case to the New York
Court of Appeals for a definitive interpretation of the
statute that would permit the full resolution of petitioners’
claims. I thus concur only in the judgment.
I
New York prohibits its merchants from “impos[ing] a
surcharge on a [customer] who elects to use a credit card
in lieu of payment by cash, check, or similar means.” N. Y.
Gen. Bus. Law Ann. §518 (West 2012). A merchant who
violates this prohibition commits a misdemeanor and risks
“a fine not to exceed five hundred dollars or a term of
imprisonment up to one year, or both.” Ibid.
A
Section 518 can be interpreted in several ways. On first
read, its prohibition on “impos[ing] a surcharge” on credit
card customers appears to prohibit charging customers who
pay with a credit card more than those who pay by other
2 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
SOTOMAYOR, J., concurring in judgment
means. See Black’s Law Dictionary 1579 (9th ed. 2009)
(“surcharge” means “[a]n additional tax, charge, or cost”).
That is, §518 may require a merchant to charge all cus-
tomers the same price, no matter the form of payment.
An earlier federal law containing an almost identical
prohibition muddies the path to this plain text reading. A
1976 amendment to the Truth in Lending Act set out a
temporary prohibition barring a “seller in any sales trans-
action” from “impos[ing] a surcharge on a cardholder who
elects to use a credit card in lieu of payment by cash,
check, or similar means.” §3(c)(1), 90 Stat. 197. The
amendment also defined a “surcharge” as “any means of
increasing the regular price to a cardholder which is not
imposed upon customers paying by cash, check, or similar
means.” §3(a), ibid. “[R]egular price” was later defined to
mean the displayed price if a merchant displayed only one
price or the credit card price if the merchant either did not
display prices or displayed both cash and credit card prices.
§102(a), 95 Stat. 144. Under that definition, a merchant
violated the federal prohibition on “impos[ing] a sur-
charge” by displaying in dollars-and-cents form only one
price—the cash price—and then charging credit card
customers a higher price.1
When the federal law lapsed in 1984, New York enacted
§518, which sets out the same ban on “impos[ing] a sur-
charge.” New York borrowed the federal prohibition al-
most verbatim. But it chose, without explanation, not to
borrow the federal definitions or to enact clarifying defini-
tions of its own.
The difference between the laws leaves §518 open to at
least three interpretations. It could be read in line with
its plain text to require that a merchant charge the same
——————
1 This is the interpretation of the lapsed federal ban offered by the
United States and accepted by the majority. For purposes of this
opinion, I assume that this interpretation is correct.
Cite as: 581 U. S. ____ (2017) 3
SOTOMAYOR, J., concurring in judgment
price to all his customers. It could be read in line with the
lapsed federal ban to permit a merchant to charge differ-
ent prices to cash and credit card customers but to prohibit
a merchant from displaying in dollars-and-cents form only
the cash price and then charging credit card customers a
higher price. On this reading, §518 would not apply where
a merchant displays in dollars-and-cents form only the
credit card price and then charges a lower price to cash
customers, or where a merchant displays both the cash
and credit card prices in dollars-and-cents form. Or it
could be read more broadly, based on the omission of the
definitions that had limited the federal ban’s scope. On
this reading, §518 might prohibit a merchant from charac-
terizing the difference between the cash and credit card
prices as a “surcharge,” no matter how he displays his
prices.2
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2 Section 518’s sparse enforcement history does not clear up the am-
biguity. New York has pursued one §518 prosecution, which resulted in
a conviction later set aside on appeal. The decision supports, but does
not require, giving §518 a broader reading than the lapsed federal ban.
See People v. Fulvio, 136 Misc. 2d 334, 344–345, 517 N. Y. S. 2d 1008,
1015 (1987) (stating that §518 permits a conviction for being “careless
enough to describe the higher price in terms which amount to the
‘credit price’ having been derived from adding a charge to the lower
price” (emphasis deleted)). A more recent enforcement spree is more
opaque. A group of merchants state that when a customer called
asking for their prices, they would quote the cash price and tell the
customers they charged, for example, “a $.05 surcharge” for payment
with a credit card. See, e.g., App. 107. They state that in 2009 the New
York Attorney General’s Office told them that they had violated §518,
directed them to stop, and explained that they could comply with §518
by quoting the credit card price and offering a “discoun[t]” for payment
with cash. Ibid. While these merchants’ acts would have violated the
lapsed federal ban—by stating a single cash price and then charging a
higher price to credit card customers—the recent enforcement actions
do not demonstrate that §518 prohibits only those acts and stretches no
further. And because the New York attorney general lacks the author-
ity to adopt an interpretation of §518 that binds other prosecutorial
entities in the State, these enforcement actions speak only to how the
4 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
SOTOMAYOR, J., concurring in judgment
Confirming the elusive nature of §518, New York has
pressed almost all of these interpretations during this
litigation. Before the District Court, it viewed §518 as
mirroring the lapsed federal ban. See 975 F. Supp. 2d
430, 442 (SDNY 2013). Before the Second Circuit, it of-
fered the lapsed federal ban as a narrowing interpretation,
thus suggesting that §518 applies more broadly than that
provision. See 808 F.3d 118, 140, n. 13 (2015). And be-
fore this Court, it explained that other prosecutorial enti-
ties in New York are not bound by its interpretation of
§518 (or the interpretations of the state district attorneys
who are parties to this case), leaving open the possibility
of still other interpretations. See Tr. of Oral Arg. 40.3
B
Petitioners here are five New York merchants. When a
customer pays with a credit card, petitioners (like all
merchants) are charged a processing fee by the card issuer.
Petitioners want to pass that fee on to their credit card
paying customers, but not their cash paying customers.
They want to charge cash customers one price and credit
card customers a higher price that includes the processing
fee. One petitioner, Expressions Hair Design, currently
does pass the costs of credit card processing fees on to its
credit card paying customers. The other four charge one
price to all customers. They set their prices to account for
the processing fees they predict they will incur.
All five would prefer to use a different pricing system or
display than the ones they use now. Expressions Hair
Design and Five Points Academy would like to charge cash
and credit card customers two different prices and to
——————
attorney general may interpret §518. See Tr. of Oral Arg. 40–41.
3 The multiple available interpretations of §518 do not render §518 so
vague as to violate the Due Process Clause. But they do render §518
ambiguous enough to warrant asking the New York Court of Appeals to
resolve the statute’s meaning.
Cite as: 581 U. S. ____ (2017) 5
SOTOMAYOR, J., concurring in judgment
display a dollars-and-cents cash price alongside the extra
charge for credit card customers—say, “$100 with a 3%
credit card charge” or “$100 with a $3 credit card charge.”
Brooklyn Farmacy & Soda Fountain, Brite Buy Wines &
Spirits, and Patio.com want to charge cash and credit card
customers two different prices and to characterize the
difference in prices as a “surcharge” when they display or
convey their prices to customers. App. 47–48, 51, 57.
All five do not use their preferred pricing systems or
displays for fear of violating §518. Expressions Hair
Design and Five Points Academy believe §518 prohibits
their pricing display because it would convey the credit
card processing costs impermissibly as a surcharge, rather
than permissibly as a discount—say, “$103 with a 3%
discount for cash payment” or “$103 with a $3 discount for
cash payment.” The other three petitioners believe that
§518 regulates how they can describe the difference be-
tween cash and credit card prices. Because §518 does not,
in their view, clearly state just how it regulates those
descriptions, they have decided that the uncertainty coun-
sels against a change.
Petitioners view §518 as an unconstitutional restriction
on their ability to display and describe their prices to their
customers. And so they sued and challenged the law on
First Amendment grounds.
II
Resolving petitioners’ challenge to §518 requires an
accurate picture of how, exactly, the statute works. That
understanding is needed both to decide whether §518
prohibits petitioners’ preferred pricing systems and dis-
plays and, if so, whether that prohibition is consistent
with the First Amendment. See 808 F.3d, at 141; ante, at
10, n. 3.
But the Second Circuit did not decide just how far §518
extends. It instead decided how §518 applies to part of the
6 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
SOTOMAYOR, J., concurring in judgment
petitioners’ challenge—the pricing display Expressions
Hair Design and Five Points Academy wish to use—and
declined to decide how, or even if, §518 applies to the rest
of the challenge. While §518 evades easy interpretation, a
partial decision was neither required nor right. The court
below erred by not asking the New York Court of Appeals
for a definitive interpretation of §518, and this Court errs
by not correcting it.
A
Given a constitutional challenge that turned on the
interpretation of an ambiguous state statute not yet defin-
itively interpreted by the state courts, the Second Circuit
faced a problem. Any interpretation it gave §518 would
not be authoritative since state courts, not federal courts,
have the final word on the interpretation of state statutes.
But it had before it two routes—abstention and certifica-
tion—to a solution. Both would have allowed it to secure
an authoritative interpretation of §518 before resolving
the constitutional challenge.
In this context, abstention and certification serve the
same goals. Both recognize that when the outcome of a
constitutional challenge turns on the proper interpretation
of state law, a federal court’s resolution of the constitu-
tional question may turn out to be unnecessary. The state
courts could later interpret the state statute differently.
And the state court’s different interpretation might result
in a statute that implicates no constitutional question, or
that renders the federal court’s constitutional analysis
irrelevant. See, e.g., Arizonans for Official English v.
Arizona, 520 U.S. 43, 79 (1997); Brockett v. Spokane
Arcades, Inc., 472 U.S. 491, 507–509 (1985) (O’Connor, J.,
concurring). Abstention and certification avoid this risk
by deferring a federal court’s decision on the constitution-
ality of the state statute until a state court has authorita-
tively resolved the antecedent state-law question.
Cite as: 581 U. S. ____ (2017) 7
SOTOMAYOR, J., concurring in judgment
Abstention is a blunt instrument. Under Railroad
Comm’n of Tex. v. Pullman Co., 312 U.S. 496 (1941), a
federal court’s decision to abstain sends the plaintiff to
state court. Once the plaintiff obtains the state courts’
views on the statute, he may return to federal court, state-
court decision in hand, for resolution of the constitutional
question. Pullman abstention thus “entail[s] a full round
of litigation in the state court system before any resump-
tion of proceedings in federal court.” Arizonans for Offi-
cial English, 520 U.S., at 76.
Certification offers a more precise tool. In States that
have authorized certification, a federal court may “put the
[state-law] question directly to the State’s highest court,
reducing the delay, cutting the cost, and increasing the
assurance of gaining an authoritative response.” Ibid.
The rule relevant here is typical of certification statutes.
New York allows a federal court of appeals to certify “de-
terminative questions of New York law . . . involved in a
case pending before that court for which no controlling
precedent of the Court of Appeals exists . . . to the [New
York] Court of Appeals.” N. Y. Comp. Code, Rules &
Regs., tit. 22, Rule 500.27(a) (2016).4
——————
4 The New York Court of Appeals regularly accepts and answers certi-
fied questions. See, e.g., Flo & Eddie, Inc. v. Sirius XM Radio, Inc., 28
N.Y. 3d 583, ___ N. E. 3d ___ (Dec. 20, 2016) (certified Apr. 13, 2016);
Pasternack v. Laboratory Corp. of Am. Holdings, 27 N.Y. 3d 817, 59
N.E.3d 485 (June 30, 2016) (certified Nov. 17, 2015); Matter of Viking
Pump, Inc., 27 N.Y. 3d 244, 52 N.E.3d 1144 (May 3, 2016) (certified
June 10, 2015); Beck Chevrolet Co. v. General Motors LLC, 27 N.Y. 3d
379, 53 N.E.3d 706 (May 3, 2016) (certified May 19, 2015); Ministers &
Missionaries Benefit Bd. v. Snow, 26 N.Y. 3d 466, 45 N.E.3d 917 (Dec.
15, 2015) (certified Mar. 5, 2015). The Second Circuit has “actively and
vigorously employed” certification. Kaye, Tribute to Judge Guido
Calabresi, 70 N. Y. U. Annual Survey Am. L. 33, 34 (2014) (noting,
based on service as the Chief Judge of the New York Court of Appeals,
that certification by the Second Circuit “has done an enormous amount
to bridge the gap between our state and federal court systems”).
8 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
SOTOMAYOR, J., concurring in judgment
While the decision to certify “rests in the sound discre-
tion of the federal court,” Lehman Brothers v. Schein, 416
U.S. 386, 391 (1974), this Court has repeatedly empha-
sized that certification offers clear advantages over ab-
stention. “[M]ere difficulty in ascertaining local law is no
excuse for” abstaining and “remitting the parties to a state
tribunal for the start of another lawsuit.” Id., at 390.
Keeping the case, waiting for an answer on the certified
question, and then fully resolving the issues “in the long
run save[s] time, energy, and resources and helps build a
cooperative judicial federalism.” Id., at 391. As a result,
“the availability of certification greatly simplifies the
analysis” of whether to abstain. Bellotti v. Baird, 428
U.S. 132, 151 (1976); see also Arizonans for Official Eng-
lish, 520 U.S., at 75 (“Certification today covers territory
once dominated by a deferral device called Pullman ab-
stention” (internal quotation marks omitted)). And this
Court has described abstention as particularly problematic
where, as here, a challenge to a state statute rests on the
First Amendment. Cf. Virginia v. American Booksellers
Assn., Inc., 484 U.S. 383, 396 (1988) (“Certification, in
contrast to the more cumbersome and (in this context)
problematic abstention doctrine, is a method by which we
may expeditiously obtain that construction”); Houston v.
Hill, 482 U.S. 451, 467–468 (1987).
The court below chose a convoluted course: It rejected
certification, abstained in part, and decided the question
in part. It did so by dividing petitioners’ challenge into
two parts. As to the first part, it held that §518 did pro-
hibit the pricing display that Expressions Hair Design and
Five Points Academy prefer: displaying the cash price
alongside the credit card charge.5 It found this application
——————
5 The court below did not truly engage with the plain text reading of
§518, under which a merchant may not charge different prices to cash
and credit card customers. See 808 F.3d 118, 128 (CA2 2015). It is
Cite as: 581 U. S. ____ (2017) 9
SOTOMAYOR, J., concurring in judgment
of §518 consistent with the First Amendment. See 808
F.3d, at 130. As to the second part, it declined to address
whether §518 speaks to, or unconstitutionally restricts,
how petitioners who wish to display both the cash and
credit card prices in dollars-and-cents form can describe
the difference between those prices. See id., at 136. It
doubted whether §518 did reach that broadly and assumed
that, even if it did, the New York state courts would con-
strue the statute more narrowly—in line with the lapsed
federal provision. And so the court declined to certify the
question and chose instead to abstain from deciding this
part of petitioners’ challenge. See id., at 137–139. It did
so even though New York, responsible for enforcing §518,
had “never quite abandon[ed]” its position that §518 might
reach more broadly than the lapsed federal provision. Id.,
at 140, n. 13.
The Second Circuit should have exercised its discretion
to certify the antecedent state-law question here: What
pricing schemes or pricing displays does §518 prohibit?
Certification might have avoided the need for a constitu-
tional ruling altogether. If the state court reads §518 only
as a price regulation, no constitutional concerns are impli-
cated. Compare 44 Liquormart, Inc. v. Rhode Island, 517
U.S. 484, 507 (1996) (plurality opinion) (“direct regula-
tion” of prices does “not involve any restriction on
speech”), with Virginia Bd. of Pharmacy v. Virginia Citi-
zens Consumer Council, Inc., 425 U.S. 748, 761 (1976)
(price advertisements contain protected speech because
they convey a merchant’s “ ‘idea’ ” that “ ‘I will sell you the
X prescription drug at the Y price’ ”). Or certification
might have limited the scope of the constitutional chal-
lenge in the case. If the state court reads §518 to mirror
the lapsed federal ban, that would eliminate the need for a
——————
free to consider that reading on remand in light of the Court’s constitu-
tional holding.
10 EXPRESSIONS HAIR DESIGN v. SCHNEIDERMAN
SOTOMAYOR, J., concurring in judgment
constitutional ruling on the second part of petitioners’
challenge (premised on a reading of §518 that prohibits
more than the lapsed federal ban). At the very least,
certification would have allowed the court to resolve peti-
tioners’ entire challenge in one go.
The Second Circuit declined to exercise its discretion to
certify because it viewed the “state of the record” as too
underdeveloped. 808 F.3d, at 141. It thought that the
New York Court of Appeals could not interpret §518, and
that it could not resolve the challenge to §518, based
on that record. Both issues are pure questions of law:
whether §518 prohibits petitioners’ preferred pricing sys-
tems and displays (a statutory interpretation question for the
New York Court of Appeals) and whether §518 survives
petitioners’ First Amendment challenge (a constitutional
question for the Second Circuit). And both issues turn on
only a limited set of facts—the pricing systems and dis-
plays that petitioners wish to use. As discussed above, the
record contains those facts. The “state of the record” thus
does not counsel against certification. Given the signifi-
cant benefits certification offered and given the absence of
persuasive downsides identified by the Second Circuit, the
decision not to certify was an abuse of discretion.
B
The consequences of the decision not to certify reverber-
ate throughout the Court’s opinion today. For lack of a
definitive interpretation of §518, it chooses to address only
the first part of petitioners’ challenge and to defer to the
Second Circuit’s partial interpretation of §518.6 Ante, at
——————
6 It does so by invoking an interpretive rule of deference to a lower
federal court’s construction of the law of a State within its jurisdiction,
in line with the general principle that this Court does not resolve issues
of state law. I do not read the Court’s deference to the Second Circuit
as holding that this Court will defer to a lower federal court’s interpre-
tation of state law even where doing so would cast serious constitutional
Cite as: 581 U. S. ____ (2017) 11
SOTOMAYOR, J., concurring in judgment
6–8. It then holds that §518 does restrict constitutionally
protected speech. Ante, at 8–10. But it does not decide
whether §518’s restriction is constitutionally permissible
because doing so would require it to answer the ever-
present question in this case: “whether the statute permits
. . . pricing schemes like the one . . . Expressions currently
uses.” Ante, at 10, n. 3. And so it sends this case back to
the Second Circuit for further proceedings. Ante, at 10.
III
“The complexity” of this case “might have been avoided,”
Arizonans for Official English, 520 U.S., at 79, had the
Second Circuit certified the question of §518’s meaning
when the case was first before it. The Court’s opinion does
not foreclose the Second Circuit from choosing that route
on remand. But rather than contributing to the piecemeal
resolution of this case, I would vacate the judgment below
and remand with instructions to certify the case to the
New York Court of Appeals to allow it to definitively
interpret §518. I thus concur only in the judgment.
——————
doubt on, or invalidate, a state law. Such a rule would be incorrect.
See Frisby v. Schultz, 487 U.S. 474, 483 (1988) (describing lower
courts’ interpretation as “plain error . . . [t]o the extent they endorsed a
broad reading of the” law at issue because “the lower courts ran afoul of
the well-established principle that statutes will be interpreted to avoid
constitutional difficulties”). The Court’s silence on the relevance of the
avoidance canon to the Second Circuit’s interpretation is consistent
with an unexpressed conclusion, with which I disagree, that no narrow-
ing construction is available that would avoid constitutional concerns or
that a broader constriction raises no constitutional concerns.