You Say Tomato, I Say Tomato

In Dana’s Railroad Supply v. Florida Attorney General, Case No. 14-14427 (decided November 4, 2015), the United States Court of Appeals for the Eleventh Circuit addressed an interesting issue involving the application of the First Amendment to commercial speech. The Court concluded that the State of Florida was improperly regulating commercial speech by authorizing one type of conduct and penalizing other conduct when, in the Court’s view, there was no difference between the two types of conduct. In the Court’s view, the statute at issue drew a distinction merely over how the conduct was labeled. That penalizing of a label violated the First Amendment.

The case involved a Florida statute that regulates the options that Florida retailers have for handling credit card processing fees. Credit card companies collect a fee from retailers on every credit transaction, reducing what the retailer receives for its goods or services from the customer paying with credit. The statute makes it a misdemeanor for a seller to “impose a surcharge on the buyer or lessee for electing to use a credit card.” Fla. Stat. § 501.0117(1)-(2). However, the statute also expressly allows “the offering if a discount for the purpose of inducing payment by cash.” Id. § 501.0117(1).  A collection of retailers filed a lawsuit challenging the statute, and the Eleventh Circuit upheld their challenge.

In the opinion of the Court majority, there was no functional distinction between a surcharge for using a credit card and a discount for using cash. In both cases, the retailer had two prices: a credit price and a cash price. If the retailer said “this is my price, but I will charge you a higher price if you use a credit card,” that would violate the statute. However, if he said “this is my price, but I will give you a discount if you pay in cash,” that was allowed. In the opinion of the majority, what was being punished was not a difference in conduct (having two prices, a cash price, and a higher credit price) but a difference in how the retailer described its conduct. Because the Court majority found that Florida had not articulated a sufficient justification for treating the same conduct in different ways based on how it was labeled, the Court concluded that the Florida statute violated the First Amendment.

In recent years, courts have become more attentive to the application of the First Amendment to commercial speech. Reading the advance reports, one sees more and more instances in which businesses are resisting regulations on the grounds that they infringe First Amendment rights either by compelling speech or prohibiting truthful speech. The decision of the Eleventh Circuit in the Dana’s Railroad Supply case is evidence of that trend.

The Opinion is available at http://media.ca11.uscourts.gov/opinions/pub/files/201414426.pdf