Orrick Appellate Team Files Amicus Brief in Key Challenge to Bans on Retailer Credit Card Surcharges

December.21.2016

An Orrick appellate team today filed an amicus brief on behalf of the International Center for Law & Economics and sixteen law and economics scholars in a closely watched First Amendment challenge to New York’s law banning credit card surcharges.

The U.S. Supreme Court agreed in October to hear Expression Hair Design et al v. Schneiderman et al, exploring whether laws such as New York’s violate the free speech rights of merchants.  The case is set to be argued January 10, 2017. 

Petitioners’ challenge to the surcharge ban is largely premised on behavioral economics theories, which they claim show that credit card surcharges (which are banned) and cash discounts (which are allowed) are economically equivalent, but that the “message” of a surcharge is more powerful in encouraging cash transactions. The amicus brief explains that the petitioners’ behavioral economics theories are not in fact supported by sound empirical evidence, and that some of the cited studies actually cut the other way. Further, the brief details how surcharges and discounts are different in that they facilitate different types of sales and pricing practices. Unlike discounts, surcharges facilitate deceptive advertising and profiteering, the brief observes.

“This Court should thus reject Petitioners’ invitation to base constitutional doctrine on a behavioral hypothesis unsupported by any sound empirical evidence —especially where, as here, that result could potentially expose consumers to the type of conduct that the State’s law seeks to prevent,” the Orrick brief states.

The Orrick brief asks the Supreme Court to side with last year’s ruling by the Second Circuit U.S. Court of Appeals, which upheld the New York law. The brief can be found here.

The Orrick team representing the amici includes partners Josh Rosenkranz and Bob Loeb, and associates Ian Fein and Charles Tyler.