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NY State No-Surcharge Law Unconstitutional

posted by Adam Levitin

Judge Rakoff issued an opinion today holding that the New York state credit card no-surcharge law violates the First Amendment of the US Constitution because a "surcharge" and a "discount" are two ways of expressing the same thing, and the state of NY cannot direct merchants which of those two ways of expression to use.  I'm a little skeptical of some of Rakoff's authority--he cites a couple of papers by some Levitin character (here and here), but the opinion is classic Rakoff:  "Alice in Wonderland has nothing on section 518 of the New York General Business Law."  

This ruling has real significance in the event that the settlement in the multi-district credit card interchange litigation (MDL 1720) is ultimately approved because while that settlement amends card network association rules to permit surcharging in certain circumstances, surcharging remains impossible in 11 or so states that have no-surcharge laws.  If the NY statute is unconstitutional, it's hard to fathom how other states' no-surcharge statutes would be too.  Of course, we'll have to see what happens on appeal. 

October 3, 2013 at 11:11 AM in Credit & Debit Cards

Comments

Isn't a discount vs surcharge more like a truth in price labelling law ? I suppose one could say that using troy ounce vs. avoirdupois ounce (difference of 10%) is also a matter of freedom of speech, but we make no qualms about government insisting on standard measures.

Posted by: andrew | October 05, 2013 at 07:42 AM

Rakoff holds corporations have First Amendment rights. Where is the liberal outrage?

Posted by: Necessary Proper | October 08, 2013 at 01:30 PM

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