Expressions Set To Determine Retail Transparency and Fate

By Katelyn English

Across the United States, retail sale prices inform consumers about merchandise’s monetary value. Most Americans will see a store product’s sales tag amount, ready their wallet at the cash register and consider that price as a factor in their choice of payment method.

Pew Research Center shows nearly six out of ten, roughly 58 percent of adults report having credit card bills as part of their regular expenses. Yet, a New York statute bans sellers from announcing credit card surcharge prices, stating fines and jail time as legal penalties. Some retailers see this as their truthful commercial speech, protected by the First Amendment, violated. As the law allows for original price sale inflation and a discount amount for cash purchases via price tag or word of mouth, it denies sellers the right to place on a price tag or say—surcharge— to inform customers about credit card swipe fees (Volokh).

On October 3, 2013, five retailers brought suit against New York State’s Attorney General and District Attorneys from New York, Kings and Broome Counties questioning the constitutionality of New York General Business Law section 518. The United States Court for the Southern District of New York originally presided over the case noting the statute surfaced after the lapse in Congress’s 1976 no-surcharge amendment to the Truth in Lending Act, which echoes section 518 saying, “[n]o seller in any sales transaction may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means” (EXPRESSIONS HAIR DESIGN V SCNEIDERMAN, 975 F. Supp. 2d 430 U.S. Dist. 2013).

The court also said the credit card industry started pushing for state-level no-surcharge laws— again meaning the prohibition of sellers saying or posting the term surcharge for consumer information, not preventing them from obtaining credit card swipe charges via a cash discount scheme—creating laws in ten states similar to New York’s section 518 (Id. at 7). Further, the court points out how credit card companies decided to include contractual no-surcharge provisions in their agreements with retailers. It noted that Visa and MasterCard’s actions in recently dropping these contractual provisions led to the state no-surcharge law’s renewed importance (Id. at 8).

Why would New York retailers not want to charge higher prices for credit card transactions when they are paying a percentage for credit card swipe fees? They can and still do, but not through surcharges as section 518 holds: “No 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 § 518). Retailers are essentially left with two options—charge the same price for cash and credit transaction payments or separate prices for cash and credit customers thus describing the difference as a “cash discount” as opposed to a “credit card surcharge” (Salzman, Pacific Legal Blog).

The district court expressed the frustration retailers faced (Id. at 8). It’s case facts show how four of the five retailers in the case charged the same price for all transactions including credit cards for fear of violating the statute. It stated only Expressions Hair Design placed a counter sign notifying its customers of a three percent charge for credit card transactions due to high swipe 3 fee charges by credit card companies. But Expressions even erred on the more cautious side removing its sign and watching its language when a customer who was a lawyer reminded the salon of New York’s no-surcharge law.

In the end, the district court ruled section 518 was unconstitutional. It applied the four-part test established in Central Hudson Gas & Electric Corp. v. Public Service Commission saying the statute deserved “heightened judicial scrutiny” due to the law’s disclosure requirement and outright prohibition on speech (Id. at 12). To meet the test, the district confirmed three test reasons—(1) the retailers’ restricted speech concerned lawful conduct and was not misleading (Id. at 13), (2) the statute does not “directly advance any interest” protecting customers from fraud (Id. at 13), (3) the statute is “far broader than necessary” to prevent fraud (Id. at 14)

However on September 29, 2015, the United States Court of Appeals for the Second Circuit held section 518 did not violate First Amendment—speech. It said the law “regulated only conduct” in that the law “simply prohibits imposing credit-card surcharges,” not “referring to them” or “engaging in advocacy related to them” (EXPRESSIONS HAIR DESIGN V SCNEIDERMAN, 808 F. 3d 118 U.S. App. 2015). The appellate court did bring up United States v. O’Brien. It concluded, however, that the plaintiffs referenced section 518 as regulating exclusively speech, whereby questioning whether the regulated conduct was “inherently expressive” implicating First Amendment protection fell on deaf ears.

Soon after, the United States Supreme Court granted certiorari to review the case. How it will rule as to “[w]hether state no-surcharge laws unconstitutionally restrict speech conveying price information (as the Eleventh Circuit has held), or regulate economic conduct (as the Second and Fifth Circuits have held)” is up for debate (SCOTUSblog).

A time existed when commercial speech received no protection under the First Amendment. Yet, the United States Supreme Court’s attitude towards this began shifting in the 1960s to the 70s seen in the Court’s cases—New York Times Co. v. Sullivan where it held paid advertisement had First Amendment protection despite publication for profit and Bigelow v. Virginia where it ruled Virginia could not criminalize New York abortion advertisements in its state newspapers paving 4 the way for Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., a 1976 case where the Court held the First Amendment affords some protection for commercial speech when it struck down a Virginia law banning pharmacists from advertising prescription drug prices, “truthful information” solely about lawful activity (Sukhatme, Harvard Law).

More recently, the Eleventh Circuit and Eastern District of California heard cases on the constitutionality of state laws prohibiting credit card surcharges holding similarly to the district court in Expressions Hair Design v. Scneiderman.

In November 2015, the Eleventh Circuit held a Florida statute “targeted expression alone,” and that “there is no real-world difference between a surcharge and a discount” meaning the law violated retailers’ commercial free speech in defining price differences between credit and cash sales (DANA’S R.R. SUPPLY V ATTORNEY GENERAL, 807 F.3d 1235 11th Cir. 2015). In March 2015, the Eastern District of California ruled similarly on California’s law. (ITALIAN COLORS REST V HARRIS, 99 F. Supp. 3d 1199 E.D. Cal. 2015).

The Court’s cases have cemented its commitment in granting commercial speech First Amendment protection according to legal enthusiasts, such as Micah L. Berman, who have emphasized the Court’s growing interest in commercial speech’s evolution.

Berman, an assistant professor of Public Health and Law at Moritz College of Law, sums up and interprets what Mermin and Graff write in their work titled The First Amendment and Public Health that the Court’s “commercial speech doctrine is deemed ‘an amalgam of strict scrutiny and intermediate scrutiny,’ leaning ever further in the direction of strict scrutiny” (Berman, The Georgetown Law Journal). He goes further to state that many believe the Court will soon grant full protection to commercial speech, noting a majority of the Court “subscribes to the view” Justice Stevens compiled in Rubin v. Coors Brewing Co—law that deprives information from the public for its own good offends an “informed citizenry,” a primary goal of the Free Speech Clause, violating the First Amendment (Berman).

This case not only has the potential to promote consumer pricing transparency, but it also can cause the “fall in credit card swipe fees” possibly “saving retailers millions” as many economists have predicted (Jenkins and Brooks, Sedgwick LLP). The Supreme Court has the ball in its court to determine the fate of retail and how consumers can be made aware of products they purchase. Because the Court has upheld truthful information flow to inform the public time and again, New York can seemingly look forward to a tough case to win.

 

Works Cited

Berman, Micah L. “Manipulating Marketing and the First Amendment.” The Georgetown Law Journal. Web. 1 Nov. 2016.

Dana’s R.R. Supply v. Attorney General, 809 F.3d 1282, 2016 U.S. App. LEXIS 1190 (11th Cir., 2016)

Expressions Hair Design v. Scneiderman, 975 F. Supp. 2d 430, 2013 U.S. Dist. LEXIS 143415 (S. Dist., N.Y., 2015)

Expressions Hair Design v. Scneiderman, 808 F. 3d 118, 2015 U.S. App. LEXIS 21521 (2d Cir., 2015)

Italian Colors Rest v. Harris, 99 F. Supp. 3d 1199, 2015 E.D. LEAGLE (2015)

Jenkins, Kirk and Meegan Brooks. “Justices Eye Credit Card Surcharge Laws and Free Speech.” LAW360. Web. 1 Nov. 2016.

N.Y. General Business Law § 518 (McKinney 1996)

Salzman, Larry. “Defending the free speech rights of retailers.” Pacific Legal. 22 Nov. 2016. Web. 1 Nov. 2016.

Sukhatme, Neel. “Making Sense of Commercial Speech: A Theoretical Framework and a Case Study in Food and Drug Law.” Harvard Law School. 22 April 2005. Web. 1 Nov. 2016.

Volokh, Eugene. “Supreme Court’s new First Amendment price advertising case – can allow ‘cash discounts’ but forbid ‘credit card surcharges’?.” Washington Post. Washington Post, 29 Sept. 2016. Web. 2 Dec. 2016.

“What Americans Pay For – And How (III. Consumer Credit).” Pew Research Center Social Trends. Pew Research Center, 7 Feb. 2007. Web. 1 Nov. 2016.

First Amendment Rights of Public Employees

Ritomaitree Sarkar
Blog Post
Communication Law

First Amendment  Rights of  Public Employees

Public sector employees enjoy Constitutional protections in the workplace that in many cases their private sector counterparts do not. Until the middle of the last century, it was well established that public employees enjoyed free speech rights under the First Amendment, but that public employers were privileged to substantially restrict the exercise of those rights as a condition of public employment,( Adler v Board of Education, 342 U.S. 485 (1952). Over subsequent years, First Amendment protections of public employees were greatly expanded as the Supreme Court clearly established that public employers could not, as a condition of employment, require public employees to relinquish substantial rights to associate freely with others or to refrain from compelled speech (in the form of loyalty oaths, etc.).  (Wieman v. Updegraff, 344 U. S. 183 (1952); Shelton v. Tucker, 364 U. S. 479 (1960); Keyishian v. Board of Regents, 385 U. S. 589 (1967).

But firstly what do we understand by First Amendment?

The First Amendment to the United States Constitution prohibits the making of any law respecting an establishment of religion, ensuring that there is no prohibition on the free exercise of religion, abridging the freedom of speech, infringing on the freedom of the press, interfering with the right to peaceably assemble, or prohibiting the petitioning for a governmental redress of grievances. (“U.S. Const. Amend. I”)

So in laymen’s language this means, an American retains the right to practice a  religion of his or her choice,  to say just about anything (other than some narrow categories of speech such as obscenity and defamation), the right of a free press, and freedom to assemble peacefully anywhere. In this article I will be focusing more on one pillar of the First Amendment which is freedom of speech.

The questions we will examine here is how far does the First Amendment go to protect the speech of government employees?

Does it allow the government to use a public employee’s speech as the ground for discharge or denying a promotion?

Ironically the answer to the last question according to the Supreme Court at one time was a simple ‘Yes’.

By 1967 the Court took the position that public employment cannot be conditioned on a surrender of constitutional rights. The problem for the Court then became how to balance the government’s interest in maintaining an efficient public workplace against the individual employee’s interest in free expression. (Kevishian.)

Sometimes public employees are disciplined for speaking out against government corruption, belonging to a particular political party, criticizing agency policy or engaging in private conduct of which the employer disapproves. For example, in his book Balancing Act: Public Employees and Free Speech, David Hudson Jr. reveal that public employees have been disciplined for:

  • Criticizing a police policy that placed primarily African-American officers on the front lines of a community-policing project in certain neighborhoods. (Balancing Act: Public Employees and Free Speech, David Hudson Jr.)
  • Uttering a racial slur at a dinner party. (Balancing Act: Public Employees and Free Speech, David Hudson Jr.)
  • Complaining that a police helicopter unit was not operating safely. (Balancing Act: Public Employees and Free Speech, David Hudson Jr.)
  • Refusing to change a college student’s grade from an F to an “incomplete” when the student had attended only three of 15 classes. (Balancing Act: Public Employees and Free Speech, David Hudson Jr.)
  • Failing to remove a religious pin from a uniform. (Balancing Act: Public Employees and Free Speech, David Hudson Jr.)

 

In one of the recent examples Robert R. Bennie, Jr., Plaintiff, v. John Munn, et al., in his official capacity as Director of the Nebraska Department of Banking and Finance, 2016 case, Robert (Bob) Bennie, like millions of Americans, was working for a private business but under government contract. What got him into trouble is that the regulators didn’t like Bennie’s political speech. Until November 2010, Bennie worked for LPL Financial (LPL). LPL is a broker-dealer, meaning it holds accounts and assets and executes financial transactions. It operates through agents like Bennie, who deal with customers. As a broker-dealer, LPL is subject to regulation by the Nebraska Department of Banking and Finance (department).

In 2010 The Lincoln Journal Star ran a story about Bennie’s role in the Tea Party political movement. The article quoted Bennie denouncing the government and politicians, including President Barack Obama. (http://journalstar.com/news/local/911/judge-dismisses-bob-bennie-lawsuit-against-state-banking-officials/article_4fd26a84-7c0f-57cb-b4e4-838ad79f39bb.html)

After the article was published Bennie noticed a change of behavior of LPL towards his work. LPL explained that since a recent internal reorganization, Bennie’s proposed advertisements were reviewed by a senior analyst. Department employees asked whether LPL had any guidelines about agents like Bennie publicly communicating their political views. After living under such restrictions Bennie contacted Nebraska Governor David Heineman and told him the department was targeting Bennie and harassing him.

Bennie then sued, arguing that the state regulators violated the First Amendment by retaliating against Bennie through their emails to his employer based on his political speech.

The emails were certainly problematic, because it implicitly pressured LPL to curtail Bennie’s speech to avoid problems with the department. The emails were also evidence of a deeper problem, as the district court found: that the state regulators “were looking for reasons to go after” Bennie and “made regulatory inquiries of LPL that were motivated, to varying degrees, by the content of Bernie’s speech.” ( George Lee, Contributor to Forbes magazine)

For the state regulators to allow their apparent disagreement with or even distaste for what Bennie had to say politically, or how he said it, to influence how the department treated him and his employer was wholly inappropriate and also absolutely inconsistent with the First Amendment. Bennie has filed a petition for certiorari by the U.S. Supreme Court.

Branti (Branti v. Finkel, 445 U.S. 507 (1980) is one of a series of cases in which the court has prevented firings based on the political beliefs of employees. Branti was one of the six assistant public defenders fired from a country defender’s office simply because they were Republicans and the newly appointed County Defender was a Democrat. The court cited that sometimes it may be permissible to use political affiliation as a basis for hiring and discharge decisions (for example no one would doubt the right of the President to hire only cabinet officers or speechwriters that share his or her political affiliation) but said that, assistant county defenders did not hold the type of decision making power that made political affiliation an appropriate consideration. ((Branti v. Finkel, 445 U.S. 507 (1980))

Ten years later in Rutan v Republic party of Illinois (Rutan v. Republican Party of Illinois (88-1872), 497 U.S. 62 (1990) a case involving the staffing of Illinois prisons, the Supreme Court extended protection for political beliefs to initial hiring decisions as well as decisions relating to promotions and transfers.

In 2006 in Garcetti v Ceballos (Garcetti v. Ceballos Supreme Court of the United States, 2006 547 U. S. , 126 S. Ct. 1951, 164 L. Ed. 2d 689) the court considered the First Amendment claim brought by a deputy district attorney in the Los Angeles District Attorney’s office who had been transferred and denied a promotion because of his statements to supervisors criticizing the credibility of statements made in affidavit prepared by a deputy sheriff.

In a 5 to 4 vote the Court rejected the employee’s claim holding that the First Amendment does not protect public employees’ for statement made pursuant to their official duties. According to Justice Kennedy, the critical fact in this case was that “his expressions were made pursuant to his duties as a calendar deputy. Considering the fact that Ceballos spoke as a prosecutor fulfilling his responsibility to advise his supervisor about how to proceed with a pending case-distinguishes Ceballos’ case from those in which the First Amendment provides protection against discipline”.

In another case Pickering v. Board of Education (Pickering v.Board of Education
391 U.S. 563 (1968
)
a public school teacher was fired for writing a letter to a newspaper critical of the local school board. In ordering the teacher reinstated the court found that a public employee’s statements on matter of public concern could not be the basis for discharge unless the statement were of the sort to cause a substantial interference with the ability of the employees to continue to do his job.

In Bob Bennie’s case, the circuit court acknowledged that the regulators’ actions were inconsistent with the First Amendment, but affirmed the ruling because two of the three circuit court judges could not find “clear error” in the trial court’s findings on the “ordinary firmness” test.  In a split decision in May 2016, the 8th Circuit upheld the dismissal of Bennie’s lawsuit, but called the banking officials’ conduct wholly inappropriate and “absolutely inconsistent with the First Amendment.” This case now will go to the Supreme Court.

There have been many instances like the above where public sector officers were subjected to harassment because of making opinionated statements regarding the government, religion etc.

In essence the U.S. Supreme Court has carved out an exception to its First Amendment jurisprudence for public employees. Basic free-speech rules that apply outside the workplace sometimes have little relevance for public employees. For instance, that as a general matter the First Amendment prohibits governmental discrimination based on the content or viewpoint of an individual’s speech. For example, a law prohibiting citizens from criticizing elected officials would be impermissible because it would discriminate on the basis of content, allowing praise of government officials but not allowing criticism.

Yet such fundamental First Amendment principles do not always apply to public employees in the workplace. For example, a public employee could be fired for saying, “My superior or co-worker is unqualified and corrupt.” Even though that employee would clearly be expressing a particular viewpoint, the Supreme Court has recognized that “many of the most fundamental maxims of our First Amendment jurisprudence cannot reasonably be applied to speech by government employees.”

The reason the Supreme Court states is, public employers must maintain efficient operation of the people’s business. For that reason, it is acceptable for government employers to discipline employees for speech that undermines the integrity of the office or disrupts morale. This discipline can take many different forms, including transfer, demotion or even discharge. Unfortunately, government employers sometimes retaliate against employees for speech that concerns an important public issue a matter of “public concern,” as the Supreme Court has termed it. Because public employers and employees both have important interests at stake in these cases, the courts often are faced with the difficult task of balancing these competing interests. The Supreme Court recognizes that government employers must protect business efficiency. But the Court also has said that “the threat of dismissal of public employment is a potent means of inhibiting speech.”(Balancing Act: Public Employees and Free Speech)

If the US Supreme Court does agree to hear the Bennie case it will offer more guidance on how lower courts should proceed to balance the government’s interest in maintaining an efficient public workplace against the individual employee’s free expression.

 

Bibliography

  1. Bob Bennie legal case, the primary source of information for the blog post- http://www.forbes.com/sites/georgeleef/2016/10/15/regulators-retaliate-against-tea-party-activist-for-his-free-speech-and-get-away-with-it/#114a91cd2f68
  2. Free expression in America: A Documentary History by Sheila Suess Kennedy.
  3. Reflections on Freedom of speech and First Amendment by George Anastaplo.
  4. Rutan v Republic of Illionois- https://www.law.cornell.edu/supct/html/88-1872.ZO.html
  5. Rutan v Republic of Illionois- http://www.casebriefs.com/blog/law/constitutional-law/constitutional-law-keyed-to-cohen/protection-of-penumbral-first-amendment-rights/rutan-v-republican-party-of-illinois/
  6. Garcetti v Ceballos- Lexisnexis
  7. http://www.kentlaw.edu/faculty/mmalin/classes/PublicSectorSp09/CourseDocs/Garcetti.pdf- Garcetti v Ceballos
  8. https://supreme.justia.com/cases/federal/us/391/563/case.html- Pickering v Board of Education.
  9. Freedom of Speech- A Reference Guide to the United States Constitution- https://www.questia.com/library/117829328/freedom-of-speech-a-reference-guide-to-the-united
  10. Balancing Act: Public Employees and Free Speech By David L Hudson Jr