Pearson v. Edgar

Decision Date07 August 1998
Docket NumberNo. 97-2667,97-2667
PartiesAlvin PEARSON, Brenda Curtis, and Century 21 Pearson, Inc. Realtors, Plaintiffs-Appellees, v. James R. EDGAR and James E. Ryan, Defendants-Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

Philip C. Stahl (argued), Grippo & Elden, Chicago, IL, for Plaintiffs-Appellees.

Rita M. Novak, Laura Wunder (argued), Office of the Attorney General, Chicago, IL, for Defendants-Appellants.

Laurene K. Janik, National Association of Realtors, Chicago, IL, for Amicus Curiae.

Before COFFEY, MANION, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

In this opinion again we address the constitutionality of an Illinois statute regulating certain real estate sales practices regarding solicitation. The district court held that the statute violates the First Amendment and the Equal Protection and Due Process Clauses of the Fourteenth Amendment. We agree that the statute violates the First Amendment, but we disagree with the district court's other conclusions.

I. HISTORY

The Illinois General Assembly enacted 720 ILCS 590/1-1(d) ("the statute") to try to prevent blockbusting, or panic peddling, by real estate agents. Blockbusting, or panic peddling, is a real estate practice in which real estate agents encourage homeowners to put their homes on the market by exploiting fears of change in the racial composition of the neighborhood and the ensuant declining home values. The statute allows homeowners to notify real estate agents that they do not wish to be solicited. Solicitation of one of these homeowners by an agent who has notice of the homeowner's contrary wishes is a criminal offense. The statute reads as follows:

It shall be unlawful for any person or corporation knowingly:

....

(d) To solicit any owner of residential property to sell or list such residential property at any time after such person or corporation has notice that such owner does not desire to sell such residential property. For the purpose of this subsection, notice must be provided as follows:

(1) The notice may be given by the owner personally or by a third party in the owner's name, either in the form of an individual notice or a list, provided it complies with this subsection.

(2) Such notice shall be explicit as to whether each owner on the notice seeks to avoid both solicitation for listing and sale, or only for listing, or only for sale, as well as the period of time for which any avoidance is desired. The notice shall be dated and either of the following shall apply: (A) each owner shall have signed the notice or (B) the person or entity preparing the notice shall provide an accompanying affidavit to the effect that all the names on the notice are, in fact, genuine as to the identity of the persons listed and that such persons have requested not to be solicited as indicated.

(3) The individual notice, or notice in the form of a list with the accompanying affidavit, shall be served personally or by certified or registered mail, return receipt requested.

The remainder of the statute makes blockbusting itself illegal; that part of the statute is not at issue in this case.

After passage of the statute, a community group in the Beverly neighborhood of Chicago known as the Beverly Area Planning Association canvassed the neighborhood to find homeowners who did not want to be solicited by real estate agents. The Association compiled a list of names and served the list on local real estate agents.

The plaintiffs are Century 21 Pearson, Inc. Realtors, Alvin Pearson, and Brenda Curtis. Pearson owns the Century 21 agency, which employs plaintiff Curtis as well as Mardie Brown. Brown made a solicitation call to a homeowner in the Beverly neighborhood after the Century 21 agency had been served with a list containing that homeowner's name. Pearson, Brown, and the Century 21 agency were charged with violating the statute; the criminal complaints were dismissed but not before each was sentenced to a $100 fine and placed under court supervision. On March 31, 1986, the plaintiffs filed this civil rights suit alleging that the statute violates the First Amendment. They also alleged that the statute is unconstitutionally vague and violates the Equal Protection Clause.

The plaintiffs moved for a preliminary injunction to halt application of the statute during litigation. The district court found that the complaint failed to state a claim under the First Amendment and that the plaintiffs had no likelihood of success on the merits; the district court therefore denied the motion for a preliminary injunction. Only plaintiff Curtis pursued an interlocutory appeal. We affirmed the district court's denial of the preliminary injunction and remanded the case for further proceedings in an opinion that became the key to this long running saga. See Curtis v. Thompson, 840 F.2d 1291 (7th Cir.1988).

The district court read our opinion in Curtis to preclude any chance of success for any of the plaintiffs and to establish the law of the case, and the district court dismissed the case in its entirety. See Pearson v. Thompson, No. 86 C 2181, 1989 WL 88367 (N.D.Ill. July 26, 1989). All the plaintiffs then appealed, and we affirmed on law of the case grounds. See Pearson v. Thompson, 955 F.2d 46, 1992 WL 25349 (7th Cir. Feb. 13, 1992), vacated, Pearson v. Edgar, 507 U.S. 1015, 113 S.Ct. 1809, 123 L.Ed.2d 441 (1993).

The plaintiffs petitioned for a writ of certiorari. The Supreme Court granted the writ, vacated our second opinion, and remanded the case to us "for further consideration in light of City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 113 S.Ct. 1505, 123 L.Ed.2d 99 (1993)." Pearson v. Edgar, 507 U.S. 1015, 113 S.Ct. 1809, 123 L.Ed.2d 441 (1993). We, in turn, remanded the case to the district court "for consideration of the impact of Cincinnati v. Discovery Network.... The district court should conduct an evidentiary hearing to allow the parties to create the appropriate record for determining the constitutionality of Ill.Rev.Stat. ch. 38 7051(d) under the new standards set out by Discovery Network." Pearson v. Thompson, 4 F.3d 997, 1993 WL 315601 (7th Cir. Aug. 12, 1993).

On remand, the district court conducted that evidentiary hearing but then decided that further proceedings would help it make a better decision about the constitutionality of the statute. To that end, the district court ordered the parties to prepare for a bench trial.

At the conclusion of the trial, the district court analyzed the state's two asserted justifications for the statute: preventing blockbusting and protecting residential privacy. Some of the key findings of fact relating to those justifications are:

37. There is no evidence that standard real estate marketing materials cause rapid racial change or contribute to panic selling.

38. Panic peddling and blockbusting did occur in Chicago during the 1960s and early 1970s.

39. However, blockbusting and panic peddling rarely, if ever, occur in Illinois today.

....

49. During the bench trial, the defendants produced no evidence in this case that real estate solicitation harms or threatens to harm residential privacy.

Pearson v. Edgar, 965 F.Supp. 1104, 1108-09 (N.D.Ill.1997) (citations to record omitted). Relying on these key findings, the district court applied the Central Hudson test for restrictions on commercial speech. See Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557, 566, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). Regarding both blockbusting and residential privacy, the district court held that the state failed to satisfy the Central Hudson test. Specifically, the district court held that the state failed to prove that the statute directly advances its asserted goals and also failed to prove that the statute is not more extensive than necessary to serve those interests. The district court held the statute unconstitutional and granted relief to the plaintiffs. The state appeals from that decision.

II. ANALYSIS
A. Standards of Review

We review the findings of fact for clear error. See Fed.R.Civ.P. 52(a) ("Findings of fact ... shall not be set aside unless clearly erroneous...."); Thornton v Brown, 47 F.3d 194, 196 (7th Cir.1995). A factual finding is clearly erroneous only if we are "left with the definite and firm conviction that a mistake has been committed." Thornton, 47 F.3d at 196 (citations omitted). We review the district court's conclusions of law de novo. See McFarlane v. Life Ins. Co. of North Am., 999 F.2d 266, 267 (7th Cir.1993). And in First Amendment jurisprudence, "[t]he party seeking to uphold a restriction on commercial speech carries the burden of justifying it." Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 71 n. 20, 103 S.Ct. 2875, 77 L.Ed.2d 469 (1983). "This burden is not satisfied by mere speculation or conjecture; rather, a governmental body seeking to sustain a restriction on commercial speech must demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree." Edenfield v. Fane, 507 U.S. 761, 770-71, 113 S.Ct. 1792, 123 L.Ed.2d 543 (1993).

B. Curtis v. Thompson

We begin our analysis by reviewing our decision in Curtis. As noted in Curtis we upheld the district court's denial of a preliminary injunction. We observed that the parties had not had a chance to present affidavits or other evidence. See id. at 1295. However, we determined on the record before us that the statute properly advanced the state's interest in residential privacy. See id. at 1299, 1302. That being the case, we agreed with the district court that Curtis had no likelihood of success on the merits and therefore a preliminary injunction was not warranted.

In reaching that result, we applied the four-part Central Hudson test for restrictions on commercial speech. We asked:

1. Whether the speech concerns lawful activity and is not misleading;

2. "[Whether...

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2 books & journal articles
  • The Do-not-call List Controversy: a Parable of Privacy and Speech
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    • University of Nebraska - Lincoln Nebraska Law Review No. 38, 2022
    • Invalid date
    ...solicitation restriction was narrowly tailored and of the kind "endorsed by the Supreme Court in Rowan"); Pearson v. Edgar, 153 F.3d 397, 404 (7th Cir. 1998) (striking down a regulation under the "reasonable fit" prong as paternalistic, because, unlike Rowan, "[h]ere, the state, not the hom......
  • The Do-not-call List Controversy: a Parable of Privacy and Speech
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    • Creighton University Creighton Law Review No. 38, 2004
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    ...solicitation restriction was narrowly tailored and of the kind "endorsed by the Supreme Court in Rowan"); Pearson v. Edgar, 153 F.3d 397, 404 (7th Cir. 1998) (striking down a regulation under the "reasonable fit" prong as paternalistic, because, unlike Rowan, "[h]ere, the state, not the hom......

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