Anderson v. Treadwell
| Decision Date | 25 June 2002 |
| Docket Number | Docket No. 01-7954. |
| Citation | 294 F.3d 453 |
| Parties | Patricia C. ANDERSON, Michael A. Hosein and Stephen E. Parker, Plaintiffs-Appellees, v. Alexander F. TREADWELL, as Secretary of State of the State of New York, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Second Circuit |
Andrew G. Celli, Jr., Office of N.Y. State Atty. Gen., New York, NY, (Eliot Spitzer, N.Y. State Atty. Gen., Michael S. Belohlavek, New York, NY, on the brief), for Defendant-Appellant.
Michael T. Wallender, Albany, NY, (Howard W. Goldson, Goldson/Nolan Associates, LLP, Melville, NY, on the brief), for Plaintiffs-Appellees.
Before NEWMAN, KEARSE, and LEVAL, Circuit Judges.
This appeal requires us to decide whether a state's regulation of residential real estate solicitations by licensed real estate salespersons violates their free speech rights under the First Amendment. Defendant-Appellant Alexander Treadwell, New York's Secretary of State, appeals from the June 29, 2001, judgment of the United States District Court for the Eastern District of New York (Thomas C. Platt, District Judge), granting summary judgment to Plaintiffs-Appellees Patricia Anderson, Michael A. Hosein, and Stephen E. Parker, real estate sales licensees, who challenged the constitutionality of N.Y. Real Prop. Law § 442-h(3) (McKinney 2001) on its face and as applied, and regulations promulgated under the statute. The District Court ruled unconstitutional subsection 442-h(3) and the regulations establishing "cease-and-desist zones" in which homeowners can elect not to receive at-home real estate solicitations. Judge Platt concluded that the regulatory scheme lacked a "reasonable fit" between the State's alleged interest in homeowner privacy and the means chosen to serve that interest. For the reasons stated below, we reject the Appellees' constitutional challenges and therefore reverse.
New York Human Rights Law § 296(3-b) outlaws "blockbusting" — the practice of soliciting real estate sales and listings by representing that a change in the racial, ethnic, or religious character of a block, neighborhood, or area is underway.1 As we have previously recognized, New York State Association of Realtors, Inc. v. Shaffer, 27 F.3d 834, 835-36 (2d Cir.1994) ("NYSAR"). NYSAR thus recognized that "blockbusting" is not only the solicitation of homeowners to sell their homes out of fear of changing neighborhood demographics but also the harmful effects that result when such solicitations precipitate home sales.
In 1989, in an effort to enforce its ban on blockbusting, the New York State Legislature enacted Real Property Law § 442-h. As enacted, subsection 442-h(2) allows the Secretary of State to find, after public hearing and investigation, that a defined geographic area is subject to blockbusting, and to adopt a "nonsolicitation order" forbidding all solicitations of residential real estate listings or sales from any homeowner within that zone. Subsection 442-h(3) authorizes the Secretary, upon finding a pattern of intense and repeated solicitations within a defined geographic area, to establish "cease-and-desist zones," within which real estate licensees2 are forbidden from directing in-home solicitations to homeowners who have registered in advance with the Secretary of State their wish not to receive such solicitations.
In 1991, the New York State Association of Realtors challenged the nonsolicitation orders on First Amendment grounds, and this Court, applying the test for commercial speech, ruled the nonsolicitation regulation promulgated pursuant to subsection 442-h(2) invalid because the Secretary had failed to provide direct and concrete evidence of the harm that was alleged to justify the restriction. See NYSAR, 27 F.3d at 842-44. Accordingly, the Court concluded that the Secretary had failed to establish a "reasonable fit" between the degree of the harm and the scope of the restriction. See id. at 844.
Under subsection 442-h(3),3 the Secretary can create cease-and-desist zones in those areas where he determines that "owners of residential real estate property... are subject to intense and repeated solicitations by real estate brokers ... to place their property for sale." In these zones, real estate licensees are prohibited from soliciting a listing from any owner who has filed a statement with the Secretary of State expressing the wish not to be solicited, and whose name appears on the cease-and-desist list. A rule establishing such a zone is effective for five years, after which the Secretary can re-adopt the rule or it will expire.
Current regulations promulgated pursuant to subsection 442-h(3) establish five cease-and-desist zones, and delineate their boundaries. N.Y. Comp.Codes R. & Regs. tit. 19, § 175.17(c)(2) (2001). The regulations prohibit a real estate licensee from "solicit[ing] the sale, lease or the listing for sale or lease of residential property" from an owner in the cease-and-desist zone who has signed onto the cease-and-desist list. Id. § 175.17(c)(1). "Solicitation" is defined as "an attempt to purchase or rent or an attempt to obtain a listing of property for sale, for rent or for purchase,"4 and the solicitation ban extends to "use of the telephone, mails, delivery services, personal contact or otherwise causing any solicitation, oral or written," to be left for the owner or anyone else at the owner's home address. Id. § 175.17(d)(1). The solicitation ban does not cover classified advertising in non-real estate publications, advertisements placed in public view, or radio or television advertisements. Id. § 175.17(d)(2). The regulations define residential property as one-, two-, and three-family houses, including co-ops and condos. Id. § 175.17(e).
Currently, approximately 20,000 homeowners are on the cease-and-desist list, with more than 14,000 in Queens County. The Secretary determines whether any particular communication is an unlawful solicitation by investigating the content of the communication and the intent of the licensee in sending the communication. The regulation has been applied broadly to prohibit most communications by licensees to residents located at homes on the cease-and-desist list, and licensees have been found to have violated the regulations by distributing business cards, or having promotional advertisements in mass distributed coupon packs that arrive at homes on the cease-and-desist list.
The Plaintiffs are real estate professionals licensed by the Department of State, offering services in New York, including areas that have been designated cease-and-desist zones by the Defendant. They contend that, in order to obtain real estate listings, they rely upon direct, in-home solicitations, including in-home visits, telephone calls, and literature delivered directly to homeowners. Plaintiff Parker brings the suit as a sales agent reasonably fearing prosecution and risking sanction for violation of subsection 442-h(3). He alleges that he has had particular difficulty developing his business due to this restriction. The Plaintiffs allege that the solicitation of listings is critical to the success of a real estate licensee, and that there is no cost-effective alternative to communicating truthful, non-deceptive information about the real estate market, the licensee, the licensee's company, and the nature of their services.
Plaintiffs Hosein and Anderson were charged by the Defendant with a disciplinary violation due to Hosein's mailing a flier to an addressee on the cease-and-desist list for Queens County. The flier introduced Hosein to potential clients, and detailed some of the services provided by his company, Coldwell Banker Halmike Realty. The flier concluded with the following sentence, which the Secretary of State deemed to be a solicitation for a listing: "If you have considered selling or buying a home now or in the near future, or simply want to find out what your home is worth in today's market, don't hesitate to call." Hosein and Anderson pled no contest to the charge of violating section 175.17 by soliciting a listing for the sale of residential property, and entered into a consent order with the Department of State, pursuant to which each paid a $300 fine.
The Plaintiffs commenced this action pursuant to the Constitution and 42 U.S.C. § 1983 in the United States District Court for the Eastern District of New York in February 1999. On cross-motions for summary judgment, the District Court granted the Plaintiffs' motion for summary judgment, concluding that subsection 442-h(3) and the regulations promulgated thereunder were unconstitutional. The District Court applied the test for content-based regulations of speech, see United States v. Playboy Entertainment Group, Inc., 529 U.S. 803, 120 S.Ct. 1878, 146 L.Ed.2d 865 (2000), and deemed the statute underinclusive as to the stated goal of homeowner privacy because it did not proscribe solicitation by other types of solicitors, see City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 113 S.Ct. 1505, 123 L.Ed.2d 99 (1993). Accordingly, the Court concluded that the remedy did not "reasonably fit" with the problem it sought to address, see Central Hudson Gas & Electric Corp....
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