A Lawsuit in AZ Advances an Interesting Theory on the Speech Code
The NAR Speech Code is actually invalid?
I just received some information on a lawsuit that was filed a few months ago in state court in Arizona called DeVries v. Arizona Association of Realtors (AAR). The plaintiff is a longtime Realtor, Chadwick DeVries, and he’s suing AAR and four other Realtors who brought a 10-5 ethics complaint against him.
I will post the Complaint below in case you want to read it in full, but if you want the backstory of what happened, you can at least get the plaintiff’s side of the story in this video where he was interviewed by a channel named The Purpose Project:
Basically, DeVries suffered the same fate as Wilson Fauber the Realtor from Virginia, whom I interviewed on this episode of Notorious POD. Like Fauber, DeVries ran for office… then had other Realtors come after him for social media posts. He ran for Prescott City Council in 2023, and then had four fellow Realtors file a Speech Code ethics complaint against him for “hate speech” he shared on social media.
AAR’s Ethics Hearing Panel of the Professional Standards Committee found him guilty of violating NAR’s Code of Ethics. From the Complaint:
[Committee] recommended that Plaintiff receive a letter of reprimand to be placed in his personal file with the AAR, that he complete a three hour Fair Housing class, that he pay a $1,000.00 fine to the AAR, and that he submit a $300.00 administrative fee in all cases in which a violation of the Code of Ethics has been determined (i.e., a $1,200.00 administrative fee).
DeVries appealed that to AAR as per its procedures, and the Appeal Panel affirmed the Hearing Panel’s decision and punishments.
He brought this lawsuit after his appeals within the Association were exhausted. But his lawsuit raises an interesting argument I had not seen before. It is one I had not thought of it myself, though perhaps I should have. I think it’s interesting and worth exploring as it goes to a possible core problem with NAR’s Speech Code.
Here we go.
DeVries Likely Did Violate 10-5
As a threshold matter, I think it is worth pointing out the differences between this case and the Fauber case. There are many, but two struck me.
First, Fauber posted what he did prior to the NAR Speech Code being promulgated. DeVries posted what he did afterwards. So at least in the DeVries case, he can’t argue ex post facto violation.
Second, DeVries reposted memes and made comments that are far more inflammatory than what Fauber posted. Here are a couple of examples:
If you’d like to see the full Exhibit, download that here:
Now, as it happens, I think those are pretty similar to thousands of memes I see all over social media, from all political sides. But these aren’t verses from the Bible, as Wilson Fauber had posted.
Whether you agree with the Speech Code or you think it’s an abomination as I do, fact is that as long as the Speech Code is on the books, what DeVries did likely does contravene any reasonable interpretation of 10-5. These memes are intended to ridicule and probably offend.
Important for DeVries’ argument, it is very clear from the transcripts of hearings and the ethics complaints themselves that the Realtors who accused him of violating the NAR Code of Ethics are not accusing him of violating Article 10. They admit that they do not know of any instance where DeVries engaged in discrimination in his real estate work, and they don’t know if he engaged in employment discrimination. They are not accusing him of being part of any plan or agreement to discriminate, or deny equal professional services. They are accusing him of violating 10-5, of posting hate speech, specifically against LGBTQ+ people.
Yes, I think DeVries has the right to say whatever he wants on his social media profile, whether these memes or something worse. Yes, I think NAR Speech Code is an awful mistake and should be repealed.
But Chad DeVries did violate the NAR Speech Code as is currently understood and enforced. There is no universe where Wilson Fauber is found guilty of hate speech for posting a Bible verse, and Chad DeVries is not for posting these memes.
The Complaint and the Novel Legal Theory
So unlike Fauber, who has a real claim that he did not violate 10-5, DeVries is making a different claim altogether.
He is claiming that SoP 10-5 is not grounds for discipline — that the NAR Speech Code has no legal effect.
If you’d like to read the Complaint, it can be found here:
The argument (which Ryan Heath, DeVries’ lawyer who is in the video above explains pretty well) goes like this:
Membership as a Realtor is a contract between an individual and the Realtor Association. (Associations, given the three-way agreement.)
The terms of that “membership contract” that the member agrees to abide by are NAR’s Constitution, Bylaws, and most especially the Code of Ethics.
NAR’s Standards of Practice are not part of the terms of the “membership contract” because SoPs are not part of the Code of Ethics.
NAR’s Professional Standards Policies are not part of the terms of the “membership contract” because PSPs are not part of the Code of Ethics.
Therefore, punishing DeVries for “violating” Standards of Practice or Professional Standards Policies is a breach of his “membership contract” by AAR.
This is a new twist to the NAR Speech Code saga I had not considered and had never seen before.
Standards of Practice Are Not Part of the Code of Ethics
Ryan Heath, DeVries’s lawyer, obviously parsed the NAR Constitution and Bylaws as well as the NAR Code of Ethics Arbitration Manual (“CEAM”) carefully. He argues that the entire edifice of the NAR Speech Code, including SoP 10-5, is not part of the Code of Ethics.
The Complaint states:
Appendix X to part Four of the CEAM explains that, during a disciplinary proceeding, it is the job of the Hearing Panel to “decide whether the Articles expressly cited in complaints were violated—not whether Standards of Practice . . . were violated.” Likewise, the introduction to the CEAM explains, “[i]n filing a charge of an alleged violation of the Code of Ethics by a Realtor®, the charge shall read as an alleged violation of one or more Articles of the Code. A Standard of Practice may be cited only in support of the charge…. Articles 1 through 17 establish specific obligations for which Realtors® may be disciplined.” (emphasis added).
The Article in question is Article 10 of the Code of Ethics, which reads in its entirety (copied and pasted from the Complaint, and emphasis was from original):
REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity. REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity. (Amended 1/23)
REALTORS®, in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity. (Amended 1/23). (Emphasis added).
The terms of the “membership contract” therefore are limited to requiring DeVries (1) not to deny equal professional services, (2) not be party to any plan or agreement to discriminate, and (3) not discriminating in employment practices.
Posting on social media is not part of Article 10, unless it goes to “equal professional services,” and therefore is not one of the terms of the membership contract.
SoP 10-5, like all Standards of Practice, are merely “interpretations” of the Code in order to help the committee trying to decide whether a violation of the Code of Ethics has occurred.
DeVries cites the Preface to the Code of Ethics, which says as much, as well as notes from the end of the Code of Ethics, which states:
In filing a charge of an alleged violation of the Code of Ethics by a Realtor®, the charge must read as an alleged violation of one or more Articles of the Code. Standards of Practice may be cited in support of the charge.
The Standards of Practice serve to clarify the ethical obligations imposed by the various Articles. [Emphasis in original from the Complaint.]
To be disciplined, the Realtor must have violated an Article of the Code, not the Standards of Practice that goes with that Article.
He completes the argument by pointing out that the terms of the “membership contract” — i.e., the Constitution, Bylaws, and the Code of Ethics — may only be changed by a specific and laid-out process:
The provisions of the Constitution, Bylaws, and Code of Ethics may only be amended according to specific procedures.
Under Article XIX Section 1 of the Constitution, “[t]his Constitution may be amended by two-thirds of the number of votes at the National Convention[.]”
According to Section 1 of Article XVIII of the Constitution, “Bylaws may be adopted or amended at any meeting by two-thirds of the [Board of] Directors present at such meeting, provided that a quorum is present at such meeting[.]”
Pursuant to Article IV Section 3 of the Bylaws, “[t]he Code of Ethics may be amended by two- thirds of the number of votes cast by the [Board of] Directors[.]”
Article XIX, Section 2 of the Constitution provides, in relevant part: “[t]he Code of Ethics may be amended by two-thirds of the number of votes cast by the delegates at the National Convention.” [Line breaks added for legibility.]
Anything else is not a valid amendment of the terms of the “membership contract.”
In 2020, when NAR promulgated the Speech Code, the actual procedure was one where the Professional Standards Committee presented recommendations and got the Board of Directors to approve them. From NAR:
The NAR Professional Standards Committee met on October 5, 2020, to consider recommendations from its Interpretations and Procedures Advisory Board on the Code of Ethics’ applicability to discriminatory speech and conduct. The Committee approved the Advisory Board’s recommendations, and six of them were presented to and approved by the NAR Board of Directors at their November 13, 2020 meeting. Two of the changes will be effective immediately.
Of importance to us here — and to DeVries — is the fact that the Professional Standards Committee did not recommend amending the Code of Ethics. Instead, they recommended changes to Policy Statement 29 in CEAM, and “The Board of Directors approved a revised policy that expands applicability of the Code to all of a REALTOR®’s activities” as well as adopting SoP 10-5, and expanding the definition of “Public Trust.”
I don’t know how the Board of Directors voted in November of 2020 in approving the recommendations, but I’d be willing to bet that they would have had 2/3 needed to amend the Code of Ethics itself. They didn’t do that.
At the end of the day, the thrust of the argument is that the terms of the “membership contract” were not changed. Only the plain language of Article 10 constitute the terms, and Policy Statement 29, SoP 10-5, and the changes to definition of “Public Trust” are not changes to the terms of the membership contract. Therefore, punishing DeVries for violating a non-contractual term is itself breach of contract by AAR.
Tortious Interference Claims
If DeVries is successful with his core argument — that Standards of Practice and Professional Standards Policies are not part of the Code of Ethics — then he has a decent chance in his claims against the four Realtors who brought ethics charges against him for tortious interference with contract.
I don’t think DeVries will be able to get punitive damages since that requires the court finding that those who filed ethics complaints against DeVries “intentionally aimed to cause harm” beyond simply interfering with the contract. There is a chance here, given that the prosecution (persecution?) of DeVries was likely politically motivated and definitely ideological in nature, but I think the defendants could argue good faith in trying to enforce the Code of Ethics. That is going to be fact-dependent and jury-dependent. I do think some of the social media posts made by some of the defendants I saw in the trial record would hurt their case in front of a jury, but we’ll see.
The First Amendment Claim; “Quasi-Government”
Of course DeVries also brings a First Amendment claim, but I think that’s a bit… more of a stretch.
It essentially requires the court to agree that Realtor Associations are quasi-governmental organizations akin to a rural hospital because they control the MLS.
Except that Arizona Assoc. of Realtors does not control the MLS; the local *might* but not always. The MLS itself can change rules, like ARMLS has, to take on people who are non-Realtors. Phoenix Association of Realtors is in a death-match with NAR right now over whether they can offer de-facto local membership without the Three-Way Agreement… but both agree that they can offer MLS-only membership.
So that’s a bit on the weak side. Of course, if the court does find that Realtor Associations are in fact quasi-government organizations, and therefore the full panoply of Constitutional rights vest in their members… well… I mean, that’s game over.
For now, I don’t think the First Amendment claim has much merit. The contract claim seems stronger.
Repercussions
Suppose DeVries wins at trial here. What then?
First, I think every person who was disciplined under NAR Speech Code has a legal claim against the Associations who did so.
Brandon Huber, the pastor-Realtor who was found guilty of hate speech a few years ago for posting things that are far less inflammatory than what DeVries posted, can sue the local, the state and National Association for damages. The statute limitations for a breach of contract lawsuit is 8 years in Montana. Certainly Wilson Fauber would also have a claim against Virginia.
Both might have tortious interference claims against all of their accusers who brought ethics charges as well, along with punitive damages depending on the facts.
There are likely other names who we don’t know because they simply bent the knee instead of fighting back.
Second, that in turn would make Realtors question whether they want to bring ethics charges in the first place. They have to make sure that they are alleging violations of the actual Code of Ethics itself, rather than any SoP or PSP. That seems like an improvement over today where too many Realtors don’t mind ruining others businesses and lives in order to virtue signal more clearly.
Third, that would invalidate and make more-or-less useless all of the SoPs and PSPs that NAR has. That seems like a big deal to me.
For example, SoP 1-3 says “REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value.” That is no longer a valid part of the Code of Ethics and a Realtor cannot be disciplined for violating it. SoP 3-6 says “REALTORS® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation.” If DeVries wins, then Realtors cannot be disciplined for not telling other brokers that there is an accepted offer on the house.
Post a DeVries win, if NAR wants to create rules, then it must do so by amending the actual Code of Ethics itself. Again, nothing stopped the NAR Board of Directors in 2020 from making social media posts a violation of Article 10 by amending Article 10 itself, rather than stuffing the rule into a SoP and a Policy Statement.
It goes without saying that the Code of Ethics would balloon into an unwieldy set of regulations….
Fourth… and this is a repercussion not so much from a DeVries victory but from the fight itself… the politics of this fight makes no sense for Associations.
Yavapai County, where Prescott is located, went 66 to 32 for Trump. This is hardly a haven for Progressive ideology. Prescott is more liberal than surrounding cities, but this is what Prescott looks like politically:
Do the leaders of PAAR think that the people in and around Prescott support their coordinated campaign against a conservative Realtor for sharing memes? Do they believe that their buyers and sellers would think better of the Realtor brand because of this fight?
Arizona is already dealing with a major problem in Phoenix. Does Arizona need this fight?
I think this last point is particularly interesting because if you watched the video above from The Purpose Project, I think it will be crystal clear that Chad DeVries is not looking to back down. He strikes me as a man who had enough support locally to run for City Council (unsuccessfully, but… to run in the first place you have to have people who support you). Could he would spearhead a revolution within PAAR? He does call on other Realtors to give a damn and given the political demographics of Prescott….
I do think if nothing else, the punishment of a Realtor who has never had a single complaint filed against him during his entire 29 year long career, a top producer who has numerous gay clients, who has two children who are gay, contributes to his local community in numerous ways, and is by all measures a pretty standard Christian conservative rather than some out-there right wing wacko does more to tarnish the Realtor brand in deep-red Yavapai County and in Prescott than any meme that DeVries retweeted on his social media pages.
Let me leave this post first, by reiterating what I have urged NAR to do: repeal the Speech Code.
But second, let me ask Arizona Association of Realtors a question: “How do you imagine this ends?”
-rsh
Related and worth a read from Paul Graham most recent post, The Origins of Wokeness.
"Let's start with the easier problem. Is there a simple, principled way to deal with wokeness? I think there is: to use the customs we already have for dealing with religion. Wokeness is effectively a religion, just with God replaced by protected classes. It's not even the first religion of this kind; Marxism had a similar form, with God replaced by the masses. [15] And we already have well-established customs for dealing with religion within organizations. You can express your own religious identity and explain your beliefs, but you can't call your coworkers infidels if they disagree, or try to ban them from saying things that contradict its doctrines, or insist that the organization adopt yours as its official religion."
https://www.paulgraham.com/woke.html
In my over 20 years in organized real estate, I have never thought about the SoP's in this way. I must say I am gobsmacked! I have to wonder, however, since the SoPs have been in place and referenced in so many cases, could there be some sort of suggestion that they have been established long enough to be a valid extension of the Code of Ethics? Granted, the strict interpretation of the member contract and NAR's bylaws would suggest otherwise. For the record, my position has always been that this speech code should not exist.