A New York federal court last week issued a preliminary injunction that prohibits the state’s attorney general from enforcing a “No Credit Surcharge Law.”

Five merchants and their principals sought the injunction in a lawsuit that argues that the law infringes on their rights to free speech. The state has interpreted the law to allow merchants to offer a “discount” for cash purchases but prohibits them from advertising a surcharge for credit purchases.

“The defendants will need to decide whether to continue the fight or accede to the court's clear view on the merits that the statute is unconstitutional,” said Jeremy T. Rosenblum, a consumer financial services attorney at Ballard Spahr.

“If the state continues to fight, the plaintiffs will need to decide whether they want to invest the resources to pursue the antitrust claim or to stand pat with the claims the court already has approved. In the latter case, a final judgment and appeal could come soon,” Mr. Rosenblum said. “This decision is a big victory for the plaintiffs but, in deciding whether to begin surcharging immediately, merchants should consider that the preliminary injunction does not provide complete protection if the decision is reversed.”

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