CINCINNATI (CN) — The Kentucky Press Association told a Sixth Circuit panel Tuesday that a trial judge erred when he removed the newspapers' fee exemptions for records requests in a lawsuit brought by Zillow about property tax data access.
The suit stems from a 2019 challenge to the state's open records law, when Zillow requested property tax roll files from a slew of counties in Kentucky to update its online real estate database. The counties deemed Zillow's request to be of a commercial purpose, meaning it wouldn't be exempt from higher fees for obtaining the documents, and charged it between $10,000 and $40,000 for each tax roll file.
Kentucky state law defines "'commercial purpose ' as 'the direct or indirect use of any part of a public record or records, in any form, for sale, resale, solicitation, rent, or lease of a service, or any use by which the user expects a profit either through commission, salary, or fee.'"
There is a caveat, however: "'Commercial purpose' does not include the publication or related use of the public record by a newspaper or periodical, by a radio or television station in its news or informational program, or by use in the prosecution or defense of litigation by the parties to such an action or their attorney," according to Kentucky law.
Zillow said the fees were unconstitutional because although Zillow is a corporation, it was using the data to build a free database. "The record evidence in this case demonstrates that Zillow publishes information in the tax roll file in a truthful, non-misleading way, in the same manner as a traditional newspaper or periodical," Zillow says in its appeals brief.
A trial court agreed and found the exemption for newspapers an unconstitutional violation of Zillow's First Amendment rights, and killed the exemption altogether.
"The end result is that Zillow still has to pay the fees, but now newspapers, whose interests were not represented in the lawsuit, have to pay them too," the Kentucky Press Association said in its appeals. "Thus, it turned out to be a pyrrhic victory for Zillow."
Michael Abate, one of the attorneys for the Kentucky Press Association, told a Sixth Circuit panel Tuesday that Zillow did not have standing to bring a facial challenge to the state's open records statute so the trial court did not have the authority to sever the newspaper exception.
But Zillow attorney Darren Ford pushed back.
"Broadly speaking, the district court arrived at the correct result in this case, but did so based on the erroneous construction of the Kentucky statutes challenged by Zillow," Ford told the panel.
Ford maintained that the statute was unconstitutional because it ultimately gives the government leeway to examine why people are requesting certain records.
U.S. Circuit Judge Karen Moore, a Bill Clinton appointee, asked if the statute would still be unconstitutional if it only included the distinction between commercial and non-commercial purposes.
"I think you would have to perhaps show that there were unconstitutional applications of that," Ford said. "And on its face, that it was a proxy for essentially favoring some types of speech and not other types of speech."
Both Ford and Abate agreed this isn't an instance of favoring one kind of speech over another, rather an improper application of the commercial purpose portion of the statute.
"The newspaper exception standing alone creates no burden on Zillow's rights. It creates no burden on Zillow's First Amendment rights," Ford said. "We're not in a competition to make it harder for anybody to make to get public records in Kentucky. What our position is in this case, and as the basis for our claims in this case is to say, hey, we engage in publication and related use of public records."
Richard Bertelson III, the attorney for the Kentucky Department of Revenue, which oversees the property tax records, called Zillow's suit a misguided constitutional challenge to boost its profits.
"To a certain extent Zillow does operate the same way a newspaper does, doesn't it? In terms of publishing the data from the tax rolls," Moore said.
Bertelson said there's more to Zillow than that.
"Perhaps, but you also have to look under the covers to figure out what Zillow actually does," Bertelson said. "What Zillow actually does is it has a multitude of real estate businesses, home loans, renting and selling, branding, real estate agents as Zillow premier agents."
U.S. Circuit Judge Danny Boggs, a Ronald Reagan appointee, asked how that is different from The Wall Street Journal's real estate section.
"Every Thursday, they have this big section called 'Mansion' from which they publish stories that are very much like what Zillow does in a different format," Boggs said. "It tells you when you know, DiCaprio is selling his $30 million mansion and tells you stories about it and pictures and then runs all these real estate ads right next to it. Just because the Wall Street Journal is a multibillion-dollar operation, does that make a difference?"
Bertelson said the difference is that The Wall Street Journal is not advertising its own businesses — others are paying to have their advertisements in its publication.
Boggs quipped back: "What section of the law or the Constitution makes that make a difference? The Wall Street Journal makes millions and millions of dollars for using public data, and then people buy the paper and they advertise. It could set up its own real estate business, but does that make any difference?"
Bertelson said it does. "The Kentucky Press Association itself has admitted that if it were to set up a website, just like Zillow, and use the data like Zillow does in a living database of homes, let's say, then they would have to pay the commercial purpose fees as well."
U.S. Judge Julia Gibbons, a George W. Bush appointee, rounded out the panel. The judges did not indicate when they would rule on the matter.
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