On October 8, U.S. SDNY granted New York State’s motion to dismiss in a case challenging the state’s recently enacted law requiring merchants to disclose when pricing has been set by an algorithm using a consumer’s personal data. The plaintiff, a retail trade association, alleged the law’s requirement violated the First Amendment’s prohibition on compelled speech. However, the court dismissed the plaintiff’s claims and request for a preliminary injunction, finding that the plaintiff had not plausibly alleged a constitutional violation.
The law, enacted on May 9 as part of the state’s omnibus budget bill, requires businesses in New York to include a disclosure message whenever a personalized algorithmic pricing is used, stating explicitly that “THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.”
The plaintiff argued that the law “compels” its members “to express a misleading and controverted government-scripted opinion without justification” in violation of its members’ First Amendment rights. The defendant contended the law mandates the disclosure of purely factual and uncontroversial commercial speech.
The court agreed with the State of New York, holding that the disclosure is factual, not controversial, and was reasonable in informing consumers about prices. The court also determined that the law was not unduly burdensome, and that consumers would not otherwise know when their personal data was used in pricing.
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