Marcus & Millichap Real Estate Investment Services of Nevada, Inc. et al v. Decker et al
Filing
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ORDER denying 100 Renewed Motion for Temporary Injunction. Signed by Judge Richard F. Boulware, II on 12/3/2017. (Copies have been distributed pursuant to the NEF - BEL)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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MARCUS & MILLICHAP REAL ESTATE
INVESTMENT SERVICES OF NEVADA,
INC., MARCUS & MILLICHAP REAL
ESTATE INVESTMENT SERVICES, INC.,
GORDON ALLRED, ALVIN NAJIB
MANSOUR, KEVIN NAJIB MANSOUR,
PERRY WHITE, and NENAD ZIVKOVIC,
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ORDER
Plaintiffs’ Motion for Temporary Injunction
Plaintiffs,
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Case No. 2:16-cv-01299-RFB-GWF
v.
JOSEPH DECKER, in his official capacity as
Administrator of the Real Estate Division,
Department of Business & Industry, State of
Nevada, and NORMA JEAN OPATIK, NEIL
SCHWARTZ, SHERRIE CARTINELLA,
DEVIN REISS, and LEE K. BARRETT, in
their official capacities as Commissioners of
the Nevada Real Estate Commission,
Defendants.
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Before the Court is Gordon Allred, Alvin Najib Mansour, Kevin Najib Mansour, Perry
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White, and Nenad Zivkovic (collectively, “Individual Plaintiffs”)’ Renewed Motion for
Temporary Injunction, (ECF No. 100). For the reasons stated below, these motions are denied.
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I.
BACKGROUND
On June 10, 2016, Individual Plaintiffs and Marcus & Millichap Real Estate Investment
Services, Inc. (“M&M”) (collectively, “Plaintiffs”) filed a Complaint and Request for Declaratory
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and Injunctive Relief against Defendants, officials of the Nevada Real Estate Division (“NRED”)
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and Nevada Real Estate Commission (“NREC”). (ECF No. 1). Plaintiffs assert two Section 1983
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claims, alleging that a NREC real estate regulation 1) violates the Commerce Clause, and 2)
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violates the First Amendment. Plaintiffs additionally seek declaratory and injunctive relief.
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On July 12, 2017, Plaintiffs filed a Motion for Preliminary Injunction. (ECF No. 47).
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Defendants filed a Response on July 25, 2017. (ECF No. 58). The Court held a hearing on the
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Motion on July 26, 2017, and denied the Motion without prejudice with leave to refile, as the
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administrative hearings which the Plaintiffs sought to enjoin were continued from August to
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December. (ECF No. 63). The Court also granted in part and denied in part a Motion to Compel,
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(ECF No. 45), at the hearing.
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On August 25, 2017, Plaintiffs and Defendants filed Cross-Motions for Summary
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Judgment. (ECF Nos. 71-72). The same day, Plaintiffs also filed a Statement of Material Facts
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regarding their Motion for Summary Judgment. (ECF No. 74). The parties filed Responses on
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September 15, 2017. (ECF Nos. 84-85). Replies were filed on September 29, 2017. (ECF Nos. 92,
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93). The International Council of Shopping Centers, The Commercial Real Estate Development
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Association, and National Multifamily Housing Council (collectively, “Interested Parties”) filed a
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Motion for Leave to File Amicus Brief in Support of Plaintiffs on November 10, 2017. (ECF No.
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96). The proposed amicus brief is attached to the Motion. (ECF No. 96-1).
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On November 14, 2017, Individual Plaintiffs filed an Emergency Motion to Renew the
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[47] Motion for Preliminary Injunction. (ECF No. 100). M&M filed a Joinder on November 15,
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2017. (ECF No. 103). Defendants filed a Response to the Motion for Leave to File Amicus Brief
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on November 16, 2017. (ECF No. 108). Defendants filed a Response to the Emergency Motion on
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November 20, 2017. (ECF No. 111). M&M submitted a Supplemental Brief on the Renewed
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Motion on December 1, 2017. (ECF No. 113).
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II.
LEGAL STANDARD
A preliminary injunction is “an extraordinary remedy that may only be awarded upon a
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clear showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council, Inc.,
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555 U.S. 7, 22 (2008). To obtain a preliminary injunction, a plaintiff must establish four elements:
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“(1) a likelihood of success on the merits, (2) that the plaintiff will likely suffer irreparable harm
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in the absence of preliminary relief, (3) that the balance of equities tip in its favor, and (4) that the
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public interest favors an injunction.” Wells Fargo & Co. v. ABD Ins. & Fin. Servs., Inc., 758 F.3d
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1069, 1071 (9th Cir. 2014), as amended (Mar. 11, 2014) (citing Winter, 555 U.S. 7, 20 (2008)). A
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preliminary injunction may issue under the “serious questions” test. Alliance for the Wild Rockies
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v. Cottrell, 632 F.3d 1127, 1134 (9th Cir. 2011) (affirming the continued viability of this doctrine
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post-Winter). According to this test, a plaintiff can obtain a preliminary injunction by
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demonstrating “that serious questions going to the merits were raised and the balance of hardships
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tips sharply in the plaintiff’s favor,” in addition to the other Winter elements. Id. at 1134-35
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(citation omitted).
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III.
DISCUSSION
a. Renewed Motion for Temporary Injunction
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Prior to analyzing the request for injunction, the Court will briefly discuss the regulatory
and statutory framework at issue in this case.
i. Nevada’s cooperative certificate law
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Nevada law permits out-of-state licensed real estate brokers cooperating with Nevada
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brokers to engage in real estate transactions. Nev. Rev. Stat. § 645.605. Pursuant to this law, “[t]he
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Administrator [of the Real Estate Division] shall have authority to issue certificates authorizing
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out-of-state licensed brokers to cooperate with Nevada brokers, and the [Nevada Real Estate]
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Commission shall have authority to promulgate rules and regulations establishing the conditions
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under which such certificates shall be issued and canceled . . . .” 1 Id. Nevada Administrative Code
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(“NAC”) Section 645.185 contains the rule for how cooperative certificates may operate.
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Subsection 11, the provision at issue, provides: “An out-of-state broker may not use a cooperating
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These certificates are referred to by the parties as “cooperative certificates.” The Court
adopts such language in this Order.
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broker’s certificate as authority to sell or attempt to sell real estate in Nevada to a resident of
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Nevada. Such a certificate may be used only for the purpose of allowing the out-of-state broker or
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salesman to offer real estate in Nevada for sale to a person other than a resident of Nevada.”
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Plaintiffs argue in their Complaint that the cooperative certificate law prohibits cooperation except
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in very limited circumstances. Plaintiffs raise challenges to the NAC cooperative certificate
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provision under both state and federal law, and seek to enjoin the administrative enforcement
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proceedings soon to take place against the Individual Plaintiffs.
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Plaintiff does not dispute that, under Nevada law, an out-of-state individual can obtain a
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broker’s license which grants that individual all of the same professional authority to operate as an
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individual who is in-state and licensed. Nev. Rev. Stat § 645.330.
ii. Likelihood of success on the merits
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In the original Motion for Temporary Injunction (ECF No. 47), Plaintiffs argue that they
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are likely to succeed on their constitutional challenge to the NAC cooperative certificate provision.
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Plaintiffs argue that they have a valid claim that the cooperative certificate law violates the
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Dormant Commerce Clause. Plaintiffs claim that the law fails the strict scrutiny Commerce Clause
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tests because 1) it is an impermissible “turf state” law; and 2) the law is discriminatory on its face,
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in its purpose, and in practical effect. Plaintiffs contend that there are other less restrictive means
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for achieving a compelling governmental interest, such as requiring that out-of-state brokers work
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in cooperation with a Nevada broker to ensure compliance with local regulations in broader real
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estate transactions. Plaintiffs rely heavily on a Western District of Kentucky case, River Oaks
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Mgmt., LLC v. Brown, No. 3:06-CV-00451-S, 2007 WL 2571909 (W.D. Ky. Sept. 4, 2007), in
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support of their argument.
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Plaintiffs argue in the alternative that the cooperative certificate law violates the Pike
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balancing test, because the burden on interstate commerce is “clearly excessive.” Plaintiffs contend
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that the regulation of the cooperative certificate scheme exceeds its statutory authorization, as the
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statute only provides for the conditions of issuance and cancellation of the cooperative certificate.
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Defendants contend that there is no likelihood of success on the merits. They essentially
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argue that the Dormant Commerce Clause claim fails because Plaintiffs have the ability to obtain
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licenses in Nevada to engage in the activity they seek to do. Defendants further argue that NAC
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645.185(11) neither prevents nor discriminates against the transaction of interstate commerce, and
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therefore the provision cannot be found unconstitutional.
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The Court finds no likelihood of success on the merits or a serious question going to the
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merits. Plaintiffs do not establish that the cooperative certificate law discriminates on the basis of
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out-of-state status; the cooperative certificate law only distinguishes between those out-of-state
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brokers that are licensed and those that are not. Additionally, the cooperative certificate law does
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not prevent an unlicensed out-of-state broker from being able to obtain a license and subsequently
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practice freely in the state. 2 Because Plaintiffs do not show that the cooperative certificate
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provision discriminates per se on the basis of out-of-state status, it is unlikely they will prevail on
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the Dormant Commerce Clause claim.
iii. Irreparable harm
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Plaintiffs make several arguments in their attempt to establish irreparable harm. First, they
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claim that their rights under the Dormant Commerce Clause are violated, which as a matter of law
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establishes irreparable injury. Plaintiffs also argue that the cooperative certificate framework
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amounts to a “turf state law” that puts Plaintiffs at a competitive disadvantage. Individual Plaintiffs
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elaborate on their arguments in the Renewed Motion, where they contend that irreparable harm is
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also established because the disciplinary proceeding and resulting record is public and available
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throughout the industry, including to competitors who might exploit the administrative findings.
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Plaintiffs contend that, even if the Court later finds that the cooperative certificate law is invalid,
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damage will already be done if the administrative proceedings are not enjoined.
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The Court finds that Plaintiffs have not established irreparable harm. First, the Court finds,
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and the Plaintiffs concede, that there is in fact a state legal remedy for an adverse finding at the
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forthcoming administrative hearing. Plaintiffs acknowledge that, under Nevada law, they can seek
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review of any state agency determination within the agency and then seek review by a state court
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During the proceedings, Plaintiffs tangentially raised the alleged requirement of having
to maintain “a definite place of business” in the state after obtaining a real estate license. Nev. Rev.
Stat. § 645.550(1). However, as the issue was not properly raised or briefed, the Court will not
analyze the requirement in this Order.
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of any final agency decision. Nev. Rev. Stat. § 233B.130. Indeed, the Plaintiffs can raise their
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constitutional arguments before both a state agency and a state court reviewing a state agency’s
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final decision. As there are multiple opportunities for state agency and state court review of any
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initial agency decision at the forthcoming administrative hearing, there can be no finding of
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irreparable harm.
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The Court is unpersuaded that irreparable harm can be found on the strength of the
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Plaintiffs’ constitutional argument weighed against the professional reputational harm they may
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suffer for an initial adverse finding. If this standard were the governing standard, it would
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authorize federal courts to essentially monitor state agency decisions at all levels and intervene
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before even state agencies or state courts had an opportunity to review the agency’s actions. The
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Court finds no support in the caselaw for such a standard.
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As the Court has found that injunction relief is not warranted based upon its consideration
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of the two factors already discussed, the Court finds it unnecessary to address the other two factors
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for injunctive relief.
b. Request for stay of the constitutional question
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Defendants request in the alternative that if the Court finds that the administrative
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proceeding and the instant litigation are intertwined, then the Court stay the constitutional question
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until Individual Plaintiffs have exhausted their administrative remedies. (ECF No. 111 at 4). For
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the reasons explained above, the Court finds an injunction is not warranted. Therefore, the Court
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will address this issue and the previously raised abstention issue in its forthcoming ruling on the
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Motions for Summary Judgment. At this time, the Court finds no reason to stay the case.
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IV.
CONCLUSION
IT IS THEREFORE ORDERED that the Renewed Motion for Temporary Injunction (ECF
No. 100) is DENIED.
DATED: December 3, 2017.
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__________________________________
RICHARD F. BOULWARE, II
UNITED STATES DISTRICT JUDGE
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