The National Retail Federation (NRF) is leveraging its friendships.
Last week, the U.S. Chamber of Commerce and the Chamber of Progress each filed an amicus curiae brief in an ongoing lawsuit between the NRF and New York Attorney General Letitia James.
The NRF brought the lawsuit against the state last month over the constitutionality of the New York Algorithmic Pricing Disclosure Act. The trade group alleged that the law, which requires retailers to disclose the use of algorithmic pricing based on consumers’ data, violates the First Amendment and could cause consumers to adopt negative opinions of retailers. It said that while the law could lead consumers to believe that brands and retailers increased the price of goods, evidence shows that algorithmic pricing can bring prices down for consumers. That dissonance, it contended, could confuse consumers and, in turn, harm businesses.
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Last month, James asked the court to dismiss the lawsuit with prejudice, noting that the state’s law is legal and alleging that the NRF failed to provide concrete proof that the act could be unconstitutional.
Throughout James’ argument for dismissal, she relied on the Zauderer precedent, which, in simple terms, notes that the government can require companies to include disclosures that are “purely factual and uncontroversial” when it directly benefits the state’s interest in protecting consumers.
The NRF, in its complaint, noted that Zauderer should not apply because it also requires that the state’s requirements be “justified” and “not unduly burdensome.” For several reasons, the trade group said, the algorithmic pricing law is both unjustified and unnecessarily burdensome.
It seems the Chamber of Commerce and the Chamber of Progress agree. In two separate amicus briefs—which are submitted by external third parties hoping to provide additional context or relevant information on a case that could influence a judge’s decisions—the organizations contended that the judge should not greenlight James’ motion to dismiss the case. The Chamber of Commerce also stated that it believes the court should grant the NRF’s motion for a preliminary injunction.
The Chamber of Progress said the law “imposes sweeping and untethered restrictions on…pro-consumer practices” because it requires “a government-scripted statement” to be used on a business’ site that could “confuse consumers and disincentivize practices with a record of helping consumers and innovation.”
The organization goes on to allege that the law that policymakers passed deviates from what it initially set out to do: prevent algorithmic pricing discrimination. Chamber of Progress said that “the legislature failed to engage meaningfully with the benefits of algorithmic pricing or the problems with mandated disclosures.” The group alleged that, under Zauderer, the state hasn’t proven a meaningful interest, and even if it has it has not considered a less harmful route to policing algorithmic pricing. It called the required disclosure, which would read, “This price was set by an algorithm using your personal data” clearly and conspicuously, “particularly inflammatory” and said that “many obvious alternatives…would have been less burdensome.”
“For example, a statute specifically targeting price-gouging of vulnerable consumers or racial discrimination would be far more appropriately tailored to meet the state’s asserted interests here,” Chamber of Progress wrote. “Instead, the broad, vague disclosures mandated by this statute create a likelihood of consumer confusion and, equally worrisome, conflation of consumer-benefiting pricing schemes with predatory and discriminatory ones.”
The crux of the Chamber of Progress’ argument is that while the law, as the NRF asserted, is unconstitutional, it also has the propensity to significantly harm consumers and stymie innovation and technology initiatives occurring inside companies.
In the Chamber of Commerce’s amicus brief, it relies on some similar arguments to the Chamber of Progress, alleging that the law is likely to hurt consumers and businesses alike. It also leverages a slew of legal precedents in an effort to convince the court that James’ argument for a motion to dismiss is invalid.
The Chamber of Commerce alleged that Zauderer does not apply to the law for a number of reasons, including that, per precedent, “New York must put forward a ‘potentially real, not purely hypothetical’ justification for its disclosure.” It alleged that the state “cannot even satisfy this standard” because it relied on what the chamber called “consumer curiosity” as a justification for algorithmic pricing disclosures. The brief stated that, according to precedent, such curiosity cannot stand alone as a justification for disclosures and contended that, should the court allow New York to do so, it would open a door for states to require streams of disclosures for the sake of answering consumer questions.
“New York’s consumer-curiosity interest does not suffice—even under Zauderer,” the Chamber of Commerce wrote. “Even with the state’s disclosure, a consumer will lack meaningful insight into pricing decisions. Indeed, many factors influence prices, including basic principles of supply and demand, and consumers will never know which factor contributed most to a particular difference in price.”
What’s more, the organization noted, “although New York cannot show the act remedies any consumer harm, there is ample evidence the act will cause consumer harm.” That, it contended, is because business practices like loyalty programs, senior and student discounts and other price-dropping initiatives could be disrupted by the law because the required disclosure “implies a nefarious scheme involving sensitive, private information,” in turn placing undue burden on the business to defend its practices to consumers.
NRF Chief Administrative Officer and General Counsel Stephanie Martz said the trade group sees the chambers’ amicus briefs as an indicator that the issue of algorithmic pricing is top of mind for many retailers.
“These briefs from two organizations that represent a large swath of the business community—essentially, all of the business community—further underscore our view that the compelled statement about ‘algorithmic pricing’ that New York seeks to compel businesses to make is a matter of opinion, not fact, and is unrelated to any alleged ‘harm’ that comes from beneficial offerings like personalized promotions and loyalty programs,” Martz said in an emailed statement.
Federal court records show a judge has not yet ruled on James’ motion to dismiss, nor on the NRF’s motion for a preliminary injunction. James filed a stay of enforcement for the Algorithmic Pricing Disclosure Act last month, which means the state will not enforce—or retroactively enforce—the law until 30 days after a court has ruled on the trade organization’s request.
