Judge Issues Temporary Restraining Order Against New Tennessee Law Requiring Licenses for Online Auctioneers

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A U.S. District Court judge has issued a temporary restraining order preventing Tennessee officials from enforcing a new state law that forces online auctioneers to get a state license.

U.S. District Court Judge Eli Richardson (pictured above) of the Middle District of Tennessee issued his ruling late last week.

The temporary restraining order expires July 11 at noon. An injunction hearing on the matter is scheduled for July 10 at 9 a.m., according to a copy of Richardson’s injunction.

“Considering the lack of evidence on the current record that extended-time online auctions are harming Tennessee consumers, the Court finds that the balance of relative harms among the parties weighs in favor of Plaintiffs and against Defendants at this time,” Richardson wrote.

“Finally, the Court finds that the public interest will not be harmed by injunctive relief pending a preliminary injunction hearing, that will be set in short order.”

Will McLemore, one of the plaintiffs in the case, told The Tennessee Star Monday he runs an online auction company out of Nashville.

“This law would have caused me to have to alter my business model and affect auction managers that work with me and my firm,” McLemore said.

“One of my auction managers is licensed, and the other three don’t hold an auctioneering license. So, they would have to stop what they are doing.”

McLemore also said no one in Tennessee complained last year about online auctioneers.

The new law, McLemore said, would regulate people who conduct online auctions that use extended time bidding.

Beacon Vice President of Legal Affairs Braden Boucek

As The Star reported last week, the Nashville-based Beacon Center of Tennessee has filed suit against the law. Beacon officials said the state exempts big online auction sites, including Ebay.

Beacon is a free-market think tank.

“This law is not just unfair but is also unconstitutional, as it clearly violates the First Amendment,” Beacon spokesman Mark Cunningham said in a release.

In an emailed statement to The Star, Beacon Vice President of Legal Affairs Braden Boucek said the law is “a step in the wrong direction.”

As The Star reported in April, online auctioneers will suffer, as will Tennessee’s economy, if state officials require them to get a license, Beacon officials said at the time.

Boucek said the clear majority of complaints about online auctioneering came from business competitors who don’t like having to compete with a new business model.

This, Boucek went on to say, artificially inflates prices of goods, all of which are passed on to the consumer.

Boucek linked to an Institute of Justice study that examined state and national estimates of the economic costs of occupational licensing.

The Institute for Justice is a Virginia-based and libertarian law firm that pursues civil liberties and other public interest cases, according to its website.

According to the study, more than 21 percent of Tennessee’s workforce is licensed.

“It costs us 46,068 jobs.  We lose $173 million in economic value lost, $4.5 billion in misallocated resources,” Boucek said in April.

“We could also see nearly a 16 percent increase in economic returns over what licensees would make if not for licensing.”

Read the temporary restraining order:

BUTLER_Order granting TRO

 

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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected]

 

 

 

 

 

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  1. […] The Tennessee Star reported this week, U.S. District Court Judge Eli Richardson of the Middle District of Tennessee issued the temporary […]

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