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Wang v. Pataki

October 25, 2005

LAN LAN WANG AND PRINCIPAL CONNECTIONS, LTD., D/B/A MLX.COM, PLAINTIFFS,
v.
GEORGE E. PATAKI, IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE STATE OF NEW YORK, AND ELIOT SPITZER, IN HIS OFFICIAL CAPACITY AS ATTORNEY GENERAL OF THE STATE OF NEW YORK, DEFENDANTS.



The opinion of the court was delivered by: Sweet, D.J.

OPINION

The defendants Eliot Spitzer, Attorney General of the State of New York (the "Attorney General"), Randy A. Daniels, Secretary of State of the State of New York (the "Secretary") (collectively, the "Defendants") have moved pursuant to Rule 12(b)6, Fed. R. Civ. P., to dismiss the First Amended Complaint ("FAC") of the plaintiff pro se Lan Lan Wang ("Wang") and Principal Connections, Ltd., d/b/a MLX.com ("PCL") (collectively, the "Plaintiffs"). For the reasons set forth below, the motion is granted.

Prior Proceedings

The Plaintiffs filed their complaint on December 12, 2000. The Governor and the Attorney General moved to dismiss the complaint and in an opinion of October 5, 2001, the motion was granted as to the Governor and the action was stayed, (the "October 5 Opinion"), Wang v. Pataki, 164 F. Supp. 2d 406 (S.D.N.Y. 2001). After the completion of state court proceedings, described below, the Plaintiffs filed the FAC on November 19, 2004.

The FAC alleges five causes of action: (1) that "Plaintiffs' business is targeted for government action," and coupled with the Defendants' alleged "arbitrary and capricious interpretation of the AIV law " this "amounts to a prior restraint by the Defendants against the Plaintiffs' commercial speech" (FAC ¶ 57); (2) that 19 N.Y.C.R.R. § 190.8, which provides that "[n]o apartment information vendor shall place any advertisements for specific apartments," and that, "[a]dvertisements shall be limited to the vendor's name, address, telephone number and business hours, and a description of the services offered," is an unconstitutional abridgement of Plaintiffs' First Amendment right to engage in commercial speech (FAC ¶ 63); (3) that the Defendants have selectively prosecuted Plaintiffs in violation of the Equal Protection Clause of the Fourteenth Amendment (FAC ¶¶ 66-70); (4) that the Defendants' "use of an administrative proceeding to suspend Wang's real estate broker's license" allegedly "denied her the opportunity to contest the constitutionality of the AIV law before the New York State courts," thereby "depriv[ing] the Plaintiffs of [substantive] due process of law" (FAC ¶¶ 73-74), and (5) that the privileges or immunities clause of the Fourteenth Amendment has been violated. (FAC ¶ 77).

On August 24, 2003, Wang applied to the Secretary for a license under the Apartment Information Vendor Law, N.Y. Real Property Law § 446-a-j (the "AIV" law). That application was denied, and Wang thereafter requested an evidentiary hearing on the issue of whether she should be granted an AIV license. On December 9, 2004, after a hearing, Administrative Law Judge ("ALJ") Felix Neals, in a one-page decision, found that Wang should be given an AIV license. That decision was appealed to the Secretary who on May 16, 2005 remanded the proceeding for further factual findings.

The instant motion was heard and marked fully submitted on May 18, 2005.

The FAC

The Parties

Plaintiff PCL is a New York corporation doing business under the name MLX.com. (FAC ¶ 4).

Wang is a resident of New York, and the chief executive officer and majority shareholder of PCL. (FAC ¶ 5).

The Attorney General is charged with prosecuting criminal violations of the AIV law, originally enacted in 1975, which is the subject of this action. (FAC ¶ 6).

The Secretary is charged with administering New York's laws governing the occupational licensing of real estate brokers and apartment information vendors. The Secretary has the authority to issue, suspend, and revoke real estate brokerage and apartment information vendor licenses, as well as to regulate the business practices of licensees. (FAC ¶ 7).

The AIV law regulates the business practices of the apartment referral industry. The AIV law was intended to prevent fraudulent advertising practices and breach of contract by apartment referral agents, some of whom sold rental listings that contained non-existent or unavailable apartments. Subsequent amendments to the AIV law changed the description of licensees from "apartment referral agents" to "apartment information vendors." (FAC ¶ 8).

The AIV law forbids anyone from acting as an "apartment information vendor" without first obtaining a license from the New York Secretary of State. An apartment information vendor is defined as an individual or company which, for an advance fee, "furnish[es] information concerning the location and availability of real property, including apartment housing." (§ 446-c). The AIV law only applies to rental housing, not units for sale, such as condominiums or cooperatives. (FAC ¶ 9).

The AIV law authorizes the Secretary, at his discretion, to revoke or suspend an AIV license upon a finding that the license holder violated any provision of the AIV law. The AIV law authorizes the Attorney General to prosecute all criminal violations of the AIV law. (FAC ¶¶ 13, 14). Offenders are subject to a maximum fine of $5,000 for each infraction (§ 446-h(1-2)).

The Secretary has promulgated and maintained rules and regulations under the AIV law, N.Y. Comp. Codes R. & Regs. tit. 19, §§ 190.1-190-8, and § 190.8 of the Secretary's rules and regulations state, "No apartment information vendor shall place any advertisements for specific apartments. Advertisements shall be limited to the vendor's name, address, telephone number and business hours, and a description of the services offered." (FAC ¶¶ 18, 19).

The Plaintiffs' Business

In 1993, Wang, a licensed real estate broker, founded PCL to create a non-traditional Multiple Listing Service ("MLS") that would enable individual consumers to access the same listings used by real estate brokers. Prior to PCL's formation, there was no functional MLS in the New York City real estate rental market. (FAC ¶ 22).

PCL's service enabled property sellers, buyers, landlords, and renters, to interact directly through an Internet-based "portal," in addition to viewing listings provided by landlords, owners, and real estate brokers. Individual brokers and landlords and property owners could list with PCL. PCL operated the portal and the MLS as a single, integrated service, and PCL also provided limited in-house brokerage services, such as assisting lease negotiations. Wang served as PCL's official broker of record until her license was suspended by the Secretary in 2004. PCL charged individual customers a one-time flat fee for all services, including Wang's real estate brokerage and access to PCL's Internet portal. (FAC ¶¶ 23-25).

An individual could register with the PCL website to obtain a "guest" account that enabled him to search the MLS database free of charge for apartments meeting their criteria (i.e., neighborhood, number of bedrooms, and rent, etc.) and could then pay the one-time flat fee to purchase PCL's full product, which included brokerage services and specific ...


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