South-Suburban Housing Center, Cross-Appellant v. Greater South Suburban Board of Realtors and National Association of Realtors, Counterplaintiffs-Appellants, Cross-Appellees v. City of Blue Island, Counterdefendants-Appellees, Cross-Appellants

These consolidated appeals deal with a variety of constitutional and Fair Housing Act challenges to real estate marketing activities and municipal ordinances affecting the real estate market in a number of the southern suburbs of Chicago, Illinois. The municipalities involved are the Cities of Blue Island and Country Club Hills and the Villages of Calumet Park, Glenwood, Hazel Crest, Matteson, Park Forest, Richton Park and University Park. The court disposed of these issues following a bench trial consisting of approximately eight weeks of testimony presented intermittently between March 23, 1987, and September 1, 1987.

We affirm 1) the district court's finding that Greater South Suburban Board of Realtors and National Association of Realtors (the Realtors) did not violate the Fair Housing Act in excluding South Suburban Housing Center's (SSHC) Apache Street homes from the Multiple Listing Service or in commencing disciplinary action against SSHC's realtor, William Motluck; 2) the trial judge's determinations that the Realtors lacked standing to pursue their Equal Protection claim against SSHC and Park Forest and that the affirmative marketing plan applicable to the Apache Street homes was permissible under the Fair Housing Act; 3) the district court's determinations upholding against First Amendment challenge the municipal ordinances of Country Club Hills, Matteson, Park Forest and University Park concerning the size, placement and number of "for sale" signs; and 4) the trial court's conclusion that the municipal ordinances of the City of Country Club Hills and the Villages of Hazel Crest, Matteson, Glenwood and Park Forest limiting solicitation did not violate the Fair Housing Act. We reverse the district judge's finding that the anti-solicitation ordinances of the above-mentioned municipalities violated the First Amendment and were unconstitutional because of vagueness. We also reverse the district court's conclusion that the Country Club Hills permit fee for the erection of "for sale" signs was free from constitutional infirmity. And we remand for further consideration the Realtors' claim that the Village of Glenwood's ban of "for sale" signs violated the Fair Housing Act, despite the eleventh-hour repeal of the same.

The municipal defendants are located in an area bordered on the north by the City of Chicago, on the west approximately by Harlem Avenue or Interstate 57, on the south roughly by Will County and on the east by the Indiana State line. The district court found that these formerly all-white suburbs have become integrated, but now face the threat of resegregation as a result of

"a complex mix of market forces. These market forces include racial prejudice: some whites and some blacks prefer to live in segregated communities; the belief that high concentrations of blacks result in a drop in home values; the expectation that an integrated community will eventually become segregated; and housing search practices that are reinforced by certain real estate practices."

South-Suburban Housing Center v. Greater South Suburban Board of Realtors, 713 F.Supp. 1068, 1074 (N.D.Ill.1988). In order to stem the tide of these market forces and promote integrated housing patterns, the plaintiff, SSHC, "attempted to influence the housing market by encouraging the sales and marketing of real estate in what it terms to be 'non-traditional' ways, i.e., encouraging whites to move to black or integrated areas and blacks to move to white or integrated areas." Id. at 1075. A controversy between South-Suburban Housing Center and the Realtors over the propriety of SSHC making special efforts to market houses in black neighborhoods to white home buyers spawned the initial complaint in this litigation, which has resulted in the eight appeals consolidated herein.

The plaintiff, SSHC, is an Illinois, non-profit corporation whose "purposes are to 'promote and encourage multiracial communities in the South Suburbs' of Chicago and 'promote open housing to all people regardless of race.' " Id. at 1073. SSHC engages in a program of "affirmative marketing" of real estate, which "consists of race conscious efforts to promote integration or prevent segregation through special marketing of real estate to attract persons of particular racial classifications who are not likely to either be aware of the availability or express an interest in the real estate without such special efforts." Id. at 1075.

The defendants/counterplaintiffs are two realtor trade associations, the Greater South Suburban Board of Realtors (GSSBR) and the National Association of Realtors (NAR). The GSSBR is an Illinois, non-profit corporation which is an organization of licensed real estate brokers and salesmen operating in the south suburbs of Chicago. One of GSSBR's activities is the operation of a multiple listing service (MLS) in the south suburbs. The district court described the MLS as follows:

"[the] multiple listing service ('MLS') [is] a facility by which a MLS member broker makes a blanket unilateral offer of subagency to all other MLS participants with respect to a home listed with that broker. The MLS computer data base contains information about homes listed for sale with its members. MLS members and their home-seeking prospects can review this data via computer terminals or by reviewing printed compilations distributed to members on a bi-weekly basis."

Id. at 1077. The NAR is also an Illinois non-profit corporation and an organization of licensed real estate brokers that "provides policy guidance and materials and services of various sorts to its local affiliates, including the GSSBR." Id. at 1073.

The other litigants in this case are nine south suburban municipalities, the Cities of Blue Island and Country Club Hills and the Villages of Calumet Park, Glenwood, Hazel Crest, Matteson, Park Forest, Richton Park and University Park. These municipal defendants are parties to the suit as a result of ordinances they enacted either regulating real estate broker in-home solicitations or regulating the exhibition of real estate "for sale" signs. The Village of Park Forest also faces a legal challenge because of its alleged involvement with SSHC's efforts to "affirmatively market" to white individuals three homes South-Suburban Housing Center purchased from Park Forest.

The facts of this case deal with the following: 1) concerns over affirmative marketing, 2) limitations on real estate broker solicitation and 3) restrictions on "for sale" signs.

This action originated as a result of the Realtors' reaction to South-Suburban Housing Center's attempts to promote a racial balance in the Village of Park Forest through making special efforts to interest white home buyers in property there. The current racial imbalance came about during the 1970s when many black families moved into an area in the northeast corner of the Village of Park Forest, Illinois known as the Eastgate subdivision. At the time of the 1980 census, the census block including the homes at issue here had become more than fifty-six percent black, more than double the black population of any other census block in the Eastgate subdivision. As a result of the area's reputation as "a black block," few white families were interested in buying property. The area became less attractive to home buyers as VA and FHA mortgage foreclosures led to abandoned homes and neighborhood blight. See South-Suburban Housing Center, 713 F.Supp. at 1076. In response to the problem of abandoned homes in the Eastgate subdivision, in 1982 the Village of Park Forest instituted a program of purchasing vacant or abandoned homes for rehabilitation and resale, including vacant homes at numbers 9, 15 and 26 Apache Street. SSHC submitted a proposal, which included affirmative marketing, to Park Forest for the acquisition, rehabilitation and resale of these three homes.

After the Park Forest Board of Trustees accepted the proposal and sold the homes to the South-Suburan Housing Center, the SSHC agreed to list the homes for sale with Century 21-Host Realty through one of its salesmen, William H. Motluck. The parties utilized a standard real estate contract form with the exception of provisions that Century 21-Host Realty was "to implement the affirmative marketing plan attached as appendix." In addition to securing a buyer, Century 21-Host Realty's receipt of a commission was conditioned upon its "performance of the attached affirmative marketing plan."

The affirmative marketing plan (AMP) directed that the realtor "use its best efforts to attract minority and majority groups persons" to the particular Apache Street home, and stated that the SSHC and the Realtor "agree that white home seekers are not likely without special outreach efforts to be attracted to the Apache St. home." The AMP also provided that the Realtor would use "the following special outreach activities to attract white home seekers to the Apache Street home:

A. Placement of advertisements in newspapers with a predominantly white circulation;

B. Distribution of information to selected rental developments; and

C. Distribution of information to selected employers."

The Plan also provided that "Realtor shall not take any action which prohibits, restricts, narrows or limits the housing choice of any client on the basis of race." Century 21 was further required to maintain "a list of all persons, by race, who are shown the Apache Street home...."

The Realtors became involved when Century 21-Host Realty listed the Apache Street homes with GSSBR's multiple listing service. The AMP created a conflict between Century 21 salesperson William Motluck and the Realtors, as the Realtors believed it was inappropriate under the fair housing laws to affirmatively market homes to one particular race, in this instance whites, in the absence of prior discrimination. Motluck initially became aware of the problem when he received a letter from GSSBR asserting that its legal counsel was concerned with the legality of the affirmative marketing plan and furthermore that it was contrary to the voluntary affirmative marketing agreement entered into between HUD and the National Association of Realtors. Motluck upon being so advised asked for a copy of GSSBR's legal counsel's opinion. Rather than forward a copy of the opinion, they sent Motluck a letter stating that the provision requiring advertising in newspapers with a predominantly white circulation "provides for racial steering and is in violation of current Federal law." The letter further opined that the data collection provisions of the AMP are "in direct violation of the Multiple Listing rules ... [and] may constitute a combination in restraint of trade under the Sherman Anti[-]Trust Act."

On the basis of Century 21's agreement to implement the affirmative marketing plan, GSSBR's private Equal Opportunity Commission (EOC) voted to file a complaint against Motluck under Article 10 of the NAR's Code of Ethics1 with the Professional Standards Committee of the Illinois Association of Realtors.

"The EOC voted to file its complaint against Motluck because the Apache Street agreements called for 'special outreach ... to whites rather than to minorities.' The EOC's position, based upon the HUD/NAR [voluntary affirmative marketing agreement], was that special outreach to white home seekers gave rise to a violation of Article 10."

South-Suburban Housing Center, 713 F.Supp. at 1078 (citations omitted). After conducting a hearing, the Professional Standards Committee determined that there was insufficient evidence to hold Motluck liable for a violation of Article 10, as, in the words of the counsel for the hearing panel, "the evidence produced at the hearing indicated that [in attempting to market the Apache Street homes, Motluck] did nothing other than he normally did in the operation of his office in processing the listing which he obtained conditioned upon the affirmative marketing plan."

After the EOC decided to file its complaint against Motluck, Robert Turpin, the person responsible for the administration of GSSBR's multiple listing service, withdrew the three Apache Street homes from the MLS. (Turpin was present at the EOC meeting). Subsequently, GSSBR proposed to condition the listing of the homes in its multiple listing service upon Century 21's and SSHC's agreement to indemnify GSSBR and its member realtors from damages, costs or attorneys' fees which might be incurred as a result of any legal proceedings that might result from the AMP. The Realtors' justification for the indemnification requirement was a belief that

"the listings could lead to 'legal liability' or 'potential exposure' of the MLS or MLS participants under legal prohibitions against steering.

"The justification advanced by defendants for thus conditioning MLS access for the Apache Street listings was [William] North's [then Senior Vice-President and General Counsel of NAR] asserted belief that the listings called for actions which 'likely' were racial steering and therefore could lead to 'legal liability' or 'potential exposure' for the MLS or MLS participants."

Id. at 1078-79. The court found that "this justification was made in good faith and was not a pretense for discrimination." Id. at 1079.

SSHC asserts that the Realtors' removal of the Apache Street properties from the multiple listing service as well as the decision to file a complaint against Motluck because of the AMP's requirement of directing special sales efforts toward white home buyers violated Title VIII of the Civil Rights Act of 1968, 42 U.S.C. Sec. 3601 et seq. (the Fair Housing Act) in that it discriminated "on account of race." The district court concluded as a matter of law that the Realtors neither intended to discriminate against SSHC nor did their actions have a discriminatory effect. Thus, the court found no violation of the Fair Housing Act. Id. at 1079-80.

The second major area of the parties' litigation concerned the propriety of municipal ordinances prohibiting real estate brokers from soliciting real estate listings from persons who had stated their unreceptiveness to receiving solicitations. The City of Country Club Hills and the Villages of Glenwood, Hazel Crest and Matteson, Illinois have enacted ordinances regulating realtor solicitation that are similar to one another.2 The Hazel Crest ordinance reads as follows:

"No person shall solicit any owner or occupant of a dwelling to sell or rent, or list for sale or rental, such dwelling at any time after such owner or occupant has notified the Hazel Crest Village Clerk that he does not desire to be so solicited.

"The Clerk shall publish and make available, without charge, appropriate forms which may be executed by any owner or occupant of a dwelling to provide such notice. The Clerk shall prepare a list of the names and addresses of such owners and occupants and shall publish the same as follows:

A. By maintaining a copy of said list in the office of the Village of Hazel Crest Clerk and making it available for inspection;

B. By furnishing a copy of said list annually to every real estate firm belonging to the local multiple-listing service;

C. By furnishing a copy of said list upon request and payment of reproduction cost to any person having an interest in the sale or rental of any dwelling in the Village of Hazel Crest.

"In addition, any owner or occupant of a dwelling may notify, in writing, any real estate agent that such owner or occupant does not desire to be solicited. Upon such notice a real estate agent shall not solicit such owner or occupant to sell or rent, or list for sale or rental, such dwelling."3

The ordinances of all four municipalities define "solicit" or "solicitation" as follows:

" 'Solicit' or 'solicitation' means any communication by or on behalf of a real estate agent with the owner or occupant of a dwelling (i) which is intended to induce the sale, rental or listing for sale or rental of such dwelling; (ii) which is intended to offer or promote services in connection with the sale, rental or listing of such dwelling; and (iii) which is carried out by means of:

(a) in-person contacts at the dwelling;

(b) written material mailed or delivered directly to the dwelling, such as direct mail, leaflets or pamphlets; or

(c) telephonic contacts with owners or occupants of the dwelling.

"For purposes of this Ordinance the term 'solicit' or 'solicitation' shall not refer to communication carried out by means of print or electronic media of general circulation, such as a newspaper, radio, television or the yellow pages."4

The ordinances of the four municipalities considered in this section closely resemble the State of Illinois' restrictions upon real estate brokers' solicitation of unwilling persons that are contained in Ill.Rev.Stat. ch. 38 p 70-51(d), whose constitutionality we sustained in Curtis v. Thompson, 840 F.2d 1291 (7th Cir.1988).5 One difference between the ordinances of the four municipalities and the state statute is that the municipal ordinances call for the city or village not only to compile but also to publish the non-solicitation list. The other differences are that the municipal ordinances are more limited in that they specifically define "solicit or solicitation," restrict their application to types of contacts that occur in the home or a residence and provide for fines only.

The trial court found that the municipalities had two bases for their anti-solicitation ordinances. First, the ordinances are

"based on the desire to protect residents from exposure to advertising because this information might cause homeowners to question the racial stability of their communities or re-evaluate their decisions to live there. As with 'for sale' sign bans, the ordinances are designed to keep residents from moving, to maintain the status quo and to reduce the ability of homeseekers to find homes in the municipalities."6

The second "purpose of the anti-solicitation ordinances is to provide a method for a resident to obtain a measure of privacy by avoiding annoying and intrusive inquiries about residential plans." South-Suburban Housing Center, 713 F.Supp. at 1094. Although the Realtors urge that the "no solicitation" ordinances violated the Fair Housing Act in that they had a discriminatory impact upon black individuals, the trial court stated that "the record is devoid of substantial evidence tending to show that the ordinances were intended to discriminate against blacks or any other racial group," or that the "ordinances have had a racially discriminating effect." Id. at 1094.

Shortly before trial each of the four municipalities involved sent almost identical letters to real estate brokers which stated that:

"[T]he terms 'solicit' or 'solicitation' in the ordinance include any business or promotional communication by a real estate agent to a homeowner in his or her home which is not carried out by media of general circulation, and the Village will treat such a communication to a resident on the list as a violation of the Ordinance."7

The trial court held that this definition including every business communication "not carried out by media of general circulation" "despite the ordinances' requirement that a communication must be intended to induce a sale or listing for sale," rendered the ordinances constitutionally invalid: "The text of the ordinances provide insufficient warning that 'indirect' solicitation is prohibited and thus they are unconstitutionally vague." Id. at 1096 (emphasis original).

Four municipalities in the south suburbs have enacted limitations on the display of real estate "for sale" signs. The City of Country Club Hills and the Villages of Matteson and Park Forest regulate the size of these signs. These three municipalities as well as the Village of University Park have enacted regulations on the number of "for sale" signs that may be displayed on a piece of real estate as well as the placement of the signs.

Each of the municipalities that regulate the size, number and placement of "for sale" signs states in the preamble or in the text of the ordinance that its purpose is to advance the aesthetics of the community. The district court made a factual finding that there was "little evidence that the sign regulations resulted in measurable lost income for realtors, that the regulations had a discriminatory impact on black home seekers, or that they denied access to housing to anyone." South-Suburban Housing Center, 713 F.Supp. at 1090-91. Thus, the court held that the ordinances do not violate the Fair Housing Act. The trial judge further rejected the Realtors' constitutional challenge to the ordinances on the basis that "they are justified without reference to the content of the regulated speech, they are narrowly tailored to serve a significant governmental interest and they leave open ample alternative channels for communication of the information." Id. at 1093.

Country Club Hills is the only one of these municipalities that further requires that persons displaying a "for sale" sign obtain a city permit costing $60.00 for a six month period. The Realtors' claim is that this fee exceeds the costs of administering the City's regulations. Although neither the parties nor the district court cite to any specific dollar figures which are attributable to the administration and enforcement of the "for sale" sign permit program, the district court found that "[t]here was no evidence that the fees charged exceeded the administration costs." Id. at 1103.

In contrast to the other municipalities regulating real estate "for sale" signs, Glenwood, Illinois enacted an ordinance enforcing a ban on these signs in 1972. Prior to 1982 Glenwood ceased enforcing its sign ban as a result of the Supreme Court's decision in Linmark Associates, Inc. v. Township of Willingboro, 431 U.S. 85, 97 S.Ct. 1614, 52 L.Ed.2d 155 (1977), which sharply curtailed a municipality's ability to enforce a ban on "for sale" signs. In spite of the advice of Glenwood's village attorney that enforcement of a sign ban would be unconstitutional, Glenwood again decided to enforce its ordinance prohibiting "for sale" signs on March 1, 1984. On the advice of its counsel, Glenwood repealed its "for sale" sign ban just prior to trial. Even though the issue of Glenwood's enforcement of its ban on "for sale" signs was raised in the pleadings and was the subject of evidence introduced at trial, the district court failed to make specific findings of fact or conclusions of law regarding the issue. But, we hasten to point out that the Realtors failed to call this issue to the court's attention at trial much less challenge the lack of specific findings and conclusions of law in their post-trial motions in the district court.

II. THE REALTORS' CHALLENGE TO THE APACHE STREET AFFIRMATIVE

The Realtors contend that SSHC and Park Forest violated the Fair Housing Act, 42 U.S.C. Sec. 3601, et seq., and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution in initiating the affirmative marketing plan for the three Apache Street homes. The trial court held that the Realtors lacked standing to pursue the equal protection claim because the "equal protection claim ... rest[s] on legal rights of minority home buyers rather than those of homesellers." South-Suburban Housing Center, 713 F.Supp. at 1089-90. The court reached the merits of the Realtors' Fair Housing Act challenge and held that neither SSHC nor Park Forest violated the Act during the marketing of the Apache Street homes.8

Park Forest contends that the court erred in concluding that the Realtors possessed standing to bring their Fair Housing Act claim, while the Realtors urge that the trial court erred in holding that they lacked standing to pursue their equal protection claim.

In Penny Saver Publications, Inc. v. Village of Hazel Crest, 905 F.2d 150, 154 (7th Cir.1990), we observed that:

"The first element of the standing inquiry that [a plaintiff] 'must satisfy in this Court is the "case" or "controversy" requirement of Art. III of the United States Constitution.' Secretary of State of Maryland v. J.H. Munson Co., 467 U.S. 947, 955, 104 S.Ct. 2839, 2846, 81 L.Ed.2d 786 (1983). The relevant inquiry for a case or controversy is to determine whether a plaintiff has shown an injury to himself that is likely to be redressed by a favorable decision. Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38 [96 S.Ct. 1917, 1924, 48 L.Ed.2d 450] (1976)."

Indeed, other than the requirement that the purported injury must be "likely to be redressed by a favorable decision,"9 injury in fact is the only requirement to achieve standing under the Fair Housing Act, for the United States Supreme Court has held that:

" 'Congress intended standing under Sec. 812 [of the Fair Housing Act] to extend to the full limits of Art. III' and ... the courts accordingly lack the authority to create prudential barriers to standing in suits brought under that section. [Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 103, n. 9 [99 S.Ct. 1601, 1609, n. 9, 60 L.Ed.2d 66] (1979) ]. Thus, the sole requirement for standing to sue under Sec. 812 is the Art. III minima of injury in fact: that the plaintiff alleged that as a result of the defendant's actions he has suffered 'a distinct and palpable injury,' Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206, 45 L.Ed.2d 343 (1975)."

Havens Realty Corp. v. Coleman, 455 U.S. 363, 372, 102 S.Ct. 1114, 1121, 71 L.Ed.2d 214 (1982).

The Realtors assert that they suffered an injury in fact based upon their role as the representative of the individual interests of their member realtors. As this case demonstrates, the Realtors have interpreted the AMP as applied to the Apache Street homes to be in violation of the fair housing obligations and the Realtors' code of ethics. Thus, the threat of professional discipline inhibits member realtors from handling the listings involved. We are convinced that as organizations responsible for advancing both the professional ethics and the economic well being of the individual realtors, the Realtors have suffered an injury in fact as a result of the damage occurring to member realtors from their inability to handle the Apache Street listings. Thus, under Havens, the Realtors' assertion of a redressible "injury in fact" is sufficient to provide them with standing to pursue their Fair Housing Act claim. Accord Gorski v. Troy, 929 F.2d 1183, 1188-1189 (7th Cir.1991) ("Congress intended standing under the FHA 'to extend to the full limits of Art. III....' " (Quoting Gladstone, Realtors v. Village of Bellwood, 441 U.S. at 103 n. 9, 99 S.Ct. at 1609 n. 9)).

In addition to demonstrating "injury in fact," the Realtors must also satisfy prudential standing concerns in order to pursue their claim based upon the equal protection rights of potential black home buyers.

"When a person or entity seeks standing to advance the constitutional rights of others, we ask two questions: first, has the litigant suffered some injury in fact, adequate to satisfy Article III's case-or-controversy requirement; and second, do prudential considerations which we have identified in our prior cases point to permitting the litigant to advance the claim?"

Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 109 S.Ct. 2646, 2651 n. 3, 105 L.Ed.2d 528 (1989).

The trial judge concluded that the Realtors lacked standing to litigate the equal protection claims because "[a]n equal protection claim would clearly rest on legal rights of minority home buyers rather than those of home sellers." South-Suburban Housing Center, 713 F.Supp. at 1089-90. Upon our examination of the Realtors' equal protection contentions, we are convinced that the rights asserted in the complaint can only be classified as those of minority home buyers rather than those of the Realtors themselves in that the claim is phrased in language which states that the affirmative marketing plan violates the equal protection rights of potential minority home buyers. Thus, the Realtors are without standing to pursue this alleged injury to minority home buyers unless the Realtors fall somehow within an exception to the prudential rule against third-party standing.

The Supreme Court has recognized that the prudential rule against standing to assert the constitutional rights of third persons, "[l]ike any general rule ... should not be applied where its underlying justifications are absent." Singleton v. Wulff, 428 U.S. 106, 114, 96 S.Ct. 2868, 2874, 49 L.Ed.2d 826 (1976) (plurality opinion). In determining third-party standing courts are to consider "the relationship of the litigant to the person whose rights are being asserted; the ability of the person to advance his own rights; and the impact of the litigation on third-party interests." Caplin & Drysdale, Chartered, 109 S.Ct. at 2651 n. 3.

In examining the relationship between the Realtor litigants and the potential black home buyers whose rights they seek to vindicate, we must examine "whether