Court Opinion

ID: 2996421
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:28:33.140759+00
Date Added: 2024-06-11T11:19:19.724445
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 02-4034
SECOND CITY MUSIC, INC., doing business as
Second Hand Tunes,
                                     Plaintiff-Appellant,
                           v.

CITY OF CHICAGO, Illinois,
                                            Defendant-Appellee.
                         ____________
       Appeal from the United States District Court for the
         Northern District of Illinois, Eastern Division.
            No. 02 C 7741—David H. Coar, Judge.
                         ____________
   ARGUED FEBRUARY 11, 2003—DECIDED JUNE 27, 2003
                   ____________

 Before EASTERBROOK, ROVNER, and WILLIAMS, Circuit
Judges.
  EASTERBROOK, Circuit Judge. To prevent dealers in used
merchandise from serving (wittingly or not) as fences
for thieves, Chicago requires them to obtain licenses, col-
lect information about each person from whom they pur-
chase goods, and submit to searches on demand. Chicago
Municipal Code §§ 4-264-005 to -230. The ordinance cov-
ers all dealers in “secondhand property,” a term that means
any used “audio-video equipment, camera, computer hard-
ware, jewelry made of precious metal or stone, article
made of precious metal, precious stone or gem, sporting
or athletic wear or equipment, including a bicycle, watch
2                                                No. 02-4034

or currency.” Chicago Municipal Code §4-264-005 ¶7. The
phrase “audio-video equipment” has its own definition
(id. at ¶1): “any stereo, speaker, radio, video recorder, video
camera, television, tape or disc player, telephone, pager
or satellite signal device.” That was the definition, at any
rate, until June 2002, when the City added two items
that it concluded had become popular with thieves: com-
pact discs (CDs) and digital versatile discs (DVDs).
Second Hand Tunes believes that by doing this Chicago
violated the first and fourth amendments, plus the due
process clause of the fourteenth. Until the amendment,
Second Hand Tunes had not needed a license to operate
its business of buying and selling used recordings, and
it had not needed to keep the records required by the law;
it asked the district judge to prevent the City from apply-
ing the amendment to established businesses. After the
district court denied its motion for a preliminary injunc-
tion, see 231 F. Supp. 2d 784 (N.D. Ill. 2002), Second
Hand Tunes took an immediate appeal, which we ex-
pedited. The arguments on appeal are a subset of those
presented to the district court; we describe only those
developed in this court.
  Second Hand Tunes first contends that §4-264-020 is
unconstitutionally vague, at least as applied to dealers
in materials protected as speech under the first amend-
ment. This section provides, among other things, that
an applicant for a license to deal in used goods must be “of
good character and repute.” According to Second Hand
Tunes, the imprecision of this language enables the City
to discriminate against dealers in songs and movies that
the police find irksome—for example, gangsta rap, songs
with lyrics extolling drug use or underage sex, and lurid
movies that approach but do not cross the border into
obscenity. Relying principally on Lakewood v. Plain Dealer
Publishing Co., 486 U.S. 750 (1988), Second Hand Tunes
contends that an open-ended licensing standard operates
No. 02-4034                                              3

as a prior restraint on speech. The district court con-
cluded, however, that the ordinance does not regulate
speech, so that the special rules applicable to that topic
do not apply. Instead, the court thought, it is a generally
applicable law, covering rare coin dealers, bicycle shops,
and only incidentally sellers of used audio and video
discs. This led the judge to apply the approach of Graff
v. Chicago, 9 F.3d 1309 (7th Cir. 1993) (en banc), which
holds that municipalities need not write generally ap-
plicable laws with the same precision required of laws
that address speech.
   Second Hand Tunes’ other target is §4-264-050(f), which
requires dealers to make their records available to the
police for inspection on demand during business hours. The
record-keeping rules are themselves extensive: dealers
must learn (and document) the identity of those from
whom they buy, must log every item purchased in each
transaction, and must deliver this information to the
police daily; then dealers must hold new inventory
unsold for 10 days, so that the police may retrieve any
items that had been stolen. In the district court Second
Hand Tunes directly challenged the record-keeping rules;
on appeal these rules are relevant only to the extent
that they ensure that, if police arrive for an inspection,
there will be plenty to see. The district court held that
the obligation to admit the police for inspection does
not violate the fourth amendment because it is reason-
able in time (being limited to business hours, when any-
one may walk in off the street and peruse the inventory)
and scope (being limited to records that facilitate iden-
tification of stolen goods). The district judge observed
that sellers of used merchandise long have been closely
regulated to separate legitimate dealers from fences, and
that decisions such as New York v. Burger, 482 U.S. 691
(1987), deem “reasonable” searches of business premises
designed to ensure compliance with regulatory require-
4                                                No. 02-4034

ments. Cf. Dimeo v. Griffin, 943 F.2d 679 (7th Cir. 1991)
(en banc). This aspect of the district court’s decision seems
to us correct, for the reasons the district judge gave. If
the City should implement these provisions in an uncon-
stitutional manner (for example, by increasing the fre-
quency of inspections of shops that carry disfavored record-
ing), then both money damages and injunctive relief
will be available. If applied as written, though, they
comport with the Constitution.
   Vagueness in the licensing requirement is, however, a
more difficult issue. Weinberg v. Chicago, 310 F.3d 1029,
1043-46 (7th Cir. 2002), holds that precision is required
with respect to a law’s application to speech even if that
law principally covers matters other than speech. Yet
neither is this case a replay of Weinberg, where the plain-
tiff had a particular viewpoint that he wished to com-
municate, or of Lakewood, where the ordinance was di-
rected to newsracks. Second Hand Tunes is not itself
a speaker but facilitates a market where speech is a prod-
uct on sale. Plaintiff concedes that it has no point of
view with respect to the works of authors, either; it buys
and sells whatever comes on the market.
  An effort to control where and how middlemen sell
the written word differs in principle from a law addressed
only to middlemen—such as, for example, a statute re-
quiring all retail outlets, including bookstores, to be “clean”
and “well lit”. These are vague terms, to be sure, but
unlikely to have either the purpose or the effect of stifling
speech, as a law that reads directly on the sale of books
or newspapers could do. Intermediaries and agents often
are subject to rules that could not be applied to primary
speakers. Think of the requirements for admission to
the bar. Lawyers must demonstrate character and fit-
ness under standards that are no clearer than those
Chicago applies to dealers in used merchandise, cf. In re
Anastaplo, 366 U.S. 82 (1961), and lawyers may be disci-
No. 02-4034                                                5

plined if they engage in “conduct unbecoming a member
of the court’s bar”. See Fed. R. App. P. 46(b)(1)(B). No
such rules could be applied to authors and publishers, but
as applied to those who represent authors and publishers
they are valid. See In re Mann, 311 F.3d 788 (7th Cir.
2002). Second Hand Tunes concedes as much; it does
not contend that licensing is invalid per se (as licens-
ing of newspapers would be) but only that Chicago’s
licensing scheme could be misused.
   Regulating who may be a middleman in the resale
of music and video discs for which the authors and pub-
lishers already have been paid could affect speech in only
an indirect way, and no author has argued (either as
a party of by appearance as amicus curiae) that Chicago’s
system would hamper its speech. Doubtless a healthy
second-hand market makes people more willing to buy
(or to pay extra for) new goods. See Michael Waldman,
Eliminating the Market for Secondhand Goods, 40 J.L. &
Econ. 61 (1997); cf. R.H. Coase, Durability and Monopoly,
15 J.L. & Econ. 143 (1972). Still, a small increase in the
cost of operating a resale market is unlikely to have a
significant effect on the primary market—and plaintiff
has not endeavored to show that the costs created by
the amended ordinance would be other than small, in
relation to the existing costs of operating this second-
hand market. Nor has plaintiff introduced evidence show-
ing a significant viewpoint-related effect on the second-
hand market itself (a possibility we consider further below).
  What is more, Chicago’s licensing rule is not product
specific. That is to say, anyone holding a license to operate
a used-goods dealership in Chicago may sell any second-
hand merchandise, which makes it even harder to
clamp down on a particular kind of merchandise. Police
examining a license application have no idea what the
dealer may decide to stock in the future. This differs
from the ordinances in Lakewood and Weinberg, where
6                                                No. 02-4034

at the time of enforcement officials knew exactly what
speech was at issue and could target disfavored expression.
  Because the ordinance as written does not target speak-
ers, and Second Hand Tunes does not contend that it has
a point of view that the City is attempting to silence
or disfavor, potential uncertainty about the scope of the
good-character requirement does not automatically invali-
date the law, see Virginia v. Hicks, No. 02-371 (U.S.
June 16, 2003), though it may provide ground for further
development. It is possible to test plaintiff’s prediction
that the ordinance induces dealers in used CDs and
DVDs to shy away from controversial recordings. The
parties can investigate whether dealers’ mix of inven-
tory has changed. It should be easy to determine whether
dealers that carry (or carried) recordings offensive to
the police have had their license applications turned
down, experienced an unusually high number of inspec-
tions, and so on. Proof that the system in practice is be-
ing used to increase the costs of some dealers relative to
others, in a way that shrinks the market for disfavored
recordings, would support relief for dealers adversely
affected.
  There is, however, no strong justification for immediate
relief to this plaintiff, for Second Hand Tunes does not
contend that it has altered or is inclined to alter its own
mix of inventory. It made but then withdrew an applica-
tion for a license. Unlike persons with religious objections
to licensing, see Watchtower Bible & Tract Society v. Village
of Stratton, 536 U.S. 150 (2002), Second Hand Tunes would
incur no detriment by the act of applying. The record does
not afford any reason to suppose that it would be turned
down, if it carried through with an application. Thus the
“good character and repute” clause in the licensing sec-
tion does not cause plaintiff irreparable injury, without
which there is no basis for preliminary injunctive relief. See
Sampson v. Murray, 415 U.S. 61, 84-92 (1974). Injury, if
No. 02-4034                                              7

any, comes from the expense of complying with the record-
keeping requirements, but plaintiff has not pressed in this
court any argument that they violate the first amend-
ment. As we have said, some real injury may lurk be-
neath the surface if the ordinance is implemented in a
way that raises the relative costs of dealers in controver-
sial recordings, but evaluating this possibility requires
evidence so far missing from the record.
   Second Hand Tunes contends that it does suffer irrepara-
ble injury because, without the aid of an injunction, it
will go out of business. Yet two things could keep it in
business; an injunction or a license. If the license can be
had, then the lack of an injunction does not lead to ir-
reparable harm. Injury caused by failure to secure a
readily available license is self-inflicted, and self-in-
flicted wounds are not irreparable injury. Only the injury
inflicted by one’s adversary counts for this purpose. The
Supreme Court held in Lakewood that the newspaper
did not need to apply for a license, because licensing
the press is one of the principal evils against which the
first amendment is directed. See 486 U.S. at 755-56.
Second-hand dealers differ from the press; plaintiff con-
cedes that it lawfully may be required to obtain a license,
provided that the terms on which licenses issue curtail
administrative discretion. Chicago insists that in prac-
tice no discretion is being exercised, and since Second
Hand Tunes does not say that its owners are felons it
can have a license for the asking (plus the fee, which is
not separately objectionable).
  The sensible way to proceed is for Second Hand Tunes
to obtain a license and continue to operate while it builds
a record. After discovery has been completed, the dis-
trict judge can determine whether the licensing officials
exercise discretion or instead apply a mechanical rule,
and whether either the licensing standards or the imple-
mentation of the record-keeping rules has affected the
8                                                No. 02-4034

availability of controversial recordings. Any injury that
Second Hand Tunes incurs by following a different
course is of its own choosing. The order of the district
court denying its request for interlocutory relief therefore is
                                                   AFFIRMED.

A true Copy:
       Teste:

                         ________________________________
                         Clerk of the United States Court of
                           Appeals for the Seventh Circuit

                    USCA-02-C-0072—6-27-03