California Supreme Court, FilmOn.com Inc., v. DoubleVerify Inc., S244157

Anti-SLAPP Statute

Motion to Strike

Commercial Speech

Comparative Advertising

Online Advertisement

Some commercially oriented speech will, in fact, merit anti-SLAPP protection

Section 425.16 may protect private events and conversations

Free Speech

Petition Rights

Trade Libel

Tortious Interference with Contract

Tortious Interference with Prospective Economic Advantage

Unfair Competition Law

Internet Law

California Law

FilmOn.com Inc. (FilmOn) is a for-profit business entity that distributes web-based entertainment programming. In this case, FilmOn sued DoubleVerify Inc. (DoubleVerify), another for-profit business entity that offers online tracking, verification and “brand safety” services to Internet advertisers. FilmOn alleged that DoubleVerify disparaged its digital distribution network in confidential reports to DoubleVerify’s paying clients. DoubleVerify responded by filing an anti-SLAPP motion to strike.

We granted review to decide whether the commercial nature of a defendant’s speech is relevant in determining whether that speech merits protection under the catchall provision. To resolve this question, we also clarify how the context of a statement more broadly — including the identity of the speaker, the audience, and the purpose of the speech — informs the same analysis.

What we hold is that the context of a defendant’s statement is relevant, though not dispositive, in analyzing whether the statement was made “in furtherance of” free speech “in connection with” a public issue. (§ 425.16, subd. (e)(4).) In an age of easy public access to previously private information through social media and other means, context allows us to assess the functional relationship between a statement and the issue of public interest on which it touches — deciding, in the process, whether it merits protection under a statute designed to “encourage continued participation in matters of public significance.” (§ 425.16, subd. (a).)

In giving effect to this statutory purpose, we find that DoubleVerify’s reports — generated for profit, exchanged confidentially, without being part of any attempt to participate in a larger public discussion — do not qualify for anti-SLAPP protection under the catchall provision, even where the topic discussed is, broadly speaking, one of public interest. This is not because confidential statements made to serve business interests are categorically excluded from anti-SLAPP protection. It is instead because DoubleVerify’s reports are too tenuously tethered to the issues of public interest they implicate, and too remotely connected to the public conversation about those issues, to merit protection under the catchall provision.

Internet use has become pervasive in less than a generation, and along with it, advertising through online platforms. (See Interactive Advertising Bureau, IAB Internet Advertising Revenue Report (May 2018) <https://www.iab.com/wp-content/uploads/2018/05/IAB-2017- Full-Year-Internet-Advertising-Revenue-Report.REV2_.pdf> [as of May 2, 2019].) To ensure their advertising dollars are wisely spent and the ads are placed on sites with content appropriate for their target customers, businesses monitor the websites on which they advertise or may wish to advertise. One company offering such monitoring services — which include collecting and packaging information about a website’s content, viewers, and advertising practices — is defendant DoubleVerify.

For its large stable of clients, DoubleVerify gathers and provides information about the websites on which the clients are interested in advertising. The businesses pay for the reports and agree to keep them confidential. In return, they receive from DoubleVerify information on the location of the website’s viewers, whether a competitor advertises on the website, where the website displays advertisements, how long the advertisements are shown, and — crucial to this litigation — a description of the website’s content. Such a description comes in the form of a “tag” or “label classifying the website’s content.” (FilmOn.com v. DoubleVerify, Inc. (2017) 13 Cal.App.5th 707, 712 (FilmOn).) For instance, DoubleVerify may tag a website as containing “Adult Content,” which it then defines, in a glossary included in the report, as “ ‘ “mature topics which are inappropriate viewing for children including explicit language, content, sounds and themes.” ’ ” (Ibid.) Similarly, DoubleVerify also has a “Copyright Infringement: Streaming or File Sharing” tag, defined as “ ‘ “Sites, presently or historically, associated with access to or distribution of copyrighted material without appropriate controls, licensing, or permission; including but not limited to, sites electronically streaming or allowing user file sharing of such material.” ’ ” (Ibid.)

Some of the websites DoubleVerify labeled as containing “Adult Content” or “Copyright Infringement” material belonged to plaintiff FilmOn. FilmOn provides entertainment content on the web, including “hundreds of televisions channels, premium movie channels, pay-per-view channels and over 45,000 video- on-demand titles.” (FilmOn, supra, 13 Cal.App.5th at p. 712.) FilmOn brought this lawsuit against DoubleVerify after DoubleVerify allegedly distributed confidential reports to its clients “ ‘falsely classifying FilmOn Websites under the categories of “Copyright Infringement-File Sharing” and “Adult Content.” ’ ” (Ibid.) FilmOn alleges that “as a direct result of [DoubleVerify’s] false and disparaging statements published in the Reports,” FilmOn incurred damages because “ad partners and potential ad partners have refused to advertise through websites in FilmOn’s network.” Claiming that its websites neither engage in copyright infringement nor feature adult content, FilmOn sued DoubleVerify for trade libel, tortious interference with contract, tortious interference with prospective economic advantage, and violation of California’s unfair competition law.

DoubleVerify responded by filing an anti-SLAPP motion. The trial court granted the motion, and the Court of Appeal affirmed. The Court of Appeal agreed with the trial judge that DoubleVerify’s reports “concerned issues of interest to the public” because “the public has a demonstrable interest in knowing what content is available on the Internet, especially with respect to adult content and the illegal distribution of copyrighted materials.” (FilmOn, supra, 13 Cal.App.5th at pp. 719, 714.) To support its conclusion, the court analogized DoubleVerify’s confidential reports to ratings by the Motion Picture Association of America, writing, “the Motion Picture Association of America (MPAA) engages in conduct quite similar to DoubleVerify’s activities by rating movies concerning their level of adult content, and the MPAA does so, because the public cares about the issue.” (Id. at p. 720.)

(…) The anti-SLAPP law was enacted “to protect nonprofit corporations and common citizens ‘from large corporate entities and trade associations’ in petitioning government.” (USA Waste of California, Inc. v. City of Irwindale (2010) 184 Cal.App.4th 53, 66.) Attempting to protect against “lawsuits brought primarily to chill” the exercise of speech and petition rights, the Legislature embedded context into the statutory preamble, “declaring that it is in the public interest to encourage continued participation in matters of public significance.” (§ 425.16, subd. (a).)

In the paradigmatic SLAPP suit, a well-funded developer limits free expression by imposing litigation costs on citizens who protest, write letters, and distribute flyers in opposition to a local project. (See Assem. Com. on Judiciary, Analysis of Sen. Bill No. 1296 (1997–1998 Reg. Sess.) as amended June 23, 1997, pp. 2–3; Barker, Common-Law and Statutory Solutions to the Problem of SLAPPs (1993) 26 Loyola L.A. L.Rev. 395, 396.) Identifying the problem as one involving particular litigants, their motivations, and the effects of litigation, the Assembly Committee on Judiciary observed that approximately 25 percent of SLAPP suits “relate to development and zoning,” while 20 percent “arise out of complaints against public officials and employees.” (Assem. Com. on Judiciary, Analysis of Sen. Bill. No. 1296, supra, at p. 3.) The Committee recognized that “such lawsuits are often pernicious, masquerading as standard defamation and interference with prospective economic advantage litigation, while really brought by well-heeled parties who can afford to misuse the civil justice system to chill the exercise of free speech . . . by the threat of impoverishing the other party.” (Ibid.) To curb what it took to be the “disturbing increase” in such lawsuits (§ 425.16, subd. (a)), the Legislature shifted burdens of proof and fees onto the lawsuit filer to “compensate the prevailing defendant for the undue burden of defending against litigation designed to chill the exercise of free speech and petition rights.” (Barry v. State Bar of California (2017) 2 Cal.5th 318, 328.)

(…) But those two decisions stand only for the proposition that section 425.16 could apply “to private communications concerning issues of public interest.” (Terry, supra, 131 Cal.App.4th at p. 1546; see also Hecimovich, supra, 203 Cal.App.4th at p. 465 [“ ‘ “ ‘The focus of the speaker’s conduct should be the public interest. . . .’ ” [Citation.] Nevertheless, it may encompass activity between private people.’ ”].) Long before Terry and Hecimovich, we held that section 425.16 may protect private events and conversations. (Navellier v. Sletten (2002) 29 Cal.4th 82, 91 [“When previously construing the statute, however, we have declined to hold ‘that section 425.16 does not apply to events that transpire between private individuals’ . . . .” quoting Briggs, supra, 19 Cal. 4th at p. 1116].) But we have never suggested quite a different proposition: that it will never matter whether the conversations were private or widely broadcasted and received, and for what purpose.

(…) Notice how the language of section 425.17, subdivision (c) and subsequent case law indicate that the provision exempts “only a subset of commercial speech” — specifically, comparative advertising. (All One, supra, 183 Cal.App.4th at p. 1217; see Simpson, supra, 49 Cal.4th at pp. 32–33 [quoting Mendoza, supra, 182 Cal.App.4th at p. 1652, for the notion that “ ‘the Legislature appears to have enacted section 425.17, subdivision (c), for the purpose of exempting from the reach of the anti- SLAPP statute cases involving comparative advertising by businesses’ ”].) So certain commercially oriented statements will fall outside the scope of section 425.17, subdivision (c). (All One, supra, 183 Cal.App.4th at p. 1217 [“the better understanding of section 425.17, subdivision (c), is that all of the speech exempted from the anti-SLAPP statute is commercial speech, but not all commercial speech is exempted thereunder”].) Like all other statements that do not fall within the scope of an exemption, such statements are eligible for anti- SLAPP protection under section 425.16.

(…) So within the framework of section 425.16, subdivision (e)(4), a court must consider the context as well the content of a statement in determining whether that statement furthers the exercise of constitutional speech rights in connection with a matter of public interest. Having established this principle, we now turn to analyzing how context should feature in a court’s analysis under the catchall provision, and to applying that framework to the facts of this case.

(…) Most often, courts strive to discern what the challenged speech is really “about” — a narrow, largely private dispute, for example, or the asserted issue of public interest. (See Bikkina v. Mahadevan (2015) 241 Cal.App.4th 70, 85 [defendant’s speech was “about falsified data and plagiarism in two scientific papers, not about global warming”]; World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1572 [defendants’ attempts to solicit competitor’s agents and customers were not “about” the public issues of “workforce mobility and free competition” or “the pursuit of lawful employment”]; Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 111 [defendants’ statements “were not about pollution or potential public health and safety issues in general, but about [the plaintiffs’] specific business practices”].) This focus on discerning a single topic of speech is less than satisfying; if the social media era has taught us anything, it is that speech is rarely “about” any single issue.

The inquiry under the catchall provision instead calls for a two-part analysis rooted in the statute’s purpose and internal logic. First, we ask what “public issue or issue of public interest” the speech in question implicates — a question we answer by looking to the content of the speech. (§ 425.16, subd. (e)(4).) Second, we ask what functional relationship exists between the speech and the public conversation about some matter of public interest. It is at the latter stage that context proves useful.

(…) DoubleVerify is no exception. As it does now, DoubleVerify argued before the appellate court that its reports “concerned” or “addressed” topics of widespread public interest: the presence of adult content on the internet, generally, and the presence of copyright-infringing content on FilmOn’s websites, specifically. To support its argument that FilmOn’s alleged copyright infringement is a matter of public interest, DoubleVerify offered evidence that FilmOn has been subject to media reports and litigation over its streaming model. The Court of Appeal agreed, finding that DoubleVerify’s reports were made “in connection with” matters of public interest because the company’s tags “identified” content that fell within categories of broad public interest. (FilmOn, supra, 13 Cal.App.5th at p. 720.)

But the catchall provision demands “some degree of closeness” between the challenged statements and the asserted public interest. (Weinberg, supra, 110 Cal.App.4th at p. 1132.)

So even if adult content on the Internet and FilmOn’s particular streaming model are in fact issues of public interest, we agree with the court in Wilbanks that “it is not enough that the statement refer to a subject of widespread public interest; the statement must in some manner itself contribute to the public debate.” (Wilbanks, supra, 121 Cal.App.4th at p. 898; see also Dyer v. Childress (2007) 147 Cal.App.4th 1273, 1280 [“the fact that ‘a broad and amorphous public interest’ can be connected to a specific dispute” is not enough].)

What it means to “contribute to the public debate” (Wilbanks, supra, 121 Cal.App.4th at p. 898) will perhaps differ based on the state of public discourse at a given time, and the topic of contention. But ultimately, our inquiry does not turn on a normative evaluation of the substance of the speech. We are not concerned with the social utility of the speech at issue, or the degree to which it propelled the conversation in any particular direction; rather, we examine whether a defendant — through public or private speech or conduct—participated in, or furthered, the discourse that makes an issue one of public interest. (See All One, supra, 183 Cal.App.4th at pp. 1203–1204 [finding the “OASIS Organic seal” did not “contribute to a broader debate on the meaning of the term ‘organic’ ”]; Cross v. Cooper (2011) 197 Cal.App.4th 357, 375 [finding the defendant’s conduct “directly related” to an issue of public interest because it “served the interests” of preventing child abuse and protecting children].)

(…) The inquiry of whether a statement contributes to the public debate is one a court can hardly undertake without incorporating considerations of context — including audience, speaker, and purpose.

DoubleVerify has identified the public issues or issues of public interest to which its reports and their “tags” relate. It argues FilmOn is notorious for its long history of violating copyright laws, and “FilmOn’s CEO and billionaire owner, Mr. David, regularly injects himself in the public spotlight to discuss himself, his companies, and the purported legality of FilmOn’s services.” The Court of Appeal, meanwhile, determined DoubleVerify’s report “concerned an issue of public interest” because “the presence of adult content on the Internet generally, as well as copyright infringing content on FilmOn’s websites specifically, has been the subject of numerous press reports, regulatory actions, and federal lawsuits.” (FilmOn, supra, 13 Cal.App.5th at p. 720.) It also concluded DoubleVerify’s reports were related to “the public debate over legislation to curb children’s exposure to adult and sexually explicit media content.” (Ibid.)

It is true enough that the various actions of a prominent CEO, or the issue of children’s exposure to sexually explicit media content –– in the abstract –– seem to qualify as issues of public interest under subdivision (e)(4). But even assuming so, the focus of our inquiry must be on “the specific nature of the speech,” rather than on any “generalities that might be abstracted from it.” (Commonwealth Energy Corp. v. Investor Data Exchange, Inc. (2003) 110 Cal.App.4th 26, 34, italics omitted.) Defendants cannot merely offer a “synecdoche theory” of public interest, defining their narrow dispute by its slight reference to the broader public issue. (Ibid.)

It seems plain enough that DoubleVerify’s reports did no such thing. DoubleVerify issues its reports not to the wider public — who may well be interested in whether FilmOn hosts content unsuitable for children or whether its streaming platform infringes copyright — but privately, to a coterie of paying clients. Those clients, in turn, use the information DoubleVerify provides for their business purposes alone. The information never entered the public sphere, and the parties never intended it to.

Yet no single element is dispositive — not DoubleVerify’s for-profit status, or the confidentiality of the reports, or the use to which its clients put its reports. Nor does the combination of these contextual factors create a “commercial speech” category onto which we automatically map the presence or absence of anti-SLAPP protections. Some commercially oriented speech will, in fact, merit anti-SLAPP protection.

Consider, for example, Industrial Waste & Debris Box Service, Inc. v. Murphy (2016) 4 Cal.App.5th 1135, 1148 (Industrial Waste), in which the appellate court found that a for- profit consultant’s report fell within the ambit of the catchall provision. “Commercial” though that report may have been, it analyzed public reports, landfill records, and state agency data to conclude a client’s competitor — the plaintiff waste hauler — had overcalculated and misreported the rate at which it diverted waste for reuse, recycling, and composting. (Id. at p. 1143.) Following a rough approximation of the two-part framework we outline here, the court decided first that “limited landfill capacity and the environmental effects of waste disposal” are indeed issues of “significant interest” to the public and municipal governments; and second, that the report “shed light on these subjects” — that is, contributed to the issue of public interest — by deriving data from public reports and commenting on “whether and to what degree waste hauling companies in Sonoma County were meeting government standards.” (Id. at pp. 1148–1149.) These findings, in turn, prompted the sanitation board to alter its contracts and policies. (Id. at p. 1144.)

It is in the extent of its contribution to, or participation in, the public discussion that DoubleVerify’s report diverges from the report at issue in Industrial Waste. As the court in that case aptly noted, “whether speech has a commercial or promotional aspect is not dispositive” of whether it is made in connection with an issue of public interest. (Id. at p. 1150.)

(…) What this union of content and context lets us discern in this case is that DoubleVerify’s report does not qualify for protection under the catchall provision of the anti-SLAPP statute.

The scenario before us involves two well-funded for-profit entities engaged in a private dispute over one’s characterization –– in a confidential report –– of the other’s business practices. Because our “primary goal is to determine and give effect to the underlying purpose of” the anti-SLAPP statute (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332), this context matters. It allows courts to liberally extend the protection of the anti-SLAPP statute where doing so would “encourage continued participation in matters of public significance,” but withhold that protection otherwise. (§ 425.16, subd. (a).) And here, it allows us to discern what content alone conveys less clearly: DoubleVerify did not issue its report in furtherance of free speech “in connection with” an issue of public interest. (§ 425.16, subd. (e)(4).)

(California Supreme Court, May 6, 2019, FilmOn.com Inc., v. DoubleVerify Inc., S244157)

U.S. Court of Appeals for the Fifth Circuit, Express Oil Change, L.L.C.; TE, L.L.C., doing business as Tire Engineers v. Mississippi Board of Licensure for Professional Engineers & Surveyors, Docket No. 18-60144, Circuit Judge Jerry E. Smith

Trademark

Use of the Term/Mark “Engineer”

State Regulation of the Term

First Amendment’s Commercial Speech

Disclaimer

Appeal from the United States District Court for the Southern District of Mississippi.

E. raises only its constitutional claim on appeal.

Mississippi regulates the practice of engineering and restricts the use of the term “engineer.” Express Oil Change (“Express”) operates several automotive service centers in Mississippi under the name “Tire Engineers.” In 2015, the Mississippi Board of Licensure for Professional Engineers & Surveyors (“the Board”) determined that the name “Tire Engineers” violated the pertinent statutes and requested that Express cease using it. Following protracted correspondence, the parties could not reach a compromise, and Express sued for a declaratory judgment and related relief. The company contended, inter alia, that the relevant statutory provisions violate the First Amendment as incorporated through the Due Process Clause of the Fourteenth Amendment. After discovery, the district court granted the Board’s motion for summary judgment and dismissed. Because the Board’s decision violates the First Amendment’s commercial speech protections, we reverse and render judgment for Express.

Express operates a number of automotive service centers in Mississippi under the Tire Engineers mark. According to Express, Tire Engineers provides “oil changes, car repairs, and tire services—repair, maintenance, and replacement—to customers in fifteen states, including Mississippi.”

(…) After the parties were unable to agree, Express sued, seeking a declaratory judgment and related relief on three theories: first, that the Board’s decision concerning the use of the term engineer violated Mississippi law; second, that it violated Express’s “rights of commercial free speech guaranteed by the First Amendment”; and third, that the decision violated Express’s “rights under preemptive federal trademark law pursuant to the Lanham Trademark Act of 1946, 15 U.S.C. §§ 1051–1127.”

(…) Commercial speech is “expression related solely to the economic interests of the speaker and its audience.” Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557, 561 (1980).

(…) At the outset, a court must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, a court asks whether the asserted governmental interest is substantial. If both inquiries yield positive answers, a court must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest. Cent. Hudson, 447 U.S. at 566. “The party seeking to uphold a restriction on commercial speech carries the burden of justifying it.” Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 71 n.20 (1983). This “burden is a ‘heavy’ one,” Pub. Citizen, Inc. v. La. Att’y Disciplinary Bd., 632 F.3d 212, 218 (5th Cir. 2011) (quoting 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 516 (1996)), and may not be “satisfied ‘by mere speculation or conjecture,’” id. (quoting Edenfield v. Fane, 507 U.S. 761, 770 (1993)).

(…) Statements that are only potentially misleading, however, are safeguarded by the First Amendment. In such a case, a state actor must “‘show that the restriction directly and materially advances a substantial state interest in a manner no more extensive than necessary to serve that interest.’” Am. Acad., 860 F.3d at 308–09 (alteration in original) (quoting Ibanez v. Fla. Dep’t of Bus. & Prof’l Reg., Bd. of Accountancy, 512 U.S. 136, 142 (1994)).

(…) The better view is that the district court erred in concluding that Express’s use of Tire Engineers is inherently misleading.

Because its essential character is not deceptive, Tire Engineers is not inherently misleading. The name, first trademarked in 1948, apparently refers to the work of mechanics using their skills “not usually considered to fall within the scope of engineering” to solve “technical problems” related to selecting, rotating, balancing, and aligning tires. That this definition of “engineer” does not meet the Board’s preferred definition does not make its use inherently misleading. The term “engineer” can mean many things in different contexts, and it is certainly not limited to those professionals licensed by Mississippi to practice engineering. It is not, therefore, “devoid of intrinsic meaning.” Joe Conte Toyota, 24 F.3d at 756 (quoting Peel, 496 U.S. at 112 (Marshall, J., concurring)). Additionally, as Express explains, “the district court’s analysis failed to account for the manner in which the Tire Engineers mark is transmitted—on the company’s website, which describes its automotive services (not any professional engineering services), and at its retail stores, which appear like any other store that performs automotive services . . . .” Consequently, viewing the evidence in a light most favorable to the non-moving party—here, Express—the use of Tire Engineers is not inherently misleading under our precedent.

(…) Actually misleading: evidence of deception is necessary to sustain a finding that commercial speech is actually misleading (…) The Board was required to present evidence of deception. Because it did not, the district court erred in concluding that the Tire Engineers mark was actually misleading. Given that the name is neither actually nor inherently misleading, it enjoys limited First Amendment protections, as discussed in Central Hudson.

(…) “Under Central Hudson, a restriction on commercial speech survives First Amendment scrutiny if: (1) ‘the asserted governmental interest is substantial,’ (2) the regulation ‘directly advances’ that interest, and (3) the regulation ‘is not more extensive than is necessary to serve that interest.’” Pub. Citizen, 632 F.3d at 219 (quoting Thompson v. W. States Med. Ctr., 535 U.S. 357, 367 (2002)). “Each of these latter three inquiries must be answered in the affirmative for the regulation to be found constitutional.” Thompson, 535 U.S. at 367.
(…) ad 1) the evidence in the record establishes that the asserted interests of the Board are substantial.
(…) ad 2) the evidence supports a holding that the ban directly advances the Board’s asserted interest.
(…) ad 3) the final inquiry is whether the regulation is “‘more extensive than is necessary to serve’” the identified interest. Pub. Citizen, 632 F.3d at 219 (quoting Thompson, 535 U.S. at 367). “‘The free flow of commercial information is valuable enough to justify imposing on would-be regulators the costs of distinguishing . . . the harmless from the harmful . . . .’” Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 480 (1989) (quoting Shapero v. Ky. Bar Ass’n, 486 U.S. 466, 478 (1988)). The means employed by the government actor need not be the “least restrictive means,” but it must be narrowly tailored to achieve (…)

(…) In Byrum, 566 F.3d at 449, concerning the terms “interior design” and “interior designer,” we held that “the State could have eliminated any constitutional challenge here by not limiting use of the terms ‘interior design’ and ‘interior designer’ but by allowing only designers who satisfy its licensing qualifications to represent themselves as ‘licensed’ interior designers.” See also Am. Acad., 860 F.3d at 311–12. Further, this court and others have identified “sufficient disclaimers as a means to address consumer deception.” This remedy seemingly derives from Peel, Bates, and earlier Supreme Court cases that “described various regulatory safeguards which the state may impose in place of a total ban on commercial speech.” Abramson, 949 F.2d at 1577.

The record does not support the need for a total ban on the use of Tire Engineers. Evidence offered by both parties, particularly when viewed in the light most favorable to Express as the non-moving party, demonstrates that other states with similar statutes have not challenged the use of the trademark. Thus, despite claims to the contrary, the Board is an outlier in this respect, and it fails to address why alternative, less-restrictive means, such as a disclaimer, would not accomplish its stated goal of protecting the public. The Board thereby fails to satisfy the required burden of demonstrating a reasonable fit between its regulation and the constitutionally-protected speech.

Summary judgment is REVERSED, and judgment is RENDERED for Express.

(U.S. Court of Appeals for the Fifth Circuit, February 19, 2019, EXPRESS OIL CHANGE, L.L.C.; TE, L.L.C., doing business as Tire Engineers v.  MISSISSIPPI BOARD OF LICENSURE FOR PROFESSIONAL ENGINEERS & SURVEYORS, Docket No. 18-60144, Circuit Judge Jerry E. Smith)

Expressions Hair Design v. Schneiderman, Docket 15-1391

First Amendment (commercial speech): Credit cards: Price: Speech: Merchants' speech: Commercial speech: Antitrust:

Each time a customer pays for an item with a credit card, the merchant selling that item must pay a transaction fee to the credit card issuer. Some merchants balk at paying the fees and want to discourage the use of credit cards, or at least pass on the fees to customers who use them. One method of achieving those ends is through differential pricing—charging credit card users more than customers using cash. Merchants who wish to employ differential pricing may do so in two ways relevant here: impose a surcharge for the use of a credit card, or offer a discount for the use of cash. In N. Y. Gen. Bus. Law §518, New York has banned the former practice. The question presented is whether §518 regulates merchants’ speech and—if so—whether the statute violates the First Amendment.

(…) 1974 amendments to the Truth in Lending Act (TILA). The amendments prohibited card issuers from contractually preventing merchants from giving discounts to customers who paid in cash. See §306, 88 Stat. 1515. The law, however, said nothing about surcharges for the use of credit.

In 1981, Congress further delineated the distinction between discounts and surcharges by defining “regular price.” Where a merchant “tagged or posted” a single price, the regular price was that single price. Cash Discount Act, §102(a), 95 Stat. 144. If no price was tagged or posted, or if a merchant employed a two-tag approach—posting one price for credit and another for cash—the regular price was whatever was charged to credit card users. Ibid. Because a surcharge was defined as an increase from the regular price, there could be no credit card surcharge where the regular price was the same as the amount charged to customers using credit cards. The effect of all this was that a merchant could violate the surcharge ban only by posting a single price and charging credit card users more than that posted price.

The federal surcharge ban was short lived. Congress allowed it to expire in 1984 and has not renewed the ban since. The provision preventing credit card issuers from contractually barring discounts for cash, however, remained in place. With the lapse of the federal surcharge ban, several States, New York among them, immediately enacted their own surcharge bans. Passed in 1984, N. Y. Gen. Bus. Law §518 adopted the operative language of the federal ban verbatim, providing that “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 Ann. §518 (West 2012); see also 15 U. S. C. §1666f(a)(2)(1982 ed.).

In addition to these state legislative bans, credit card companies—though barred from prohibiting discounts for cash—included provisions in their contracts prohibiting merchants from imposing surcharges for credit card use. For most of its history, the New York law was essentially coextensive with these contractual prohibitions. In recent years, however, merchants have brought antitrust challenges to contractual no-surcharge provisions. Those suits have created uncertainty about the legal validity of such contractual surcharge bans.

(We limit our consideration to the single-sticker pricing regime for present purposes. Petitioners’ affidavits and briefing reference other potential pricing schemes, which may be considered by the Court of Appeals to the extent it deems appropriate).

(…) Where a seller posts a single sticker price, it is reasonable to treat that sticker price as the “usual or normal amount” and conclude, as the court below did, that a merchant imposes a surcharge when he charges a credit card user more than that sticker price.

The law (Section 518) tells merchants nothing about the amount they are allowed to collect from a cash or credit card payer. Sellers are free to charge $10 for cash and $9.70, $10, $10.30, or any other amount for credit. What the law does regulate is how sellers may communicate their prices. A merchant who wants to charge $10 for cash and $10.30 for credit may not convey that price any way he pleases. He is not free to say “$10, with a 3% credit card surcharge” or “$10, plus $0.30 for credit” because both of those displays identify a single sticker price—$10—that is less than the amount credit card users will be charged. Instead, if the merchant wishes to post a single sticker price, he must display $10.30 as his sticker price. Accordingly, while we agree with the Court of Appeals that §518 regulates a relationship between a sticker price and the price charged to credit card users, we cannot accept its conclusion that §518 is nothing more than a mine-run price regulation. In regulating the communication of prices rather than prices themselves, §518 regulates speech. (Because it concluded otherwise, the Court of Appeals had no occasion to conduct a further inquiry into whether §518, as a speech regulation, survived First Amendment scrutiny. On that question, the parties dispute whether §518 is a valid commercial speech regulation under Cen­tral Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N. Y., 447 U. S. 557 (1980), and whether the law can be upheld as a valid disclosure requirement under Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U. S. 626 (1985).) (To assess the statute’s constitutionality, the Court of Appeals may need to consider a question we need not answer here: whether the statute permits two-sticker pricing schemes like the one petitioner Expressions currently uses. Respondents’ argument that §518 is a constitutionally valid disclosure requirement rests on an interpretation of the statute that allows such two-sticker schemes.)

(U.S.S.C., March 29, 2017, Expressions Hair Design v. Schneiderman, Docket 15-1391, C.J. Roberts, no dissenter).

En promulguant N. Y. Gen. Bus. Law §518, l'état de New York a proscrit l'imposition par les commerçants d'une surcharge en défaveur de ceux qui paient avec une carte de crédit pour décourager l'usage de ce moyen de paiement. La question que pose cette affaire est de savoir si dite loi règle ou non la liberté d'expression des commerçants et dans l'affirmative, si elle porte atteinte au Premier Amendement. La Cour ne tranche que la première de ces deux questions.

(…) Quand un vendeur indique le prix sur la chose proposée à la vente, il est raisonnable de concevoir ce prix comme le montant "usuel", de sorte que le commerçant imposera une surcharge si le prix à payer par l'usager d'une carte de crédit est supérieur à ce prix usuel.

La Section 518 ne donne aucune indication aux commerçants s'agissant des montants qu'ils sont autorisés à percevoir d'un client qui règle en espèce ou d'un client qui règle par carte de crédit. Un vendeur peut facturer $10 contre du cash et $9.70, $10, $10.30, ou tout autre montant, à l'usager d'une carte de crédit. Ce que la loi stipule, c'est comment les vendeurs peuvent communiquer leurs prix. Un commerçant qui entend facturer $10 pour un paiement en espèces et $10.30 pour un paiement par carte ne peut pas communiquer ce prix comme il l'entend. Il ne peut poster "$10, avec une surcharge de 3% en cas de paiement par carte", du fait que ce libellé identifie un prix usuel inférieur au montant que devra payer celui qui utilise une carte. Cependant, si ce commerçant n'entend poster qu'un seul prix, il devra indiquer la somme de $10.30 comme étant le prix de l'article. Dès lors, la Cour convient que la Section 518 règle la relation entre le prix posté sur l'article et le prix facturé à l'usager d'une carte de crédit. Mais en réglant la communication des prix plutôt que les prix eux-mêmes, la Section 518 réglemente la liberté d'expression. Comme la Cour d'appel a jugé différemment cette dernière question, elle n'a pas eu l'occasion de déterminer si la Section 518 violait le Premier Amendement. La cause lui est conséquemment retournée. Pour apprécier la constitutionnalité de la Section 518, l'autorité précédente pourrait devoir examiner une question que la Cour n'a en l'espèce pas besoin de trancher : celle de savoir si dite Section permet à un commerçant de poster deux prix sur un article.