Court Opinion

ID: 9783729
Source: CourtListenerOpinion
Date Created: 2023-08-30 20:04:55.520281+00
Date Added: 2024-06-11T07:35:22.275069
License: Public Domain

MICHAEL A. WOLFF, Judge,
dissenting.
Introduction
Kansas City Premier Apartments (KCPA) is enjoined from conveying trathful information through its website and through its “rental advisors” to potential renters who are in the market for apartments. KCPA does so for a fee, paid by the property owners to whom prospective tenants are referred, but this fee does not justify the state’s suppression of KCPA’s distribution of this information.
The circuit court’s injunction against KCPA’s speech, upheld in the principal opinion, runs afoul of the First Amendment, as applied by the United States Supreme Court in a variety of commercial contexts, including the Supreme Court’s June 23 decision in Sorrell v. IMS Health, 564 U.S. -, 131 S.Ct. 2653, 180 L.Ed.2d 544 (2011).
One can plausibly disagree with the United States Supreme Court’s unbending rationale in recent cases on free speech, but this court’s duty is to apply the principles of these cases, not to pay homage to them while disregarding them. Because I can find no principled distinction between this case and the First Amendment principles set forth most recently in Sowell, I respectfully dissent.
Sowell struck down a Vermont law that forbade the sale of prescriber-specific information by pharmacies to “pharmaceutical manufacturers and pharmaceutical marketers.” Vt. Stats. Ann., section 4631(f) (2010). It is common practice in the pharmaceutical industry for so-called “data mining” companies to buy information from pharmacies and then sell the information to pharmaceutical companies to use in refining their drug marketing to prescribing physicians. The Supreme Court rejected Vermont’s explanation that it was intended to protect public health and keep health care costs in check, saying that the law could not withstand “heightened scrutiny.” The Supreme Court found that heightened scrutiny was the appropriate standard of review because the Vermont law was a content-based — only forbidding the marketing of drugs — and a speaker-based — only silencing pharmaceutical marketers and manufacturers — prohibition on speech. The Supreme Court *173held that the speech’s commercial nature did not negate the need for heightened scrutiny because “[w]hile the burdened speech results from an economic motive, so too does a great deal of vital expression.” 564 U.S. at -, 131 S.Ct. at 2665.
Like the regulation in Sorrell, here there is no evidence that the speech is false or misleading. The prohibition of marketing is content-based and speaker-based, as in Sorrell, justifying heightened scrutiny. By restricting the advertisement of rental properties to only licensed real estate agents, the state of Missouri has enacted content-based — only the listing, or advertising of rentals and homes is forbidden — and speaker-based — only non-licensed persons are prohibited from speaking — restrictions on speech. This case is directly parallel to the factual situation in Sorrell. As in Sorrell, heightened scrutiny is appropriate, and the state’s regulation cannot survive such scrutiny.1
The speech activities of KCPA are commercial, to be sure, but they are deemed worthy of First Amendment protection. Its activities are unadorned speech, not shown to be harmful or untruthful. The state has no business suppressing this speech under its police power to regulate occupations, and the broad injunction that the Court upholds in the principal opinion violates the First Amendment.
Occupational licensing
When KCPA challenges state suppression of its economic activities, its free speech theory seems but a proxy for its real challenge — the denial of economic liberty by a state-created cartel for marketing real estate services. The Missouri legislature has seen fit to. limit “real estate activities” to licensed real estate agents,2 thus creating a cartel.3 See section 339.010 RSMo Supp 2010.4 By requiring occupational licensing in the real estate profession, the Missouri legislature has limited the abilities of Missourians to make a living.5
The occupation of real estate agent is but one of the scores of occupations the state has seen fit to regulate from the early 20th century forward. Prior to that time, there were recognized but three “professions” — the ministry, law and medicine — and regulation was confined to the latter two. But the scores of regulatory *174statutes that have been enacted — usually at the behest of the regulated occupations — have some have some tangential relation to protection of the public and quite a direct relation to protection of the economic interests of members of the occupation group. These occupational licensing provisions can be analogized to the merchants’ guilds of medieval times. Both economic systems serve to decrease competition by restricting access to the occupation, restricting non-members from participating in economic markets, and attaching legal consequences to “essentially determinations of what are ethically or economically permissible practices.” Walter Gellhorn, Individual Freedom and Governmental Restraint 114(1956).
The constitution does not explicitly protect economic liberty, which may come as a surprise to those who skipped high school civics, but the constitutional guarantee of free speech often is invoked to fill the seemingly un-American void.6 The connection between free speech and free enterprise is direct. When describing the necessity of protecting commercial speech, the Supreme Court explained that “so long as we preserve a predominantly free enterprise economy, the allocation of our resources in large measure will be made through numerous private economic decisions. It is a matter of public interest that those decisions, in the aggregate, be intelligent and well informed. To this end, the free flow of commercial information is indispensable.” Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 765, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976).
Limiting the Flow of Information
KCPA’s free-speech theory is based on government suppression of truthful information about the availability of apartments for rent, information that is provided for a fee collected from landlords who obtain tenants for their properties through KCPA. The information KCPA provides serves a necessary function in our economy by providing consumers with information necessary to make rational decisions about their real estate rentals. By channeling all such information through licensed real estate agents, the state is limiting the information provided, creating an incentive to skew the information to the consumer to help close the deal.
Truthful, non-misleading commercial speech is protected by the First Amendment. In order to regulate this speech, the state must adduce a substantial justification for regulation; that the regulation directly advances the governmental interest asserted; and whether it is no more extensive than necessary to advance the stated governmental interest. Cent. Hud*175son Gas & Elec. Corp. v. Pub. Serv. Comm’n of New York, 447 U.S. 557, 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980).
The threshold question, therefore, is whether KCPA’s conduct is speech, and, if so, whether the speech is commercial speech. The activity at issue is KCPA’s advertisement of rental properties to the consumer. The Supreme Court has held that advertising is a form of speech. See Bigelow v. Virginia, 421 U.S. 809, 95 S.Ct. 2222, 44 L.Ed.2d 600 (1975) (finding that newspaper advertising of an abortion clinic’s referral services was speech); Cent. Hudson, 447 U.S. at 557, 100 S.Ct. 2343 (finding that advertising of utility prices is speech). Neither party here disputes that KCPA’s conduct is commercial speech— which is protected under the First Amendment. Bigelow, 421 U.S. at 809, 95 S.Ct. 2222.
The state argues that the occupational licensing governs primarily conduct and that any suppression of speech is purely incidental.7 The circuit court’s overly broad judgment enjoined KCPA from:
A. Contracting with property owners to receive compensation in return for referring prospective tenants who rent from property owners, which is not an enforceable contract under the terms of Section 339.160, RSMo;
B. Any act requiring real estate licen-sure pursuant to the terms of Chapter 339, RSMo.
The circuit court judgment does not specify how KCPA violated chapter 339, leading to its broad injunction. The court concluded that: “KCPA’s business activities do not include collecting rents or security deposits for owners. KCPA does not accept money directly from renters or prospective renters and does not handle tenant complaints for owners or managers of rental properties. KCPA does not ‘show’ properties to prospective renters through actual in-person inspection. It does not advertise or hold itself out as licensed real estate broker or salesperson. KCPA does not charge or accept advance fees for advertisements appearing on KCPA website.”
Athough the circuit court did not specify how KCPA acted as a real estate agent, the court concluded that it performed acts requiring licensure and enjoined KCPA from doing the activities quoted here, because as the court concluded that KCPA violated the following sections:
(1) 339.010(3) — negotiates or offers or agrees to negotiate the sale, exchange or purchase, rental or leasing of real estate;
(2) 339.010(4) — lists or offers or agrees to list real estate for sale, lease, rental or exchange;
(3) 339.010(7) — assists or directs in the procuring of prospects, calculated to result in the sale, exchange, renting, or leasing of real estate; and
(4) 339.010(8) — assists or directs in the negotiation of any transaction calculated or intended to result in the sale, exchange, or rental or real estate.
A court as well could conclude, as this Court should, that KCPA did not violate chapter 339 by acting as a real estate agent — by negotiating the purchase, sale or rental of real property but instead, by simply communicating to the public information about the availability of rental housing. This is indistinguishable from the advertising previously held to be speech. See Bigelow, 421 U.S. at 809, 95 *176S.Ct. 2222. This case differs from federal cases holding that blanket regulation of occupations are permissible under the First Amendment because any free speech restrictions are merely incidental. See, e.g., Accountant’s Soc’y of Virginia v. Bowman, 860 F.2d 602 (4th Cir.1988); Nat’l Ass’n for the Advancement of Psychoanalysis v. California Bd. of Psychology, 228 F.3d 1043 (9th Cir.2000).
KCPA is not challenging the ability of the state to license an occupation, just the lawfulness of its restricting communication of housing opportunities in the greater Kansas City area. The key to distinguishing between occupational regulation and First Amendment restriction of speech is whether there is a “personal nexus between professional and client.” Lowe v. S.E.C., 472 U.S. 181, 211, 105 S.Ct. 2557, 86 L.Ed.2d 130 (1985) (White, J., concurring). This personal nexus occurs when a professional “takes the affairs of a client personally in hand and purports to exercise judgment on behalf of the client in the light of the client’s individual needs and circumstances....” Id. at 232, 105 S.Ct. 2557. For example, the Fourth Circuit held that accountants, by preparing individualized assessments of their clients’ financial situations, were exercising their professional judgment on their clients’ behalf, creating a personal nexus between client and professional. Accountant’s Soc’y of Virginia, 860 F.2d at 602. Here, however, KPCA is not exercising professional judgment on behalf of its clients but merely is communicating information about available rentals.
Testimony from prospective tenants shows instances in which the KCPA “rental advisors” expressed personal opinions about properties listed on the website and rendered advice to prospective tenants about how they should approach negotiation with property owners, but none of this information was proved to be harmful to the public or the prospective tenants.
The state can completely restrict “false or misleading” speech as well as speech proposing an illegal activity. Peel v. Attorney Registration and Disciplinary Com’n of Illinois, 496 U.S. 91, 100, 110 S.Ct. 2281, 110 L.Ed.2d 83 (1990); Cent. Hudson, 447 U.S. at 557, 100 S.Ct. 2343.
The circuit court in this case found that the state did not prove that any of the property advertisements on the KCPA website were false or misleading. The state argues that because KCPA’s speech violates chapter 339, it is illegal and, therefore, does not fall under the protection of the First Amendment. This argument goes in a circle: The speech-restricting statute makes KCPA’s conduct illegal, without that statute it would be legal speech, and, therefore, KCPA’s speech is not advocating speech that is illegal under a separate statute, but speech that is made illegal by the speech-restricting statute being challenged.8 But the bottom line is that KCPA’s speech is not shown to be false or misleading, or advertising an illegal product or activity — it is simply speech protected by the First Amendment.9
“The party seeking to uphold a restriction on commercial speech carries the bur*177den of justifying it.” Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 71, 103 S.Ct. 2875, 77 L.Ed.2d 469 (1983). The state must show that the harms it recites are valid and that the restriction will alleviate them to a material degree. Edenfield v. Fane, 507 U.S. 761, 113 S.Ct. 1792, 123 L.Ed.2d 543 (1993). The government argues that chapter 339 serves a substantial government interest in preventing fraud and incompetence by persons engaged in the marketing of real estate. There is no question that the prevention of fraud is a substantial interest. Id. at 769-79, 113 S.Ct. 1792. To the extent that “competency” involves assuring that information is truthful, that might be an interest of the state. But, under Sorrell and the cases leading up to Sorrell, the state’s interest does not justify its suppression of KCPA’s speech.
Not only must the interest be substantial but the proposed government regulation also must materially and directly advance that interest and be no more extensive than necessary to serve that interest. Edenfield, 507 U.S. at 773, 113 S.Ct. 1792. The state argues that the licensing criteria protect the public by assuring the honesty and good behavior of brokers and agents. The state has not shown a nexus between truthful advertising and forbidding unlicensed realtors from advertising. “The States may not place an absolute prohibition on certain types of potentially misleading information, e.g., a listing of areas of practice, if that information may be presented in a way that is not deceptive.” In re R.M.J., 455 U.S. 191, 203, 102 S.Ct. 929, 71 L.Ed.2d 64 (1982). Here, the state could ban false or deceptive advertising from all persons — licensees or not — advertising real estate. Instead, it chose to enact chapter 339, forbidding all those not licensed from advertising. The state has not shown any studies or anecdotal evidence illustrating that having a license prevents fraud and deception. See Edenfield, 507 U.S. at 761, 113 S.Ct. 1792 (declaring a ban on in-person solicitation by CPAs is unconstitutional after the state adduced no studies or even anecdotal evidence showing there was a relationship between fraud and overreaching and the solicitation ban).
The state’s main argument in this case is that licensure is necessary to provide a background in “the subtleties of agency, conflicts, fiduciary duties, fair housing laws, discrimination issues, and other questions in which licenses real estate professionals are trained.” The state argues that this information is necessary for KCPA to render advice to their clients. For example, the state quotes Andrea Huff — a KCPA “rental advisor” — as telling a prospective tenant, “I have a few favorites ... I really like Sandstone Creek with Enclave and The Crescent to be my last choices for the overland park area (sic) ... they’re fine just not quite as new and update (sic) as the others.” The state argues that she only gave this advice be*178cause of Ms. Huffs lack of knowledge of fiduciary principles, although it is not clear whose fiduciary she would be. This example may illustrate a point opposite to the state’s point — the importance of allowing unlicensed realtors to convey information about rental listings. The rental advisor may be giving a valuable opinion that a licensed real estate agent would not give— that a particular property was not the most suitable for the prospective renter.
The state also argues two instances in which the information given by a rental advisor was inappropriate because the ad-visor advocated lying to the apartment complex, in one instance, lying about the weight of the dog owned by a prospective tenant where the apartment owner limited rentals to owners of small dogs but did not weigh them. Putting aside the question of whether lying about the weight of one’s dog is a proper rationale for occupational licensing, I would hasten to point out that if a rental advisor advocates false, deceptive or unethical information, the solution is not to limit all speech but to ban false, deceptive or misleading speech. See In re R.M.J., 455 U.S. at 203, 102 S.Ct. 929 (holding that misleading advertising may be prohibited entirely, but the state may not place an absolute prohibition on certain types of potentially misleading information, e.g., a listing of areas of law practice, if the information may be presented in a way that is not deceptive).
“The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own .good.” 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 503, 116 S.Ct. 1495, 134 L.Ed.2d 711 (1996). This is what the state seems to be doing in this case. By providing licensed real estate agents with a government-sanctioned cartel or monopoly on realty information, it is limiting the quality and quantity of information provided to consumers. The state’s paternalistic view that only licensed real estate agents somehow possess accurate and valid information may be insulting to consumers and unlicensed persons but that is not the point— the point is that the regulation violates the First Amendment. To that end, KCPA should not be censored by the government and should be allowed to communicate information to potential customers about the availability and characteristics of apartments.
Conclusion
I would reverse the judgment of the circuit court and remand. If the state wants an injunction limited only to the use of false or deceptive information, the state may be able to make the required showing. But the broad prohibition of this injunction violates the First Amendment, and I respectfully dissent.

. The Supreme Court went on in Sorrell to find that none of the government’s justifications — protection of medical privacy, integrity of the doctor-patient relationship, and improved public health and reduced healthcare costs — were advanced by the regulation. Sorrell, 564 U.S. at -, 131 S.Ct. at 2668. Instead, the Court held that the State’s burdening of speech rested on "nothing more than a difference of opinion” as to the value of particular types of speech. Id. at —-, 131 S.Ct. at 2672.

. This opinion uses the term “real estate agents” to refer to both real estate salespersons and real estate brokers as defined in section 339.010.

. A cartel is “an association of firms with common interests, seeking to prevent extreme or unfair competition, allocate markets or share knowledge.” Black's Law Dictionary, 207 (7th ed.1991).

. All statutory references are to RSMo Supp 2010 unless otherwise indicated.

. Among the requirements for becoming licensed is that the person be of "good moral character," "good reputation for honesty, integrity, and fair dealing,” and "competent to transact the business of a broker or salesperson in such a manner to safeguard the interest of the public.” See section 339.040. And, of course, that the person pay a fee. Section 338.040.4. These fees range from $40 to $150 to obtain a license and another $56 to take the licensing examination. Real Estate Commission, Fees, available at http://pr.mo. gov/boards/realestate/fees.pdf (last visited June 29, 2011).

. Though the federal constitution does not refer to economic freedom, the Missouri Constitution’s Bill of Rights includes protection for the right of the people "to the enjoyment of the gains of their own industry.” Mo. Const. art. 1 sec. 2. Fisher v. State Highway Comm’n of Mo., 948 S.W.2d 607, 613 (Mo. banc 1997), read the provision, enacted in the 1865 constitution, very narrowly to apply to recently freed slaves and a prohibition of slavery. Judge Holstein, joined in dissent by Judge Price, had the better view-that a "negligent taking by the State of one's fundamental, constitutionally protected liberty and property right to engage in lawful employment is prohibited absent payment of just compensation or other due process of law.” Id. It seems farfetched to argue, as did the majority in Fisher, that article 1, section 2, which had been re-adopted in the constitutions of 1875 and 1945 and has persisted for the past 146 years, should be confined in contemporary times to discouraging or outlawing slavery. For our present purposes, it should suffice to note that an infringement of the right to pursue a lawful occupation should be evaluated by the same kind of heightened scrutiny that the United States Supreme Court applies to infringements on the right of free speech.

. The state's argument fails because KCPA is not challenging the state’s right to license real estate salespersons and brokers but instead the state’s restriction on KCPA’s communication to consumers.

. Compare with Pittsburgh Press Co. v. Human Rel. Comm'n, 413 U.S. 376, 385, 93 S.Ct. 2553, 37 L.Ed.2d 669 (1973) (holding that there was no First Amendment protection for newspaper to carry help-wanted ads in sex-designated columns). In this case, the underlying activity being advertised for. — prostitution — was illegal. The advertisement itself was not. Here, the underlying activity — advertising real estate — is not illegal.

. Central Hudson provides the appropriate analysis to determine whether a regulation on commercial speech violates the First Amendment:
If the communication is neither misleading nor related to unlawful activity, the govern*177ment’s power is more circumscribed. The State must assert a substantial interest to be achieved by restrictions on commercial speech. Moreover, the regulatory technique must be in proportion to that interest. The limitation on expression must be designed carefully to achieve the State's goal. Compliance with this requirement may be measured by two criteria. First, the restriction must directly advance the state interest involved; the regulation may not be sustained if it provides only ineffective or remote support for the government’s purpose. Second, if the governmental interest could be served as well by a more limited restriction on commercial speech, the excessive restrictions cannot survive.
Cent. Hudson, 447 U.S. at 564, 100 S.Ct. 2343.