Leslie Rae Young v. Pete Ricketts , 825 F.3d 487 ( 2016 )

United States Court of Appeals
For the Eighth Circuit
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No. 15-1873
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Leslie Rae Young
lllllllllllllllllllll Plaintiff - Appellant
v.
Pete Ricketts, Governor of the State of Nebraska, in his official capacity, et al.
lllllllllllllllllllll Defendants - Appellees
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Appeal from United States District Court
for the District of Nebraska - Lincoln
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Submitted: December 15, 2015
Filed: June 9, 2016
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Before WOLLMAN, LOKEN, and BYE, Circuit Judges.1
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LOKEN, Circuit Judge.
Leslie Rae Young is a California resident and a licensed real estate broker in
that State but not in Nebraska. In March and July 2010, the Director of the Nebraska
Real Estate Commission (“the Commission”) issued Young letters stating that she
1
This opinion is being filed by Judge Wollman and Judge Loken pursuant to
8th Cir. Rule 47E.
was advertising real property located in the State of Nebraska for sale on
www.ForSaleByOwner.com, which is linked to www.eList.me, and on
REALTOR.com, without securing a Nebraska real estate broker’s license, and
ordering Young to “cease and desist from any and all conduct which requires a real
estate broker’s, associate broker’s, or salesperson’s license in the State of Nebraska.”
Without exhausting state law remedies, Young commenced this 42 U.S.C. § 1983
action against Nebraska officials in their official capacities. She seeks prospective
relief declaring that provisions of the Nebraska Real Estate License Act (the “License
Act”), Neb. Rev. Stat. §§ 81-885.01 to 81-885.55, “facially and as interpreted and
applied by Defendants,” violate her rights under the First Amendment and the Due
Process, Equal Protection, and Privileges or Immunities Clauses, as applied to the
States by the Fourteenth Amendment, and enjoining Defendants “from enforcing
[those provisions], as well as any and all implementing rules and regulations and the
policies and practices by which Defendants enforce these provisions.”
The district court2 stayed the action because Young had not appealed the orders
to the Commission and sought judicial review of an adverse decision in state court.
See Neb. Rev. Stat. §§ 81-885.25-30, 84-917(2). Young moved for relief from that
order, conceding that the time for requesting administrative review had expired, and
that she “does not contest” the Commission’s determination that she “was engaged
in ‘brokerage’” of Nebraska properties. The district court lifted the stay and, after
extensive discovery, granted Defendants’ motion for summary judgment. Young
appeals the dismissal of her constitutional claims. Reviewing constitutional questions
and the grant of summary judgment de novo, we affirm. See Mercer v. City of Cedar
Rapids, 308 F.3d 840, 843 (8th Cir. 2002) (standard of review).
2
The Honorable Joseph F. Bataillon, United States District Judge for the
District of Nebraska.
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I. Background.
A. At the time in question, Young as a licensed California real estate broker
was a member of and had access to all 66 Multiple Listing Service (“MLS”) databases
in California. MLSs are private databases of individual properties created and
maintained by real estate professionals -- primarily licensed real estate brokers -- to
help their clients buy and sell real estate. Only MLS members can place property
listings in the databases. REALTOR.com is the official nationwide website of the
National Association of Realtors. It displays information about properties for sale in
Nebraska and elsewhere. Only properties listed in an MLS database can be placed
on REALTOR.com. Young summarized her economic activity that gave rise to this
dispute in her First Amended Complaint and Exhibit A to that Complaint:
17. In 2008, Ms. Young created Elist.me for the purpose of providing
property advertising services to home owners around the country who want to
sell their properties online without the assistance or cost of a real estate broker.
18. In 2008, Ms. Young entered into a contract with
ForSaleByOwner.com [“FSBO”] to provide advertising services to [FSBO’s]
clients.3 A true and correct copy of that contract is attached as Exhibit A.
19. Under the terms of that contract, Ms. Young agreed to enter pictures
and other information about [FSBO’s] clients’ properties into the database
operated by Elist.me, which is then fed to [FSBO] and other websites that
advertise homes and other real estate for sale by owner. Ms. Young charges
[FSBO] a flat fee of $95 per-property for these services, not a commission,
3
Owned by the Chicago Tribune, FSBO “publishes an internet website that
advertises properties for sale [and] charges a flat fee to property owners who wish to
advertise and sell their homes without incurring the substantial cost typically incurred
by retaining a real estate agent.” Forsalebyowner.com Corp. v. Zinneman, 347 F.
Supp. 2d 868, 870 (E.D. Cal. 2004).
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which is paid whether or not an advertised house sells, and without regard to
how much it sells for.
The contract between FSBO and Young identified her company as “MLS Provider,”
“a licensed real estate brokerage firm that specializes in listing properties on the
Multiple Listing Service” in its local markets. The contract provided in part:
Realtor.com Product. FSBO may make available to FSBO Customers a
Service that enables the Listing of a FSBO Customer to appear on Realtor.com
by placing the Listing on an MLS outside the geographic area of the Listing
(the “Realtor.com Product”). MLS Provider [Young] will be the exclusive
provider of the Realtor.com Product to FSBO and the FSBO Customers . . . .
MLS Provider will ensure that such Listings [for example, “Listings” of FSBO
Customer properties in Nebraska] are placed in an MLS that is outside the
geographic area of the Listing such that agents in the geographic area of the
Listing would not see such Listing in the MLS related to such geographic area.
FSBO shall pay MLS Provider $95 for each Listing placed on an MLS . . . .
The Agreement provided that “Broker [Young] will add Seller’s contact number to
the Broker’s phone system. It is Seller’s sole responsibility to follow up with any and
all inquiries.”
It is undisputed that Young entered into nearly thirty “Property Agency Listing
Agreements” with Nebraska residents who were FSBO customers. Each agreement
identified Young or eList.me as “Broker” and her client as “Seller,” listed specific
Nebraska real estate for sale, and stated that “Seller is hiring Broker to submit the
property . . . to an out-of-area MLS for the purpose of advertising as a showcase
listing on the national website Realtor.com.” Young entered property information
provided by Nebraska Sellers into California MLS databases, which then became
REALTOR.com listings accessible to buyers and agents in Nebraska. The listings
identified Young as “advertising broker” or “agent,” and encouraged viewers to
“Email Agent,” view “Agent’s Other Listings,” and call “Leslie Young, Advertising
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Broker” for “Information and Showings.” However, consistent with the Listing
Agreement, the phone number provided was the Seller’s “contact number,” not
Young’s. Young’s eList.me company website stated, “We are a Leading Online
Advertiser providing UNSURPASSED Internet exposure!”
The summary judgment record includes undisputed evidence that Young was
in direct communication with her Nebraska client Sellers. She told one client:
When buyers write or call for information, most do not have agents
representing them. You will want to contact the buyer quickly BEFORE
THEY HIRE a local agent to represent them. This gives the seller an
opportunity to sell their property without paying a commission to the
buyer’s broker.
Another emailed Young, “Thank you for all your help managing our home for sale.”
Young signed her emails to Sellers as “Leslie Young, Broker,” or “Leslie Young,
Advertising Broker.” Young was the only person with access to change and remove
the Nebraska listings on REALTOR.com.
B. The License Act provides that it is unlawful for a non-exempt person
“directly or indirectly, to engage in or conduct, or to advertise or hold himself or
herself out as engaging in or conducting the business, or acting in the capacity, of a
real estate broker, associate broker, or real estates salesperson within this state
without first obtaining a license” from the Commission. Neb. Rev. Stat. § 81-885.02.
Acting as a broker without a license subjects the violator to civil sanctions imposed
by the Commission, including a cease and desist order, § 81-885.03. Section 81-
885.01(2) “defines” broker to include:
any person who, for any form of compensation or consideration or with
the intent or expectation of receiving the same from another, negotiates
or attempts to negotiate the listing, sale, purchase, exchange, rent, lease,
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or option for any real estate or improvements thereon, or assists in
procuring prospects or holds himself or herself out as a referral agent for
the purpose of securing prospects for the listing, sale, purchase,
exchange, renting, leasing, or optioning of any real estate . . . or holds
himself or herself out as engaged in any of the foregoing.
Persons performing covered acts with reference to property they own or lease are
exempt. § 81-885.04(1). As a real estate broker licensed in another State, Young can
obtain a nonresident broker’s license by taking a three-hour correspondence course,
paying a license fee, passing a criminal background check, and obtaining errors and
omissions insurance. § 81-885.17.
Commission Director Greg Lemon testified that the Commission issued cease
and desist orders due to Young’s Nebraska listings on MLS and REALTOR.com:
Q. What is a listing?
A. A listing is not specifically defined in [the] Nebraska statute,
but in industry usage, generally, a listing refers to a situation where a
real estate broker has a contract to assist someone in the sale of property
or lease.
* * * * *
Q. So does marketing properties require a real estate broker’s
license?
A. No. Not in and . . . of itself in all instances.
Q. Okay. Well, what kind of marketing would require a license?
A. If you are marketing for a third party for a fee and you are
representing yourself out as the intermediary third party. If you’re
simply conveying information as a newspaper or a website and you are
the medium used for that, that doesn’t require a license.
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* * * * *
A. . . . The MLS is the Multiple Listing Service which connot[]es
that something on there is a listing which is a property where a third-
party broker is assisting someone in the sale of property; so if they’re
marketing through the MLS, it would appear that there is brokerage
activity being conducted. . . .
You asked me if you were simply paid to put [property] on the
MLS would that be an activity requiring a license. No, it would not, but
in the normal course and scope of things, if you were doing that, as I
stated earlier, the MLS rules state that you’re supposed to be someone
with an agency relationship representing someone . . . .
Q. Do you know whether all MLSs require you to be a real estate
broker to put a property on the MLS?
A. Yes, they do.
* * * * *
Q. . . . [W]hat about this advertisement [on REALTOR.com]
indicated that Leslie was acting as a real estate broker?
A. . . . [I]t’s a Nebraska property. . . . [I]t says, “Presented by
Leslie Young.” . . . [I]t’s on REALTOR.com which, as I’ve discussed
before, is a website for licensees that have listings. . . . And . . . the
reference to the phone number and “e-List me. Call 877” which, I
believe, is the company of Leslie Young.
* * * * *
A. On the Nebraska property in question . . . Ms. Young is listed
as the broker on the website as well as showing her “presenting”
property . . . . It logically follows from this that Ms. Young is holding
herself out as the broker for the sale of the Nebraska real estate in
question here. Regardless of the reference to advertising . . . . On the
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plain meaning of the term, if one is publicly represented as a broker, I
would say that’s holding one’s self out as a broker.
C. Young argues that numerous provisions of the License Act are
unconstitutional. She does not challenge the terms of the Commission’s cease and
desist orders. Indeed, her failure to exhaust administrative and judicial remedies
under state law would foreclose any such challenge. Her initial Complaint alleged
that a License Act amendment violated the due process limits of Nebraska’s long-
arm-jurisdiction authority by providing that the performance of “any single act”
covered by § 81-885.01(2) “shall constitute sufficient contact with the state for the
exercise of personal jurisdiction over such person in any action arising out of such
action.” § 81-885.03(1). But she has abandoned that claim.
II. First Amendment Claims.
Young’s primary argument on appeal is that “FSBO advertising is fully-
protected First Amendment speech,” and therefore requiring Young to get a license
is a content-based prior restraint on her First Amendment rights. In support, she cites
a host of First Amendment precedents that dealt with direct restrictions on speech and
expressive activities, including commercial advertising. See, e.g., Thompson v. W.
States Med. Ctr., 535 U.S. 357 (2002); Peel v. Att’y Regis. & Disciplinary Comm’n
of Ill., 496 U.S. 91 (1990). But no direct restriction of speech is at issue here. The
Commission has not declared that Young may not advertise in any manner she
chooses. Rather, it has determined that the “advertising” she has done for her
Nebraska FSBO Customers established that she engaged in the business of real estate
broker, for compensation, without the license required by the License Act.
Long ago, the Supreme Court noted that “it has never been deemed an
abridgement of freedom of speech or press to make a course of conduct illegal merely
because the conduct was in part initiated, evidenced, or carried out by means of
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language, either spoken, written, or printed.” Rumsfeld v. Forum for Acad. & Inst’al
Rights, Inc., 547 U.S. 47, 62 (2006), quoting Giboney v. Empire Storage & Ice Co.,
336 U.S. 490, 502 (1949); see Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 456
(1978) (upholding attorney licensing laws that restrict solicitation of clients); Thomas
v. Collins, 323 U.S. 516, 545 (1945) (Jackson, J., concurring). This principle applies
and is controlling. As the district court concluded:
the Court finds this case is not about the First Amendment freedom of
speech. This case is about regulating brokers of real estate transactions.
The facts as set forth herein clearly show plaintiff met the definition by
her actions of acting as a real estate broker via the language she used in
the listing agreements. As such, she is subject to the regulatory scheme
set forth by the Nebraska Unicameral [legislature].
See Office of Prof’l Regulation v. McElroy, 824 A.2d 567, 571 (Vt. 2003) (rejecting
a First Amendment challenge to the Vermont real estate broker licensing statute
because plaintiff “is not being restrained from publishing advertisements; he is being
restrained from publishing misleading statements about his own status as a broker”).
To be sure, Young’s contention that the License Act unconstitutionally restricts
advertising protected by the First Amendment requires a close look at the facts. In
Zinnemann, for example, California authorities argued that FSBO’s website, which
simply lists properties for sale by owner and other general information, required
FSBO to obtain a California real estate broker’s license. 347 F. Supp. 2d at 870-71.
The court concluded that California’s licensing laws were not a prior restraint on
speech and did not implicate “commercial speech.”4 But it granted summary
judgment in favor of FSBO because of its First Amendment interest in disseminating
4
Commercial speech is “expression related solely to the economic interests of
the speaker and its audience.” Cent. Hudson Gas & Elec. Corp. v. Pub. Serv.
Comm’n of N.Y., 447 U.S. 557, 561 (1980).
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information on its website and the fact that “Defendants have not shown any
compelling state interest in requiring a real estate broker’s license for FSBO’s website
but not for virtually identical newspaper websites.” Id. at 879 (emphasis added).5
This distinction was more thoroughly explained in Justice White’s concurring
opinion in Lowe v. SEC, 472 U.S. 181, 229-32 (1985):
[T]he principle that the government may restrict entry into
professions and vocations through licensing schemes has never been
extended to encompass the licensing of speech per se or of the press.
* * * * *
The question whether any given legislation restrains speech or is merely
a permissible regulation of a profession is one that we ourselves must
answer if we are to perform our proper function of reviewing legislation
to ensure its conformity with the Constitution.
* * * * *
One who 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 is properly viewed as
engaging in the practice of a profession. . . . If the government enacts
generally applicable licensing provisions limiting the class of persons
who may practice the profession, it cannot be said to have enacted a
limitation on freedom of speech or the press subject to First Amendment
5
Although facial challenges are generally disfavored, “a facial challenge lies
whenever a licensing law gives a government official or agency substantial power to
discriminate based on the content or viewpoint of speech by suppressing disfavored
speech or disliked speakers,” so long as the licensing law has “a close enough nexus
to expression, or to conduct commonly associated with expression, to pose a real and
substantial threat of . . . censorship.” City of Lakewood v. Plain Dealer Publ’g Co.,
486 U.S. 750, 759 (1988).
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scrutiny. Where the personal nexus between professional and client
does not exist, and a speaker does not purport to be exercising judgment
on behalf of any particular individual with whose circumstances he is
directly acquainted, government regulation ceases to function as
legitimate regulation of professional practice with only incidental impact
on speech; it becomes regulation of speaking or publishing as such,
subject to the First Amendment’s command . . . .
The summary judgment record makes clear that Young failed to prove that the
Nebraska License Act, on its face, was “regulation of speaking or publishing as
such,” rather than legitimate regulation of the real estate broker profession (which
Young concedes is subject to licensing by the States). As Director Lemon explained
in the above-quoted portions of his lengthy deposition, Young did far more than
publish advertisements of properties for sale by owner. She entered into Listing
Agreements with FSBO customers; used her status as a licensed California broker to
place their “listings” on MLS and REALTOR.com databases not otherwise available
to for-sale-by-owner properties; and worded those listings in a manner that told
potential Nebraska buyers and their agents that the property seller was represented by
a broker.
At a minimum, Young was a “broker” within the meaning of § 81-885.01(2)
because she held herself out as one who was “listing” property for compensation. See
Accountant’s Soc’y of Va. v. Bowman, 860 F.2d 602, 605-06 (4th Cir. 1988) (holding
that the phrase “public accountant” is misleading if used by people other than
“certified public accountants”); Liberty Coins, LLC v. Goodman, 748 F.3d 683 (6th
Cir. 2014) (rejecting a facial First Amendment challenge to licensing provisions of
the Ohio Precious Metals Dealers Act), cert. denied, 135 S. Ct. 950 (2015). She also
provided individualized advice and services to her FSBO Customer clients. The fact
that her services were attractive to some Nebraska sellers because she charged a $95
flat fee, rather than the more substantial commission commonly charged by licensed
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Nebraska real estate brokers, does not make her conduct any less subject to
Nebraska’s licensing requirements.
Young’s contention that the License Act violates the First Amendment because
it is vague and overbroad is without merit. “For a statute to be vulnerable on
overbreadth grounds, there must be a realistic danger that the statute itself will
significantly compromise recognized First Amendment protections of parties not
before the Court.” Nat’l Fed’n of the Blind of Ark. v. Pryor, 258 F.3d 851, 856 (8th
Cir. 2001), quoting City Council v. Taxpayers for Vincent, 466 U.S. 789, 801 (1984);
see Bates v. State Bar of Ariz., 433 U.S. 350, 380 (1977) (“the application of
overbreadth analysis applies weakly, if at all, in the ordinary commercial context”).
For Young “to have standing to challenge the statute as vague, the statute must be
unconstitutional as applied to [her] specific conduct at issue,” which it is not. Musser
v. Mapes, 718 F.3d 996, 1000 (8th Cir. 2013).
III. Other Fourteenth Amendment Claims.
Our conclusion that the License Act does not restrict speech contrary to the
First Amendment forecloses her other facial attacks on the statute. “The fact that the
[License Act] might operate unconstitutionally under some conceivable set of
circumstances is insufficient to render it wholly invalid, since we have not recognized
an ‘overbreadth’ doctrine outside the limited context of the First Amendment.”
United States v. Salerno, 481 U.S. 739, 745 (1987).
A. Due Process and Equal Protection. Young argues that the License Act
violates the Due Process and Equal Protection Clauses because it is irrational to make
her get a license when licensed brokers may not conduct her business of advertising
FSBO properties; because the statute prohibits unlicensed brokers from advertising
FSBO properties, even though owners may advertise their own properties; and
because it is irrational to require her to attend a Nebraska broker licensing course that
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includes almost no training and testing relevant to advertising and extensive
education on matters unrelated to her business. We note these are all as-applied
challenges to the fairness and rationality of the License Act if it applies to those who
simply advertise FSBO properties. But Young is subject to the Act’s licensing
requirements because she held herself out as and acted like a real estate broker, not
merely an advertiser of real estate properties. Thus, these contentions fail to show
that “no set of circumstances exists under which the Act would be valid.” Salerno,
481 U.S. at 745.
The License Act is rationally related to the legitimate State interest in ensuring
the competency and honesty of those who hold themselves out as providing
professional brokerage services to the sellers and buyers of Nebraska real estate. One
can argue that the manner in which the License Act furthers that interest is too costly,
too parochial, or fails to effectively serve those who prefer to sell their own
properties. But those are legislative issues that do not cast doubt on the facial validity
of the statute Nebraska’s legislators have found appropriate.
B. Privileges or Immunities Clause. Finally, Young argues that the License
Act infringes on her right to practice her chosen profession, as that right is
constitutionally protected by the Privileges or Immunities Clause. This argument is
foreclosed by the Slaughter-House Cases, 83 U.S. (16 Wall.) 36, 78-79 (1872). See
Merrifield v. Lockyer, 547 F.3d 978, 984 (9th Cir. 2008) (“Given the Slaughter-
House Cases limitation . . . we cannot grant relief based upon that clause unless the
claim depends on the right to travel.”).
For the foregoing reasons, the judgment of the district court is affirmed.
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