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PEARSON v. RYAN

May 14, 1997

ALVIN PEARSON, BRENDA CURTIS, CENTURY 21 PEARSON, INC. REALTORS(R), an Illinois corporation, Plaintiffs
v.
JAMES EDGAR and JIM RYAN, Defendants



The opinion of the court was delivered by: DUFF

 This case comes before this Court for the fourth time. The plaintiffs, Alvin Pearson, Brenda Curtis, and Century 21 Pearson, Inc, originally commenced this action on March 31, 1986, seeking injunctive relief and a declaratory judgment that 720 ILCS 590/1 § 1(d) violates the First and Fourteenth Amendments of the United States Constitution. Following this Court's denial of the plaintiffs' motion for preliminary injunction, this case began its exhaustive appellate process. After two rounds of appeals, each affirming this Court, the case reached the United States Supreme Court, which then remanded it for further consideration in light of City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 123 L. Ed. 2d 99, 113 S. Ct. 1505 (1993). Given this directive, the Court held a bench trial in April 1996 to determine the constitutionality of the Illinois statute. After hearing the evidence and reviewing the parties' submissions, the Court finds that 720 ILCS 590/1 § 1(d) violates the First and Fourteenth Amendments. Below, this Court presents its findings of fact and conclusions of law in accordance with Federal Rule of Civil Procedure 52.

 I. FINDINGS OF FACT

 1. Plaintiffs Alvin Pearson("Pearson") and Brenda Curtis ("Curtis") are real estate brokers who work for Century 21 Pearson. Pls.' Ex. 1 P2, 2 P2.

 2. Century 21 Pearson, Inc. Realtors(R) ("Century 21 Pearson") is a real estate brokerage business owned and operated by Pearson. Pls.' Ex. 1 P2. Century 21 Pearson serves part of the City of Chicago and its southern suburbs. Id.

 3. The Defendants are Governor James Edgar and Attorney General Jim Ryan, in their official capacities. This case was originally brought against James R. Thompson, then-Governor of Illinois, Neil F. Hartigan, then-Attorney General of Illinois, Richard M. Daley, then-State's Attorney of Cook County, and the Beverly Area Planning Association ("BAPA"). The Cook County State's Attorney was dismissed, without prejudice in 1988. That same year, the case against BAPA ended after the entry of a consent decree. Governor Edgar and Attorney General Ryan were then substituted for their predecessors in office; they are the only remaining defendants in the case.

 4. This case arose from Pearson's prosecution by the Cook County State's Attorney for violating 720 ILCS 590/1 § 1(d) ("the statute"), the statute prohibiting realtors from soliciting an owner to list or sell his home if the owner has provided notice of his desire not to be solicited. A real estate broker with Century 21 Pearson, Mardie Brown, had "cold-called" individuals on South Winchester Avenue to inquire whether the homeowners were considering selling their residence within the next two years and, if not, whether they knew of someone who was considering selling their residence in the next few years. Uncontested Fact P44. Several Beverly area residents who had signed the BAPA anti-solicitation list, and one who had not, complained about these calls to BAPA. Uncontested Fact P44. BAPA then contacted the State's Attorney Office and asked that a prosecution be initiated. Uncontested Fact P45.

 5. Pearson, Brown, and Century 21 Pearson were charged with knowingly violating the anti-solicitation statute. Pearson, Brown, and Century 21 Pearson subsequently stipulated to the facts supporting the charges against them without admitting guilt. Each eventually received a disposition of supervision and a $ 100 fine. The criminal complaints against Pearson and Century 21 Pearson were subsequently dismissed in July 1988. Uncontested Fact P47.

 6. Pearson, Curtis, and Century 21 Pearson then brought this suit in federal court claiming that the anti-solicitation statute violated their rights to freedom of speech, due process, and equal protection. They sought a preliminary injunction which this Court denied.

 7. The Seventh Circuit affirmed the denial of the preliminary injunction in Curtis v. Thompson, 840 F.2d 1291 (7th Cir. 1988).

 8. Following that appeal, the case returned to this Court for a decision on the merits. The parties stipulated to a written record to be used to determine the constitutionality of the statute. Further review of the Seventh Circuit's decision in Curtis v. Thompson revealed, however, that Curtis established the law of the case and precluded an evidentiary hearing or consideration of additional evidence. Accordingly, this Court entered judgment dismissing the case in July 1989. Pearson v. Thompson, 1989 U.S. Dist. LEXIS 8970, 1989 WL 88367 (N.D. Ill. July 26, 1989).

 9. The Seventh Circuit affirmed the dismissal of the case in an unpublished opinion. Pearson v. Thompson, 1992 U.S. App. LEXIS 1814, 1992 WL 25349 (7th Cir. Feb. 13, 1992). The plaintiffs then petitioned for a writ of certiorari, which the Supreme Court granted. In April 1993, the Supreme Court vacated the decision and remanded the case to the Seventh Circuit for further consideration in light of City of Cincinnati v. Discovery Network. Pearson v. Edgar, 507 U.S. 1015, 123 L. Ed. 2d 441, 113 S. Ct. 1809 (1993).

 10. The Seventh Circuit subsequently remanded the case to this Court with instructions to "conduct an evidentiary hearing to allow the parties to create the appropriate record for determining constitutionality of [720 ILCS 590/1 § 1(d)] under the new standards set out by Discovery Network." Pearson v. Thompson, 1993 U.S. App. LEXIS 21600, 1993 WL 315601 (7th Cir. Aug. 12, 1993).

 11. Following the remand, this Court held a two day hearing in August 1994 based on the stipulated record.

 12. On August 29, 1995, this Court concluded that the 1994 hearing had not provided the parties with an ample opportunity to create the appropriate record. This Court again reviewed the Seventh Circuit's most recent order and determined that it allowed the parties to expand the record beyond the stipulated facts. The parties were then directed to conduct discovery and prepare for trial. Pearson v. Edgar, 1995 U.S. Dist. LEXIS 12605, 1995 WL 519748 (N.D. Ill. Aug. 30, 1995).

 13. This Court held a bench trial on April 15-26, 1996. The plaintiffs presented the following witnesses during the trial: Alvin Pearson; Brenda Curtis; Neal Beaulieu, co-owner of Century 21 Beaulieu and an attorney who defended real estate brokers accused of violating the statute; Frank J. Williams, owner of F.J. Williams Realty and former president of the Chicago Association of Realtors(R) and the South-Side Chicago Branch of the National Association for the Advancement of Colored People; Dr. Brian J.L. Berry, Professor of Political Economy at the University of Texas; William North, former Executive Vice President and General Counsel for the National Association of Realtors(R); and Laurence Stanton the Executive Director of the BAPA. The plaintiffs also designated certain portions from the deposition testimony of Felix Zaczek, the owner of a cooperative mailing franchise; George Patt, the Executive Vice President of the South/Southwest Association of Realtors(R); Sherlynn Reid, Director of Community Relations for the Village of Oak Park; Joseph Martin, Executive Director of the Housing Coalition of the Southern Suburbs; William Biros, a real estate broker who sells property in the Beverly area; and Clayton Daughenbaugh of the Institute for Community Empowerment.

 15. The Illinois anti-solicitation statute, 720 ILCS 590/1(d), provides in relevant part:

 
§ 1. It shall be unlawful for any person or corporation knowingly
 
(d) To solicit any owner of residential property to sell or list such residential property at any time after such person or corporation has notice that such owner does not desire to sell such residential property. For the purpose of this subsection, notice must be provided as follows:
 
(1) The notice may be given by the owner personally or by a third party in the owner's name, either in the form of an individual notice or a list, provided it complies with this subsection.
 
(2) Such notice shall be explicit as to whether each owner on the notice seeks to avoid both solicitation for listing and sale, or only for listing, or only for sale, as well as the period of time for which any avoidance is desired. The notice shall be dated and either of the following shall apply: (A) each owner shall have signed the notice or (B) the person or entity preparing the notice shall provide an accompanying affidavit to the effect that all the names on the notice are, in fact, genuine as to the identity of the persons listed and that such persons have requested not to be solicited as indicated.
 
(3) The individual notice, or notice in the form of a list with the accompanying affidavit, shall be served personally or by certified or registered mail, return receipt requested.

 16. A broker who violates the statute may be imprisoned for up to one year and fined up to one thousand dollars. 720 ILCS 590/2(a) (1993); 730 ILCS 5/5-8-3(a)(1) (1993); 730 ILCS 5/5-9-1(a)(2) (1997 Supp.). A second conviction provides for a sentence of one to three years and a fine up to ten thousand dollars. 720 ILCS 590/2 (1993); 730 ILCS 5/5-8-1(a)(7) (1997 Supp); 730 ILCS 5/5-9-1(a)(1) (1997 Supp.).

 17. A conviction under this statute also requires the Illinois Department of Professional Regulation to revoke the broker's certificate of registration, thereby depriving the broker of his ability to earn a living in his profession. 720 ILCS 590/3 (1993).

 18. As real estate brokers, the plaintiffs' incomes depends largely on commissions earned from the sale of property. Uncontested Fact P2.

 19. Brokers may serve as either the listing broker or the cooperating buyer's broker. The listing broker is responsible for listing the property for sale and assists the seller. The cooperating broker for the buyer assists individuals who wish to purchase a home in finding a suitable property. Brokers can earn commissions either from being a cooperating broker for a buyer or the listing broker, since the commission is split between the buyer's broker and the listing broker. The listing broker, however, has the potential to earn the entire commission if he both lists and sells the property. Tr. 188 (Beaulieu).

 20. Plaintiffs generally obtain listings of properties through truthful, nondeceptive advertising regarding the local real estate market and services available from the real estate brokerage firm and its affiliated brokers. Listings are also obtained through personal contacts and referrals from former clients. Uncontested Fact P3.

 21. In addition to serving as a listing or buyer's brokers, real estate brokers provide a variety of other services, which include appraisals, mortgage brokerage services, and commercial leasing and sales. Tr. 46-47 (Pearson); 165-167 (Curtis); 255-256 (Williams); 642-643 (North). None of these services involve the selling or listing of residential properties for sale.

 23. Most real estate brokers, including plaintiffs, rely on mass mailings, phone calls, and other forms of advertising to build name recognition within a community, to establish contacts with individuals who may wish to use the broker's services to sell or buy a residence, and to advertise their other services. Tr. 144, 147 (Curtis); Tr. 187 (Beaulieu).

 24. The plaintiffs' typically rely on direct mail to contact individuals; they also advertise their services through telephone and door-to-door contacts. Tr. 163 (Curtis).

 25. These solicitation techniques generate more real estate listings than general advertising through newspaper or yellow page advertisements. Tr. 56, 95, 128 (Pearson); Tr. 643 (North).

 26. The anti-solicitation statute therefore inhibits the ability of brokers to obtain listings. Tr. 70 (Pearson); Tr. 263 (Williams).

 27. Plaintiffs' solicitations offer homeowners valuable services, even if the latter have no current plans to sell their home. Tr. 642-643 (North). For example, plaintiffs' solicitations offer homeowners free written "market evaluations," which assess the current value of the homeowner's property. Tr. 165-167 (Curtis); Pls.' Ex. 1C. In addition to determining market value prior to listing a property for sale, such information may also be used as an appraisal for use in bankruptcy or divorce proceedings. Tr. 167 (Curtis). Additionally, many homeowners request these "market evaluations" to satisfy their curiosity regarding the current worth of their property. Tr. 165 (Curtis).

 28. Plaintiffs' solicitations also provide a service by informing homeowners facing foreclosure that they have an option to sell their home. This benefits the homeowner because a sale prior to foreclosure generally recovers more of the homeowner's equity than at a foreclosure sale. Homeowners facing foreclosure are often unaware of this option prior to receiving information from real estate brokers. Tr. 155-156 (Curtis); Tr. 255 (Williams).

 29. Flyers which provide household tips, as well as information on the real estate brokerage firm, are standard real estate marketing techniques, which are used throughout the nation. Tr. 36-39 (Pearson); Tr. 191-195 (Curtis).

 30. Examples of such flyers include a bulk mailing providing an "Energy Cost Cutting Tip," advising residents to weather strip and caulk their homes to reduce energy costs, and a flyer providing a Thanksgiving turkey stuffing recipe. Pls.' Ex. 8B, 8C. In addition to providing these household tips, such flyers also allow homeowners to ...


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