Thursday, April 06, 2017

Prices, Money, Speech, and Democracy

by Michael Dorf

In my latest Verdict column, I question the wisdom of last week's Supreme Court decision in Expressions Hair Design v. Schneiderman. The case involves a NY statute that--as construed by the Supreme Court in reliance on the earlier opinion by the Second Circuit--forbids merchants from placing a "surcharge" on credit card purchases, while allowing a discount for cash purchases. Because these are economically identical, the Court said, the NY law is really a regulation of how merchants communicate with their customers and thus a regulation of commercial speech. Accordingly, the SCOTUS remanded to the Second Circuit for application of commercial speech precedents.

In my column, I connect Expressions Hair Design with the Court's campaign finance case law and express the concern that under the guise of freedom of speech, the Roberts Court may be undermining the New Deal settlement, by which courts grant near-complete deference to elected officials in regulating the economy. Here I want to elaborate the campaign finance point.
Non-lawyer (and quite a few lawyer) critics of the Court's campaign finance jurisprudence (including especially Citizens United v. FEC) argue that "money isn't speech." This complaint is relatively easy for free speech libertarians to dispatch. For example, a few years ago Prof. Eugene Volokh put together a pithy video presentation for the Federalist Society in which he explains that the claim "money isn't speech" is a non sequitur. True, he says, money isn't speech, but laws that target the spending of money for speech infringe speech.

I mostly agree with Prof. Volokh, including with his bottom line that even if the "money isn't speech" claim fails to establish the constitutional validity of various forms of campaign finance regulation, other considerations might. I also agree with the dissenters in recent SCOTUS campaign finance cases who argue that the government's interest in combating corruption should be defined more broadly than the current case law defines it. Under current doctrine, the government may seek to combat quid pro quo corruption but not much more. In arguing for a broader conception of corruption, the dissenters make an argument for the validity of campaign finance regulation of a form that says, not that campaign finance regulation does not regulate speech, but that it permissibly regulates speech.

Another way to put that point would be to say that most of the campaign finance laws that have been struck down by the Roberts and Rehnquist Courts should have been deemed "narrowly tailored" to advance the government's "compelling interest" in combating not just quid pro quo corruption but the sort of corruption that occurs when elected officials serve the interests of wealthy individuals, corporations, and unions that either contribute to their campaigns or use nominally independent expenditures to support their candidacies, rather than serving the interests of their constituents.

Is that the best way to make an argument for the constitutionality of campaign finance regulation? Maybe not. In my column I say that even if the Second Circuit upholds the challenged New York law on credit card surcharges, the mere fact of applying the commercial speech doctrine could undermine important regulatory interests, because the application of heightened scrutiny (should it come to that) would invite additional litigation, some of which likely would succeed in blocking what are ultimately merely economic regulations over which legislatures ought to have near-total discretion. Something similar could be said with respect to campaign finance regulation.

Indeed, the doctrinal picture looks even worse with respect to campaign finance. In Expressions Hair Design, the Court left it to the Second Circuit in the first instance to decide whether to apply the Zauderer test applicable to mandatory disclosures--a test that is quite deferential--or to apply the more demanding Central Hudson test applicable to restrictions on commercial speech--which is akin to intermediate scrutiny. In the campaign finance context, the choice is between something like intermediate scrutiny for laws limiting campaign contributions and strict scrutiny for laws limiting campaign (and independent) expenditures. If we have reason to worry that the mere prospect of litigation could undermine effective regulation when that litigation will subject the challenged regulation to no more than intermediate scrutiny, then we have even greater reason to worry in the campaign finance arena, where challenged regulations will be subject to no less than intermediate scrutiny.

What is the solution? In the short run, nothing. Although the Supreme Court would allow Congress to require disclosure of the sources of the "dark money" that has lately been funding independent expenditures through (ab)use of 501(c)(4) organizations, Congress does not appear interested in doing so, mostly because such dark money disproportionately favors GOP candidates and causes. Meanwhile, I see no near-term prospect of the Supreme Court changing course to allow greater campaign finance regulation.

But assuming our political institutions survive the Trump administration, both of those circumstances might change some day. Should Congress pass salutary campaign finance laws that are invalid under current doctrine, it would be a giant step in the right direction were the SCOTUS to overrule that doctrine so as to uphold such laws under the existing difficult standards of review. It would be even better if the Court were to discard that doctrine and start anew.

In my view, the Court ought to uphold all campaign finance regulations unless they are so restrictive as to substantially impair the practical ability of candidates to raise or spend money sufficient to run competitive primary or general-election campaigns. Put differently, I would like to see something like a reasonableness test applied in this area.

Why? Partly because the "money isn't speech" argument is not quite so bad as Prof. Volokh and others suggest. He's right, of course, that a law that specifically limits money spent on speech should be treated as a regulation of speech. But much campaign spending is on things other than speech, like transportation, food, and lodging for the candidate and campaign staff. Restrictions on campaign contributions and expenditures are thus restrictions on a class of activities that include speech but are not entirely speech.

To be sure, restrictions on independent expenditures do target speech qua speech, but they do so to serve an anti-circumvention goal. In my view, such restrictions could and should be upheld as a means of backstopping legitimate campaign contribution and expenditure limits.

In any event, I see these issues chiefly in normative rather than categorical terms. Ultimately, the best reason to subject campaign finance regulation to a permissive reasonableness test is the concern that the First Amendment should be construed to serve rather than to undermine liberal democratic values. If someone objects that the First Amendment requires strict (or at least heightened) judicial scrutiny of any and all regulations of speech, my answer is no it doesn't.

The First Amendment itself says nothing about strict scrutiny, intermediate scrutiny, commercial speech, or any of the myriad doctrines the courts have invented to implement it. If you think that the Supreme Court's case law has done a good job of allowing those campaign finance regulations that serve the liberal democratic values at the heart of the First Amendment and disallowing those regulations that dis-serve such values, then you should resist changes to the case law. But if you think that the Court's doctrine has gone off the rails, then you should not be wedded to the framework that the Court has invented.


Shag from Brookline said...

Realistically, can politics ever become free of corruption or attempts at such? Does the Constitution in any provision provide for degrees of scrutiny? [Can we expect comments on the latter from originalists?] Mike's closing paragraphs reference democratic values. As I noted on another thread, I do not recall the Constitution specifically using the word democracy or its derivatives although specific reference is made to republic/republican. But the history of the Constitution as it has been amended, especially with the Civil War Amendments, suggests that democracy is interwoven throughout the Constitution.

Joe said...

When the case was first being discussed, SCOTUSBlog noted the free speech argument was somewhat creative. Now, the spin from let's say Think Progress (a left leaning blog, so by Spicer rules, maybe not worth citing) is that the opinion was restrained in its reasoning. But, as you suggest, once you open the door ... one day you get Shelby v. Holder. (law upheld with dangerous flourishes ... later key part blocked 5-4).

As to campaign finance, I also have concerns about some of the usual labeling though it isn't totally wrong. So, e.g., people basically argue corporations don't have free speech rights. Then, people toss out the NYT (but press!) or the NAACP or something. The problem with Citizens United is its breadth. The minority didn't deny "corporations" in various ways have 1A protections. Breyer, e.g., once wrote a plurality saying one campaign limit was too low.

Finally, yes, the true problem is likely the limited legitimate state interests or at least compelling state interests. Chief Justice Roberts made a bit of a special exception for judicial elections. Query how this applies to the money spent for Gorsuch.* A good middle ground would accept sometimes money is protected (abortion funding matters) but it can be regulated more in various cases. And, there are regulations of speech. I'm not as supportive of this as a book recently cited on this blog that wants to significantly up-end things.

Still, there is room for regulation. And, this is so even though we can't be "free" of corruption. The poor might always be with us. Doesn't mean things like Medicaid expansion is not a good thing.


* The long haul here warrants filibustering Gorsuch, including for reasons referenced in a recent NYT op-ed using game theory.

Marty Lederman said...

Mike: I agree with most of what you write here and in the Verdict column--especially the idea that campaign finance law should not be treated as a speech restriction because $$ for speech are not only treated equally to $$ for other campaign expenses, but almost certainly are treated *more* favorably than if the contributor gave the official/candidate $$ for any *other* purposes (e.g., to buy a yacht or to pay their kid's tuition).

I wonder, however, whether your concern about the Court's decision this week is warranted. Didn't Roberts truly turn it into a nothingburger--perhaps because it would have been hard to get five votes for anything else--by limiting it to only *one* hypo, and then only to hold that of course that hypo is a speech restriction?

Here's the hypo: The Court assumes that, under NY law, the plaintiff can advertise "Haircuts for $10.30 (w/a 30-cent discount for cash)" and can advertise "Haircuts: $10 cash, $10.30 credit,” but *cannot* advertise "Haircuts $10 (with a 3% surcharge if you pay by credit card),” which is what the plaintiff wishes to advertise. Isn't that plainly a restriction on (commercial) speech, as such? And, if so, isn't the Court's holding a big fat zero?

Shag from Brookline said...

Cash is speech on steroids?

Joe said...

I'm open to Prof. Lederman's comments but the bottom line of the piece is sound.

It again goes to not crystal clear lines but degrees. "Economic" shouldn't be a reason to say "anything goes." But, often it does warrant more discretion. And, the case did have a bit of fake minimalism.

Michael C. Dorf said...

In response to Marty's question: I suppose the case could be described as doing nothing but I think the fact that Breyer, Sotomayor, and Alito chose to concur in the judgment rather than to concur tells us that they worry a little that the case might do something. (They could have concurred in the opinion AND said that they were not persuaded that the NY law operates as the majority says, leaving open a certified question on remand).

Asher Steinberg said...

I don't know if that hypo is plainly a restriction on commercial speech. If you think sticker prices are "real" prices, and not just a mode of expression about underlying prices, then a rule that says a credit surcharge can't be imposed on top of a sticker price isn't a regulation of speech. One reason we might think that is that even the hypo you describe would actually regulate real-world prices. It seems unlikely to me that many merchants will choose to advertise a sticker price of $10.30; if they want to impose a credit/cash differential and be competitive, they'll likely choose, under the scheme as hypothesized, to advertise a sticker price of $10 and offer a cash discount to $9.70. Thus, as hypothesized, the statute practically makes it at least much more likely that cash/credit price differentials will be deflationary, not inflationary.