Patricia C. Anderson, Michael A. Hosein and Stephen E. Parker v. Alexander F. Treadwell, as Secretary of State of the State of New York

294 F.3d 453, 2002 U.S. App. LEXIS 12396, 2002 WL 1363558
CourtCourt of Appeals for the Second Circuit
DecidedJune 25, 2002
DocketDocket 01-7954
StatusPublished
Cited by33 cases

This text of 294 F.3d 453 (Patricia C. Anderson, Michael A. Hosein and Stephen E. Parker v. Alexander F. Treadwell, as Secretary of State of the State of New York) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Patricia C. Anderson, Michael A. Hosein and Stephen E. Parker v. Alexander F. Treadwell, as Secretary of State of the State of New York, 294 F.3d 453, 2002 U.S. App. LEXIS 12396, 2002 WL 1363558 (2d Cir. 2002).

Opinion

JON 0. NEWMAN, Senior Circuit Judge.

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 *457 interest. For the reasons stated below, we reject the Appellees’ constitutional challenges and therefore reverse.

Background

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, “[i]n its most systematic and crudest form, blockbusting entails the ‘churning’ of a local real estate market, a practice in which real estate brokers engage in frenzied solicitation practices that prey upon the racial and ethnic fears of persons residing in transitional neighborhoods as a means for increasing the volume of residential real estate transactions. While realtors gain the benefit of the commissions generated by the increase in sales, homeowners and communities suffer the detriment of declining property values and neighborhood instability brought on by panic selling, the fanning of racial tensions and promoting of ethnic stereotypes.” New York State Association of Realtors, Inc. v. Shaffer, 27 F.3d 834, 835-36 (2d Cir.1994) (“NY-SAR”). 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 licensees 2 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 *458 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 “sohcitfing] 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 res *459 idential 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.

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294 F.3d 453, 2002 U.S. App. LEXIS 12396, 2002 WL 1363558, Counsel Stack Legal Research, https://law.counselstack.com/opinion/patricia-c-anderson-michael-a-hosein-and-stephen-e-parker-v-alexander-ca2-2002.