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Supreme Court Remands Texas Surcharge Case back to 5th Circuit

The U.S. Supreme Court has remanded a case brought by Texas retailers challenging the constitutionality of a Texas law prohibiting surcharge fees for credit card transactions in light of the Supreme Court’s recent decision in favor of merchants in a similar case involving a surcharge statute in New York.

The basis of the Texas merchants’ claim is that, while Texas law prohibits them from imposing a surcharge on credit card transactions, it does not prohibit them from offering a discount to consumers who pay for goods and services in cash, which would result in the same ultimate economic effect on the consumer. Thus, according to the merchants, the Texas law in question impermissibly regulates their free speech by allowing them to charge customers differently depending on the method of payment the customer uses, so long as the resulting price difference is not referred to as a “surcharge” on credit card transactions.

The merchants took the battle over Texas’ surcharge law to the Supreme Court on the heels of a ruling by the 5th Circuit Court of Appeals finding that Texas’ law constituted a limitation on the merchants’ conduct and not their speech.

Last month, however, the Supreme Court issued a unanimous decision finding that New York’s similar surcharge law regulated speech and not conduct, and remanded that case back to the 2nd Circuit for a determination as to whether the statute’s regulation of speech violated the merchants’ First Amendment rights. Now that the Texas surcharge case has been remanded as well, the 5th Circuit will be asked to make a similar decision as to whether the statute violated the merchants’ free-speech rights.

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