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Increased Fees for Commercial Speaker’s Access to Records May Violate the Constitution

By Jack Greiner and Darren Ford

The United States District Court for the Eastern District of Kentucky recently denied a motion to dismiss in a case contending that Kentucky's practice of charging commercial speakers greater fees for access to public records is unconstitutional. The court noted that the case presents a "novel theory." But it found that the complaint adequately alleged violations of the First and Fourteenth Amendments. Zillow v. Bork.

The Kentucky Open Records Act, provides that when copies of public records are sought for "commercial purposes," public agencies may impose higher fees than when copies are sought for "noncommercial purposes."  For public records kept by property valuation administrators (PVAs), the Kentucky Department of Revenue provides a fee schedule. This fee schedule applies whenever individuals or entities request public records from PVAs for commercial purposes. It includes the cost of personnel time expended in responding to the request. In contrast, when records are requested for a noncommercial purpose, public agencies, PVAs included, are to charge fees "not [to] exceed the actual cost of reproduction"—a cost which expressly cannot include the personnel time expended.

Zillow is an online service that makes real estate information to users free of charge. Zillow generates revenue from selling advertising space on its website. In April, 2019, Zillow requested real estate tax rolls from six Kentucky counties. In making the requests, Zillow described how it intended to use the information, and asked the counties to inform Zillow if the county deemed the use commercial. Each county deemed Zillow's use commercial, and applied the fee schedule.

Zillow filed suit contending the statutory scheme violates the First and Fourteenth Amendments both facially and as applied. The complaint focuses on an exception within the Commercial Purpose Fee Statutes which provides that "publication or related use of public records by newspapers or periodicals" does not fall within the meaning of "commercial purpose."  Zillow argued that the newspaper exception shows that the fees charged under the statutes "target only those who intend to disseminate the information for disfavored commercial reasons."

The Kentucky defendants argued in the motion to dismiss that these publications are not exempted based on content but rather based on the medium of communication. The Court was not persuaded. It noted:  "[d]rawing all reasonable inferences in Zillow's favor, its assertion that the 'newspaper exception' is a content-based exception is plausible. As set out above, it is reasonable to infer that an exception that operates to exempt certain publications from being charged does so based on the content of those publications' eventual speech. Given the role of newspapers this may be an innocuous justification, but 'an innocuous justification cannot transform a facially content based law into one that is content neutral.'"

The court felt that Zillow's as applied claim was even stronger. As it noted, by virtue of determining that Zillow's described use was "commercial,"  the PVAs must have considered the eventual content of Zillow's speech. The court noted that "[d]efendants offer little argument on this point except to argue that the First Amendment does not speak to Zillow's 'right to be considered a newspaper.'"  But the court concluded that "it is reasonable to infer that the PVAs considered the medium of the content, a consideration closely tied to the identity of the speaker, to determine whether the newspaper exception applied."

Having found that Zillow asserted a plausible First Amendment claim, the court noted that a heightened level of scrutiny likely applied to the distinction drawn by the statutory scheme. This would require the Kentucky defendants to demonstrate that "the fee structure within Commercial Purpose Fee Statutes is supported by a legitimate governmental interest and appropriately tailored to alleviate a real harm."   But as the court noted the Kentucky defendants had not argued that the fee structure passed the heightened level of scrutiny.

At this point, the Kentucky defendants have not yet answered. The case will likely proceed to discovery and a likely summary judgment proceeding. But the notion that an enhanced  fee for commercial requests may be unconstitutional has huge implications for public records statutes nationwide.

Jack Greiner and Darren Ford, of Graydon in Cincinnati, represented Zillow in the case.

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