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Supreme Court hears arguments on credit card surcharges, attorney's fees

[JURIST] The US Supreme Court [official website] heard oral arguments [transcript, PDF] on Tuesday in Expressions Hair Design v. Schneiderman [SCOTUSblog backgrounder]. This case focuses on the fees charged by credit card companies to merchants whenever customers pay with a credit card. Ten states have passed laws that forbid these credit card surcharges, but these laws also do not forbid merchants from offering a discount when customers pay with cash or check. The issue to be decided is whether the anti-surcharge laws merely affect a "pricing practice," or whether the laws violate the First Amendment [text] in preventing merchants from using the surcharge as a means to describe a higher price charged to card users.

The court also heard arguments [transcript, PDF] in Goodyear Tire & Rubber Co. v. Haeger [SCOTUSblog backgrounder], which centers on a district court's inherent authority to impose sanctions. This case asks whether an award of attorney's fees and costs for bad faith conduct during discovery must be limited only to the fees and costs directly caused by such bad faith conduct. The Haegers were injured when a Goodyear [corporate website] tire on their mobile home burst on the highway. During the lengthy discovery process, Goodyear did not produce a test done on the tire showing its suitability at high temperatures on the highway despite the Haegers request and despite the fact that this test was produced in other litigation concerning this particular type of tire. The district court found that Goodyear attorneys acted in bad faith and used its inherent powers to require the Goodyear attorneys to pay $2.7 million in attorney's fees and costs, nearly the entire amount of the Haeger's litigation costs. Goodyear now argues that there is a direct-causation requirement for the imposition of attorney's fees and costs and that a lack of such a requirement can give litigants a windfall recovery.

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