July 24, 2015

The government can't call speech "conduct," then require a license for it

By Anastasia P. Boden Attorney

If the First Amendment means anything, it means the right to speak freely without asking for permission first.

Yet in Nebraska, you have to get a government license before advertising.  PLF client Leslie Young helps people to sell their homes without the help of a real estate broker.  She acts as an advertising agent, posting online advertisements for homes that are for sale by owner.  Nebraska calls Young’s advertising business the “conduct” of real estate brokerage, and has demanded that Young stop advertising until she gets a real estate broker license, or face fines and penalties.

PLF filed these briefs in the Eighth Circuit arguing that states can’t circumvent the First Amendment by characterizing speech as “conduct,” and requiring a business license for such “conduct.”  Licensing laws that restrict speech are held to strict judicial scrutiny—meaning the law must be written narrowly to achieve a compelling government interest—and Nebraska’s real estate broker licensing law cannot meet that high standard.

First, the law’s many exemptions undercut any rationale for the licensing requirement.  If the reason for requiring advertisers to get a real estate broker license is to prevent fraudulent or misleading advertisements, it makes no sense to exempt people like property owners, or their family members, trustees, and employees from the very same requirement.  Indeed, these parties arguably have a bigger incentive to misrepresent the properties for sale than people like Young.  Moreover, Nebraska exempts anyone who is not paid to advertise from the licensing requirements, though there’s no reason to think people who are unpaid will be better at advertising.

Second, the law is not narrowly drawn, and restricts more speech than necessary, because it reaches people like Young who aren’t even engaged in “real estate brokerage.”  Young does not show homes, represent buyers or sellers in purchases or sales of property, handle client funds, or negotiate transactions.  The law thus forces people not engaged in real estate brokerage to obtain real estate brokerage licenses, which in turn requires them to learn skills and take tests that have nothing to do with their business.

Third, the law doesn’t achieve any compelling state purpose because even licensed real estate brokers cannot advertise homes that are for sale by owner.  This means that even if Young were to get a license, she would still be legally barred from working as an advertiser.  There’s no reason to force Young to satisfy the onerous licensing requirements when, even then, she would be prohibited from doing her job.

We argue that for similar reasons, the licensing laws violate the Due Process Clause of the Fourteenth Amendment.  Due Process requires that any law that restricts a person’s right to earn a living bear a rational relationship to ensuring that the person’s fitness to practice their occupation.  So, for example, a state can’t deny you the right to be an attorney merely because you belong to a particular political party—because your political affiliation has nothing to do with your skill as a lawyer.  Any licensing requirements for practicing law must be related to training people to be lawyer.  Similarly, a state can’t require a person who braids hair for a living to get a cosmetology license, when the licensing requirements for cosmetologists are wholly unrelated to braiding hair.  Any licensing requirement must teach the applicant the skills necessary to practice their profession.

The educational requirements for real estate brokers have no relationship to Young’s business of advertising for sale by owner homes.  Instead, they are devoted solely teaching licensees things like negotiating terms of sale, representing sellers or buyers in the transaction, handling client funds, or completing closing paperwork.  They teach nothing related to advertising for sale by owner homes, with one exception:  they teach licensees that even licensees may not advertise homes that are for sale by owner.  Forcing Young to get a real estate broker licensing would thus not only be arbitrary, because the licensing requirements teach nothing about her business, but irrational, because Young would then be legally barred from doing her job.  The licensing law therefore violates the Fourteenth Amendment.

The state also argues that Young’s use of terms like “advertising agent” or “advertising broker” are misleading, because—despite Young’s many disclaimers that she doesn’t practice real estate brokerage, and instead only advertises—the public might be confused about whether she is a licensed broker.  But the Supreme Court has held that the state cannot ban self-descriptive terms based on paternalistic assumptions about whether the public will be misled.  If anything, the solution to any potential confusion is to require more speech in the form of disclaimers and disclosures, not to ban speech altogether, which is unconstitutional.  The state facetiously claims that Young’s use of the term “advertising broker” is akin to an advertiser using the term “advertising attorney” and claiming the public won’t be confused about whether she is an attorney.  Of course, the difference is that the term “broker” is commonly used in several industries: consider “stockbroker,” “energy broker,” “marriage broker,” “pawnbroker,” and “website broker.”  No one assumes that all of these brokers are also real estate brokers.  The same can’t be said of the term “attorney,” which is only used in one industry.

To read more about this case, see our case page here.

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