Internet Publishers Win As Federal Court Rejects Motion to Dismiss California Free Speech Case

Washington, D.C.—Earlier this week [Tuesday, February 17, 2004] a federal judge in Sacramento rejected the State of California’s attempt to dismiss a First Amendment lawsuit brought by ForSaleByOwner.com, an Internet publisher who refused to go along with the State’s demand that online real estate advertising companies be licensed real estate brokers. The State had sought to have the case dismissed, arguing that its effort to license real estate advertising and information websites was simply a routine exercise of the State’s power to license the entry into a profession and is directed at “conduct” rather than speech.

“The First Amendment rights of Internet publishers have taken a big step forward,” said Steve Simpson, an attorney with the Institute for Justice, which represents the plaintiffs. “We will now proceed vigorously to stop the State of California from violating the First Amendment.”

The suit was filed on May 14, 2003, in U.S. District Court in Sacramento challenging California’s onerous real estate licensing regime on behalf of two Internet real estate advertising companies—the New York-based ForSaleByOwner.com and a California affiliate that publishes ForSaleByOwner.com magazine in Sacramento. California requires Internet advertising companies, like ForSaleByOwner.com, to become licensed real estate brokers in order to provide, in essence, an online classified ad service. Securing a license takes up to two years of college-level study and thousands of dollars, which, argue ForSaleByOwner.com founder Damon Giglio and Chief Operating Officer Colby Sambrotto, is completely irrelevant to operating an advertising and information service. The State does not require newspapers to obtain a license.

“The First Amendment guarantees not only that Americans may speak their minds without having to obtain approval of the government, but that they may send and receive information vital to their daily lives as well,” said Simpson. “The State may not license the dissemination of general advertising and information.”

The judge’s decision means that the State of California will have to defend its decision to license Internet publishers in court. The publishers are expected to file motions for summary judgment in the case by this summer. Trial, if necessary, will be held early next year.

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