NASHVILLE, TN (March 29, 2022): The U.S. District Court for the Middle District of Tennessee recently ruled that Tennessee’s law requiring a license for an online auction is unconstitutional and that Tennessee’s attempt to regulate online auctions violated the United States Constitution.
The case was brought by Southeastern Legal Foundation (SLF) and Beacon Center of Tennessee on behalf of Will McLemore, Aaron McKee, two auctioneers who innovated the use of an online platform for auctioneering, and the Interstate Auction Association, an unincorporated association dedicated to innovation in auctioneering. All three regularly conduct online auctions with bidding to consumers nationwide for goods available throughout the country.
Tennessee enacted the law in 2019 making it one of the first states in the country to explicitly require licenses for online auctions even though it had no evidence that consumers were harmed. Even worse, Tennessee exempted various other types of online auction companies, such as eBay, from its license requirement even though they performed online auctions equally available to Tennessee consumers. SLF and Beacon secured an initial win on July 23, 2019 when the Court halted the program shortly before the new law became effective, ruling that it was likely unconstitutional. The most recent ruling affirmed that the 2019 law did, in fact, violate the Constitution.
According to Braden H. Boucek, the Director of Litigation for SLF, and former Vice President of Legal Affairs at the Beacon Center, “This is a huge win not only for our clients, but for all American innovators whose freedom to engage in e-commerce has been reaffirmed. E-commerce is the future and Tennessee needs to welcome it. Instead of recognizing our clients’ contributions to the state—creating a new Tennessee business and good paying jobs, choice in the marketplace, and expansion of a dynamic and fast-growing industry—Tennessee implemented this unconstitutional licensing scheme to protect the largest online auction companies in our country and traditional auctioneers. And it did so at the taxpayers’ expense.
Justin Owen, President and CEO of the Beacon Center said, “We warned legislators for three years that drastically expanding the auctioneer license to rope in online auctions was unconstitutional. When they finally relented to the auctioneer association’s protectionist power grab, we had no choice but to challenge the new law in court so that our hard-working clients didn’t lose their livelihoods.”
Learn more about the case.