Rentberry v. City of Seattle: Can Seattle Rein in The Free Market Without Violating the First Amendment?

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By: Kyle Cianchetta

Is bidding on rental properties on the internet “commercial speech,” thus protected by the First Amendment, or conduct which may be regulated by the government. We will likely find out this year, as Judge Jones of the United States District Court, Western District of Washington, is set to rule on the matter.

In March, the Seattle City Council approved Ordinance No. 125551, which amended Seattle’s Rental Agreement Regulation Ordinance. That ordinance pressed pause on Rentberry’s innovative, rent-bidding platform. The platform would allow prospective renters to bid against one another, much like an auction, with the highest bid becoming the monthly rent owed to the landlord. In June, Rentberry moved for a preliminary injunction, but later filed cross motions for summary judgment against the city of Seattle. Setting aside justiciability issues, the case boils down to whether Rentberry’s rent-bidding platform is “conduct,” thus outside the umbrella of first amendment protection, or “commercial speech,” which triggers a four-part test.

The government regulates all sorts of conduct, from the way builders construct residential homes, to the sorts of processes food manufacturers use in their factories. However, the government is usually not in the business of regulating speech, which is generally protected by the First Amendment. Sometimes it is difficult to characterize proscribed behavior as either conduct or speech, and to make matters more complicated there are classes of conduct that are deemed expressive enough to warrant First Amendment protections (flag-burning, parades, etc.). What follows is an explanation of how the two parties characterize their claims in order to persuade the judge in either direction.

The city, in its cross-motion for summary judgment and its reply to the subsequent response, argues that the ordinance targets bidding (or auctioneering) technology in the consummation of a rental transaction. The city does so in order to persuade the Judge that the ordinance is regulating conduct, not speech. Moreover, the city claims that the conduct being regulated is nonexpressive conduct. Expressive conduct (like burning a flag), under the Spence v. Washington and US v. O’Brien decisions, would trigger a similar type of intermediate scrutiny that a commercial free speech claim would bring.

Rentberry argues that the regulation targets posting bids online, which is not a “business transaction,” but rather “provides valuable information that facilitates an anticipated transaction.” This definition is nearly identical to the Supreme Court’s definition of commercial free speech; speech that “does no more than propose a commercial transaction.” Interestingly enough, it wasn’t until 1976 that the Supreme Court authored that opinion, extending some First Amendment protections to commercial speech.

Rentberry also disclaims the city’s nonexpressive conduct argument, reiterating that bidding is not conduct, rather, it is speech. It is almost as if the city was anticipating an argument in the alternative, that bidding may be conduct, but it is expressive conduct. It is interesting to note that at this point, the city’s argument does not get any easier – the test for whether conduct is expressive or merely incidentally impacts free speech is a tightrope that fortunately, Rentberry did not make them walk.

The two parties do agree on the proper test for when a government may restrict commercial free speech. That case is Central Hudson, and it lays out a four-part test that the government must satisfy in order to restrict the targeted speech.

How will this case conclude?

It is easy to see that the city’s briefs attempt to sterilize the nature of the restriction, including phrases such as “the Ordinance prohibits the use of an internet bidding function in the execution of a rental transaction.” The city also emphasizes that the plaintiff failed to explain how the “use of bidding technology,” which is conduct, is expressive or communicates any sort of message. Those characterizations attempt to move the needle from speech to conduct, and it may have been too bold of a move. Justice Breyer offered this, in a concurrence to the majority opinion in Expressions Hair Design:

“[I]t is often wiser not to try to distinguish between ‘speech’ and ‘conduct.’ Instead, we can, and normally do, simply ask whether, or how, a challenged statute, rule, or regulation affects an interest that the First Amendment protects.”

United States v. O’Brien, a landmark First Amendment decision, said this about contested legislation:

“Just as the inevitable effect of a statute on its face may render it unconstitutional, a statute’s stated purposes may also be considered.”

It is from this wisdom that the Court will probably reexamine the ordinance’s text, its purpose, and its effects. It will then be interesting to see what legal conclusions the Judge makes, and how he interprets the use of an internet platform in this case. The Supreme Court said in Reno v. ACLU, “the Internet is a unique and wholly new medium of worldwide human communication.” The internet is no longer a wholly new medium, but it is a medium nonetheless, entitled to First Amendment protections. The question is whether the regulation of particular technology distributed through the internet that enables speech can be viewed as a regulation of conduct and not an abridgement of First Amendment protections.

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