Dana's R.R. Supply v. Attorney Gen.

• Citation: 807 F.3d 1235
• Decision Date: 04 November 2015
• Docket Number: No. 14–14426.,14–14426.
• Parties: DANA'S RAILROAD SUPPLY, Dana Jackson, TM Jewelry LLC, Lee Harper, Tallahassee Discount Furniture, Duana Palmer, Cook's Sportland, Eric Cook, Plaintiffs–Appellants, v. ATTORNEY GENERAL, State of FLORIDA, Defendant–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

807 F.3d 1235

DANA'S RAILROAD SUPPLY, Dana Jackson, TM Jewelry LLC, Lee Harper, Tallahassee Discount Furniture, Duana Palmer, Cook's Sportland, Eric Cook, Plaintiffs–Appellants,

v.ATTORNEY GENERAL, State of FLORIDA, Defendant–Appellee.

No. 14–14426.

United States Court of Appeals, Eleventh Circuit.

Nov. 4, 2015.

Deepak Gupta, Gupta Wessler, PLLC, Washington, DC, David Michael Frank, Law Office of David Frank, PA, Tallahassee, FL, for Plaintiffs–Appellants.

Osvaldo Vazquez, Attorney General's Office, Pam Bondi, Allen C. Winsor, Attorney General's Office, Tallahassee, Fl, for Defendant–Appellee.

Appeal from the United States District Court for the Northern District of Florida.

Before ED CARNES, Chief Judge, TJOFLAT and SENTELLE,^* Circuit Judges.

TJOFLAT, Circuit Judge:

Anyone who has ever made a purchase at a gas station, corner store, or shopping mall will not be shocked to learn that swiping a credit card is often more expensive than is paying with cash. What may be shocking to learn is that Florida makes it a second-degree misdemeanor for "[a] sellor or lessor in a sales or lease transaction" to "impose a surcharge on the buyer or lessee for electing to use a credit card," Fla. Stat. § 501.0117(1) -(2), while the State expressly allows "the offering of a discount for the purpose of inducing payment by cash." Id. § 501.0117(1). Tautologically speaking, surcharges and discounts are nothing more than two sides of the same coin; a surcharge is simply a "negative" discount, and a discount is a "negative" surcharge. As a result, a merchant who offers the same product at two prices—a lower price for customers paying cash and a higher price for those using credit cards—is allowed to offer a discount for cash while a simple slip of the tongue calling the same price difference a surcharge runs the risk of being fined and imprisoned.¹

The First Amendment prevents staking citizens' liberty on such distinctions in search of a difference. Florida's no-surcharge law directly targets speech to indirectly affect commercial behavior. It does so by discriminating on the basis of the speech's content, the identity of the speaker, and the message being expressed. Because the at-best plausible justifications on which the no-surcharge law rest provide no firm anchor, the law crumbles under any level of heightened First Amendment scrutiny. We, therefore, must strike down § 501.0117 as an unconstitutional abridgment of free speech.

I.

In 2014, four small businesses filed suit in the Middle District of Florida after receiving cease-and-desist letters from the Florida Attorney General demanding they refrain from certain business practices that, according to the Attorney General, ran afoul of the State's no-surcharge law. Essentially, each of these businesses—which charged lower prices for customers using cash and higher prices for those using credit cards—wishes to express to their customers the price difference as an additional amount for credit-card use rather than a lesser amount for paying in cash.

Dana's Railroad Supply, a family-run hobby shop in Spring Hill, received a cease-and-desist letter on March 15, 2013, after posting a sign indicating that its customers would be subject to a fee for using credit cards to make purchases. TM Jewelry LLC, a specialty jewelry store in Key West, received its letter on July 26, 2013, for communicating to customers that they faced an additional fee for the use of a credit card. Tallahassee Discount Furniture, a retailer of discount furniture in Tallahassee, received its letter on July 8, 2013, having previously told customers that they faced a 2 percent surcharge for credit-card payments. And Cook's Sportland, an outdoor-sporting-goods store in Venice, received its letter on September 20, 2012, after having previously told customers that they faced a credit-card surcharge. Based on the belief that it is more effective, transparent, and accurate to do so, all four of the businesses wish to call the price difference a credit-card surcharge rather than a cash discount.

These businesses, plaintiffs below and appellants here, filed their complaint on March 5, 2014, presenting two claims for relief under 42 U.S.C. § 1983. First, they alleged that Florida's no-surcharge law violates the First Amendment as an unjustified restriction on speech. Second, they alleged that the law provides insufficient guidance on how to comply with its mandates, and is therefore void for vagueness. The Attorney General moved to dismiss. The businesses responded by moving for summary judgment.

On September 2, 2014, the District Court granted the Attorney General's motion, dismissing with prejudice the businesses' complaint. Because the court held that the no-surcharge law is a "[r]estriction[ ] on pricing" that fell within "the Florida Legislature's broad discretion in regulating economic affairs," it subjected the law to rational-basis review.

The District Court hypothesized three possible justifications for the no-surcharge law.² First, the court considered an antifraud rationale viewing the no-surcharge law as designed to prevent "bait and switch" tactics. That is, the law could be aimed at preventing merchants from "initially communicating only the lower price—the cash price" and then later charging a higher price—the credit-card price. Second and relatedly, the court turned to a notice rationale that perhaps the no-surcharge law prevents "unpleasant surprises" not rising to the level of a full-blown bait and switch. Finally, the court entertained a fairness rationale whereby no merchant would have the discretion to impose credit-card surcharges, preventing "competitive disadvantage" in the marketplace.

The District Court concluded that, though none of these justifications are "compelling" and "might not even be persuasive," the no-surcharge law nonetheless survives rational-basis review.³ Notably, the District Court declined to apply any level of First Amendment scrutiny despite its understanding that "the difference between a cash discount and a credit-card surcharge makes no difference in the price a customer must pay" and that the effect of the no-surcharge law is "a matter of semantics, not economics."

The businesses appealed. We now reverse.

II.

Before addressing the merits, we briefly address the Attorney General's argument that we lack jurisdiction to hear a portion of this appeal. The "irreducible constitutional minimum of standing" requires litigants in federal court to demonstrate: (1) that they suffered an "injury in fact," which is a "concrete and particularized" and "actual or imminent" legally cognizable harm; (2) that a "causal connection" exists between the injury in fact and the opposing party's conduct; and (3) that the injury "will be redressed by a favorable decision." See Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–62, 112 S.Ct. 2130, 2135–37, 119 L.Ed.2d 351 (1992) (citations and quotation marks omitted). When First Amendment protections are implicated, we apply "most loosely" the injury-in-fact requirement "lest free speech be chilled." Harrell v. The Fla. Bar, 608 F.3d 1241, 1253–57 (11th Cir.2010).

The businesses have properly alleged standing on their free-speech claim. Each business has been injured by the receipt of a cease-and-desist letter from the Attorney General threatening enforcement action, which could result in fine or imprisonment; that action is, and any future enforcement action would be, directly traceable to the State of Florida; and a declaration by this court that the no-surcharge law is unconstitutional will remedy the businesses' harm. The businesses' harm is sufficiently particularized and imminent, and the likelihood of their speech being chilled is sufficiently great, for review by this court.

Nor are the businesses barred from pursuing their void-for-vagueness claim because they seek pre-enforcement review. The general rule provides that litigants can raise void-for-vagueness challenges only as a defense during an actual prosecution because that defense turns on whether the State provided fair warning, as a matter of due process, to the litigants that their conduct would expose them to liability. Bankshot Billiards, Inc. v. City of Ocala, 634 F.3d 1340, 1348–50 (11th Cir.2011). "Litigants may not comb the statute books for poorly drafted laws and sue to enjoin their enforcement." Id. at 1349. Litigants who are being "chilled from engaging in constitutional activity," however, suffer a discrete harm independent of enforcement, and that harm creates the basis for our jurisdiction. Id. at 1349–50. Here, though the businesses properly raised it, we need not reach the void-for-vagueness issue because any reasonable construction of Florida's no-surcharge law fails any level of heightened scrutiny.

With our jurisdiction established, we proceed to the merits.

III.

This appeal presents a pure question of law: the facial validity of Florida's no-surcharge law under the First Amendment to the United States Constitution. Our review is de novo. Burk v. Augusta–Richmond Cty., 365 F.3d 1247, 1250 (11th Cir.2004).

The fate of Florida's no-surcharge law hinges on a single determination: whether the law regulates speech —triggering First Amendment scrutiny—or whether it regulates conduct —subject only to rational-basis review as a mine-run economic regulation. The First Amendment provides, in relevant part, that "Congress shall make no law ... abridging the freedom of speech." U.S. Const. amend. I.⁴ Laws passed by the federal or state governments that restrict, compel, or silence speech are disfavored, and presumptively unconstitutional. See United States v. Alvarez, 567 U.S. ––––, ––––, 132 S.Ct. 2537, 2543–44, 183 L.Ed.2d 574 (2012) ; Wooley v. Maynard, 430 U.S. 705, 714–15, 97 S.Ct. 1428, 1435–36, 51 L.Ed.2d 752 (1977). By contrast, legislatures are given wide latitude to "balance the advantages and disadvantages" when choosing whether and how to regulate commercial behavior. See Williamson v....