Although the Sixth Circuit has previously ruled against the plaintiffs, online auctioneers say the state’s licensing requirements infringe upon their free speech rights.
(CN) — The Sixth Circuit Court of Appeals on Thursday revisited challenges to the lawfulness of Tennessee’s regulations for online auctioneers, hearing arguments over whether license requirements violate their First Amendment right to free expression.
It was the second time the regulations were before the Sixth Circuit; in 2023, it ordered a lower court to dismiss a case brought by an online auction company over the commerce clause of the Constitution, finding the court lacked jurisdiction and the plaintiffs failed to state a threat of prosecution.
But the same plaintiffs recruited more online auctioneers to participate and returned weeks later with a new complaint, claiming the licensing requirements violated their First Amendment rights, particularly due to the “speech-centered” nature of their profession. The lower court dismissed the complaint, citing the Circuit’s 2018 decision in Liberty Coins, LLC v. Goodman, which found the state of Ohio had substantial interest in regulating precious metals and therefore could narrowly tailor regulations to meet its needs.
On appeal Thursday, attorney Wengcong Fa explained the plaintiffs face civil and criminal penalties because they are unlicensed online auctioneers. At the heart of the claim, he said, is that Tennessee’s licensing requirement infringes upon auctioneers’ right to communicate through images, videos and descriptions in order to inform customers and generate bids. Notably, the regulations only apply to extended-time online auctions like those offered by the plaintiffs, while they exempt timed services like eBay.
Fa argued the regulations amount to viewpoint discrimination.
“Speech is an integral, rather than an incidental, part of an online auctioneer’s work,” he told the court. “On the front end, an online auctioneer must create narratives, take pictures or create videos that portray their products in an accurate and enticing way. On the back end, an online auction is defined by speech. It’s a communication that consists of a series of invitations by the online auctioneers to the members of the audience for offers to purchase goods or real estate.”
U.S. Circuit Judge Eric L. Clay, a Bill Clinton appointee, countered that the law represented a commercial regulation, not a speech restriction.
“The state doesn’t attempt to require the auctioneer to regulate his expression when he conducts this auction — it requires the license, purportedly to protect members of the public from fraud and other associated problems,” Clay said, asking Fa why the court shouldn’t decide the case on a rational basis review, rather than resort to strict scrutiny as the plaintiffs request.
Fa said Tennessee’s regulations strictly define auctions as a form of speech while also preventing his clients from engaging in speech integral to their work. He urged the court to consider the Fourth Circuit’s ruling in Billups vs. the City of Charleston, which found in favor of tour guides who argued the historic South Carolina city’s ordinance requiring licenses was not narrowly tailored to serve the city’s interest.
U.S. Circuit Judge Rachel S. Bloomekatz, an appointee of Joe Biden, asked Fa about a limiting principle that would prevent a ruling from applying to other licensed professions that rely heavily on speech.
“The last I checked with the First Amendment, we care less about the quantity of speech protected,” she said. “So how do we measure the license of something that requires any speaking, writing or taking pictures? Can we not not license that unless it hits strict scrutiny?”
Fa dodged the broader question, but said the regulations as they apply to his clients should be subject to heightened First Amendment scrutiny. The Cato Institute and Goldwater Institute each filed amicus curiae in support of the plaintiffs.
For the state defendants — members of the Tennessee Auctioneer Commission — attorney Gabriel Krimm emphasized the regulation’s fiduciary role and historical precedents. He said the panel should look no further than the Sixth Circuit’s own ruling in Lichtenstein v. Hargett, which found a Tennessee ban on independent distribution of absentee voter applications was lawful because it applied neutrally and didn’t burden anyone’s ability to engage in actual speech.
“We’re not regulating auctioneering over a concern about what auctioneers say when they are conducting an auction,” Krimm said. “This is a fiduciary role, this is the type of profession where we have economic concerns and that’s why we’re regulating it.”
Krimm continued to explain the regulations were enacted over concern that the auctioneers have control of clients’ property and money.
“You’re in a conduct regulation situation,” he said, saying the auctioneers can still speak freely. “Once you go ahead and start telling them what they can and can’t say within a certain context, you are much closer to the line.”
Krimm admitted First Amendment issues are not always cut and dry, but encouraged the panel to affirm the lower court’s ruling using a rational basis review.
“We need to make sure that the free speech clause in the First Amendment doesn’t swallow democratic government,” he said. “That can’t be consistent with the original intent. At the same time, we need to make sure that the government is not engaged in censorship.”
The panel also included U.S. Circuit Judge John K. Bush, a Donald Trump appointee. The court took the case under submission without indicating when it may rule.
Source: Tennessee auctioneers attack license requirements on appeal | Courthouse News Service
