Licensing Speech & Regulating the Internet: Tennessee’s Auctioneer Licensing Scheme

This spring the Tennessee legislature substantially broadened the sweep of its auctioneering license, with an aim towards including the rapidly encroaching field of online auction websites. Naturally, not everyone wanted to be licensed and so those who could find their way around the legislature made sure that the law did not apply to them. This included large, well known online auction websites and various groups (who auction items for charity, for churches, for political parties, who auction salvage vehicles or livestock, or who simply make less than $25,000 annually from auction proceeds, for example).

Set aside the fact that an attempt to regulate online activity in this way likely violates the Commerce Clause – how exactly could one possibly license the internet without creating such burdens anyway? – and consider how the auctioneer license should fare under current First Amendment jurisprudence. That consideration is arguably more important in light of successful attempts by state governments across the country to regulate so called “speaking” professions.

“Occupational speech” promises to be a growing category of First Amendment case law after the Supreme Court’s 2018 decision in NIFLA v. Becerra. NIFLA clarified several issues that had been percolating below, and resolved them all in favor of expanded liberty. First (and most relevant to Tennessee’s auctioneer licensing), the Court soundly rebuked lower courts that had been applying diminished scrutiny to a nonexistent category of expression that they labeled “professional speech.” A portion of Justice Thomas’s majority opinion bears repeating here:

“Some Courts of Appeals have recognized ‘professional speech’ as a separate category of speech that is subject to different rules. These courts define ‘professionals’ as individuals who provide personalized services to clients and who are subject to a generally applicable licensing and regulatory regime. ‘Professional speech’ is then defined as any speech by these individuals that is based on their expert knowledge and judgment, or that is within the confines of the professional relationship. So defined, these courts except professional speech from the rule that content-based regulations of speech are subject to strict scrutiny. But this Court has not recognized ‘professional speech’ as a separate category of speech. Speech is not unprotected merely because it is uttered by ‘professionals’.”

The portion in bold is really not all that new. Rather, it reiterated an important idea from a much older holding in NAACP v. Button that, “a state may not, under the guise of prohibiting professional misconduct, ignore constitutional rights.” And yet, ignoring fundamental speech rights is precisely what Tennessee is doing through its auctioneer licensing regime; and it does so in defiance of the NIFLA Court’s reminder that “states [do not have] unfettered power to reduce a group’s First Amendment rights by simply imposing a licensing requirement.”

Tennessee hangs its hat on the idea that the auctioneer license simply regulates conduct, and only incidentally burdens “commercial speech.” That stance suffers many infirmities, the first of which is that the definition of auction Tennessee selected relates exclusively to “exchanges” between an auctioneer and an audience. That is, it regulates pure speech. The attempt to classify the entire profession of auctioneering as commercial speech is also out of line with Supreme Court precedent. While the concept has been extended and used far beyond its actual definition, “commercial speech” is speech that “proposes a commercial transaction,” nothing more. It is typically used in advertisement or price disclosure settings, and doesn’t apply to auctioneering which encompasses a wide range of speech beyond the mere proposition of a commercial transaction. The state hopes to have its licensing regime examined under something less than strict scrutiny if the Court buys its “regulation of professional conduct” or “commercial speech” arguments.

But even if those stylings were accurate (they’re not), the license still suffers from being content- and viewpoint-based. We know from decisions predating NIFLA, including Sorrell v. IMS Health Inc., that even regulations that might traditionally receive intermediate scrutiny get heightened scrutiny when the restriction is based on communicative content or picks and chooses which speakers may speak (and legally conduct auctions) and which may not.

Not that it would matter. Even in an analysis of “only” commercial speech, it is the government’s burden to prove that speech restrictions are appropriately tailored to directly address real and concrete harms. It is impossible to see how online auctions could ever pass. The state’s own data showed that consumers weren’t complaining (literally no complaints from consumers in 2018). What evidence does abound stinks of improper motive. The legislative record is replete with frank discussions about ensuring that online auctions are “on the same footing” with live auctions and because online auctions are auctions and we regulate auctions and …

The Beacon Center has already won a favorable TRO under newly sworn in Judge Eli Richardson of the Middle District of Tennessee. Let us hope that a preliminary injunction is equally forthcoming. NIFLA and a series of prior First Amendment decisions hold a lot of promise for plaintiffs and many others who work in speaking professions, and they should suffice to permanently strike down the auctioneer license in its current form.