Schlesinger v. San Francisco Association of Realtors

Background

Tod Michael Schlesinger, described as a licensed real estate broker, sued the San Francisco Association of Realtors (SFAR), the SFAR Foundation, and individual SFAR board members under 42 U.S.C. § 1983. He alleged violations of the First, Fifth, Eighth, and Fourteenth Amendments after SFAR investigated his communications with SFAR’s then-president about a message supporting the Black Lives Matter movement. SFAR’s attorneys said that Schlesinger’s voicemails used inappropriate and racist language and appeared to violate its harassment policies. After an investigation, SFAR issued findings stating that it would impose a one-year suspension, but the record showed that SFAR did not implement the suspension because Schlesinger was not an SFAR member.

Schlesinger asserted claims involving alleged retaliation for speech, conspiracy, due process, and cruel and unusual punishment. He sought damages and injunctive relief.

Rule 12(b)(1) Standing Ruling

The defendants moved to dismiss under Rule 12(b)(1), which allows dismissal for lack of subject-matter jurisdiction, arguing that Schlesinger lacked standing. Standing requires an injury in fact, a connection between that injury and the challenged conduct, and a likelihood that a favorable decision would remedy the injury.

The court considered a declaration stating that Schlesinger had ended his SFAR membership in 2012. The declaration also stated that participation in SFAR’s multiple listing service was separate from SFAR membership, that Schlesinger’s listing-service participation ended because he did not pay required fees, and that he could reinstate that account by paying the fees and late charges. Schlesinger did not dispute that he was not an SFAR member, but argued that SFAR’s rules also governed the listing service and that he had been suspended from it.

The court rejected that argument. It found no evidence that SFAR had suspended Schlesinger’s listing-service participation or that a suspension from SFAR would automatically suspend that participation. The court therefore found no injury in fact. It also found that any loss of listing-service participation resulted from nonpayment of fees, not SFAR’s disciplinary process. The court granted the defendants’ Rule 12(b)(1) motion.

Rule 12(b)(6) State-Action Ruling

The defendants also argued that Schlesinger failed to state a claim under Rule 12(b)(6), which permits dismissal when a complaint does not allege enough facts to support a legally recognized claim. A claim under § 1983 requires an alleged violation of a federal right and conduct by a person acting under color of state law. Private conduct ordinarily does not satisfy the state-action requirement.

The court held that Schlesinger had not alleged either part of the required connection to government action. First, he did not show that SFAR’s conduct resulted from a government policy. The California Department of Real Estate regulation he cited governed individual real estate brokers, not private organizations such as SFAR, and did not require SFAR to enforce state regulations.

Second, the court concluded that Schlesinger had not alleged facts satisfying any of the four tests used to determine whether a private entity is a state actor: the public-function test, joint-action test, state-compulsion test, or government-nexus test. SFAR was a voluntary membership organization, and the state’s consideration of professional-association information in broker-renewal decisions did not give SFAR governmental powers, establish joint action, compel SFAR’s discipline process, or create a sufficiently close relationship between SFAR and the state. The court therefore concluded that Schlesinger had failed to state a § 1983 claim.

Disposition

The court determined that Schlesinger’s standing and state-action defects could not be cured by amendment and dismissed the complaint with prejudice. The court stated that the Rule 12(b)(1) motion was granted and that, even if Schlesinger had standing, the lawsuit would be dismissed under Rule 12(b)(6). The court did not reach whether the conspiracy claims were adequately pleaded because of its standing conclusion. It also denied the defendants’ request for attorney’s fees under 42 U.S.C. § 1988.