Victory for Speech

Government bullying threatened to shut down the online real estate advertising firm of entrepreneurs Ed Williams and Frank Mackay-Smith. But thanks to yet another victory in a series of wins for Internet publishers by the Institute for Justice, Ed and Frank are free to provide their service, undisturbed by petty bureaucrats who often do the bidding of private competitors.

Williams and Mackay-Smith are dedicated to giving home sellers the choice of how to sell their homes: pay a licensed real estate agent a hefty commission or enable the homeowner to sell their home themselves using the power of the Internet. Williams and Mackay-Smith’s online advertising and information business, ZeroBrokerFees.com, provides sellers with the tools to advertise their property themselves. But because the New Hampshire Real Estate Commission had already gone after one online advertising business, Ed and Frank were rightfully concerned that they would be the next targets of a real estate cartel that is busily protecting its members.

Then IJ took up their fight, and just this past March, Magistrate Judge James R. Muirhead of the U.S. District Court for the District of New Hampshire ruled that ZeroBrokerFees.com may do business online without first securing a real estate broker’s license. The court ruled that websites that advertise properties for sale are just like newspaper classified advertising and thus do not need a broker’s license under New Hampshire law. As a result, the Court held that ZeroBrokerFees.com is entitled to an injunction preventing the state from enforcing the licensing requirement against it.

This is great news for consumers, as well as for Ed and Frank. With the housing market in the dumps, many home sellers would prefer to keep every penny of their homes’ worth in their own pockets rather than using real estate brokers. And for Ed and Frank, the decision means that they won’t have to waste thousands of hours on training and put their business on hold while they obtain a real estate broker’s license.

In his 33-page decision, Judge Muirhead found that ZeroBrokerFees.com is a “web-based publisher of real estate advertising and information.” The Court concluded that “[t]here is no logical distinction between [a newspaper classified advertising service] and plaintiff’s business, and I will not construe the exemption [for newspapers] to reach the absurd result of exempting one form of classified advertising but not another.” Although the Court ruled on statutory grounds, the judge clearly recognized the First Amendment implications.

Ed and Frank hope that their victory will clear the way for other Internet businesses to operate without the hassles and threats of prosecution from pointless regulations.

Building on success is exactly why IJ brought this case in the first place. The decision in ZeroBrokerFees.com built on IJ’s successful First Amendment challenge to California’s real estate licensing laws, ForSaleByOwner.com v. Zinnemann. Moreover, the ForSaleByOwner.com decision has already been used by online advertising businesses to help insulate them from attacks by other real estate commissions across the nation. By setting precedent in one location, IJ has gotten bureaucrats—normally aggressive in protecting their turf—to back off before deciding to pick on the next budding entrepreneur. And that’s a victory that can be celebrated across the World Wide Web.

Valerie Bayham is an IJ staff attorney