representations (even if they are true) that black persons
are moving into his neighborhood. The constitutionality of
these provisions has consistently been upheld against First
Amendment attack. United States v. Hunter, 459 F.2d 205
(4th Cir. 1972) cert. den. 409 U.S. 934 (1972). (§3604(c)
constitutional as applied to newspaper publisher);
Holmgren v. Little Village Community Reporter, 342 F. Supp.
510 (N.D. Ill. 1971) (same); United States v. Bob Lawrence
Realty, Inc., 474 F.2d 115 (5th Cir. 1973); cert. den.

414 U.S. 826 (1973) ($3604(e) constitutional despite defense
that statements were true.) As the Court observed in Bob

Lawrence, supra.,

"any informational value in a statement
violative of $3604(c) is clearly outweighed
by the government's overriding interest in

preventing blockbusting." 474 F.2d at 123. */

Bigelow v. Virginia, 421 U.S. 809 (1975) and Virginia

State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc.,

The

*/ In Bob Lawrence, the Court defined blockbusting, which it condemned as a "pernicious example of a capitalistic ethic gone astray," 474 F.2d at 119, as the practice of initiating and spreading rumors that "legrocs are moving in and that the market values of properties will fall," with residence in the area becoming undesirable and unsafe for non-Negroes. complaint in this action alleges that these defendants' practices have the same resegregative effect, with the qualification that they go further and cause their members actually to assign a lower value to homes in integrated areas, whereas blockbusters merely talk about such reduced value.

affirm, rather than undermine, the validity of the foregoing principles. In Bigelow, the Court reversed a conviction

for violation of a Virginia statute which made it unlawful

to circulate any publication which encourages or promotes an abortion. The Court rejected the idea that commercial

speech had no First Amendment protection, but took pains

not to appear to be overruling a number of decisions in which particular commercial speech had been enjoined as unlawful conduct, and specifically mentioned, by name, two Fair

Housing Act cases in which First Amendment defenses had been rejected, United States v. Bob Lawrence Realty, Inc., supra. and United States v. Hunter, supra. The Court said:

We have no occasion, therefore, to
comment on decisions of lower courts
concerning regulation of advertising in
readily distinguishable fact situations.
Wholly apart from the respective rationales
that may have been developed by the courts
in these cases, their results are not incon-
sistent with our holding here. In these

cases there usually existed a clear relationship
between the advertising in question and an
activity that the government was legitimately
regulating.

Bigelow, supra 421 U.S. at 825 fn. 10

In Virginia Board of Pharmacy, the Court struck down

a state ban on the advertisement of prescription drug prices. In so doing, the Court held that commercial speech is protected to some degree by the First Amendment. Again, however, the

Court was careful to limit its holding:

In concluding that commercial speech,
like other varieties, is protected, we of
course do not hold that it can never be
regulated in any way. Some forms of commercial
speech regulation are surely permissible.
mention a few only to make clear that they

We

are not before us and therefore are not fore-
closed by this case.

Virginia Board of Pharmacy, supra. 44 U.S.L.W.
at 4692.

In stating what was not foreclosed by its holding,

the Court said:

Also, there is no claim that the
transactions proposed in the forbidden
advertisements are themselves illegal
in any way.
Cf. Pittsburgh Press Co. v.
Pittsburgh Commission on Human Relations,
Supra; United States v. Hunter, 459 F.2d
205 (CA 4), cert denied 409 U.S. 934
(1972).

Id. 44 U.S.L.W. at 4693

In short, the Court has held that the fact that expression appears in a commercial context does not automatically strip it of First Amendment protection. However, it has recognized the continued viability of the cases sustaining regulation of speech which is part of unlawful conduct, i.e. those cases where "there usually existed a clear relationship between the advertising in question and an activity that the government was legitimately regulating." Bigelow, supra. 421 U.S. at 825. The Court also recognized the propriety of a prohibition of commercial speech which proposes illegal

transactions, Virginia Board of Pharmacy, supra.

Defendant does not contend, nor could it, that the

Supreme Court has overruled the earlier decisions sustaining the constitutionality of provisions of the Fair Housing Act. Instead, the defendant attempts to distinguish those decisions from this case by the following argument:

The instant case is disguishable from

: the so-called illegal transaction exemption.
In both the newspaper advertisement of 'white
home housing and in the blockbusting case,
(i) the purpose and intent of the speaker
was obviously discriminatory and (ii) he knew
or should have known it would have that effect.
See, e.g. United States v. Cob Lawrence Realty,
Inc. [citation omitted]. Here there is no such
intent and purpose allcged, nor is it claimed
the Society knew or should have known its standards
would have the effect of causing discrimination.

United

This distinction is wrong for several reasons. States v. Hunter supra., cannot be distinguished as defendant contends, for there was no evidence of discriminatory intent on the defendant's part. While a property owner who places a discriminatory advertisement obviously intends to discriminate, it was the newspaper publisher the sole defendant in Hunter

who was held to have engaged in unlawful conduct, despite the district

court's finding, not found to be clearly erroneous, that,

Defendant is not a racist and does not advocate

or wish to countenance racial discrimination.

United States v. Hunter,

529, 535, (D. Md. 1972).

324 F. Supp.

In addition, the distinction is meaningless since, as we

discuss more fully at pp. 47

47 supra, it is not necessary to plead, in so many words, that a defendant intended to discriminate or that he knew he was discriminating. Finally, this purported distinction finds support nowhere except in defendant's

memorandum, and is conspicuously absent from any of the decisions to which the Society refers this Court. The Court in Virginia Board of Pharmacy did not make any such distinction; it merely said that expression which promotes an illegal transaction was one example of speech which may constitutionally be prohibited.

It may fairly be said that discriminatory appraisal

standards propose an illegal transaction, Virginia Board of Pharmacy, supra., when they require or encourage use of race as a factor in valuation or underwriting. Indeed the Complaint goes even further and alleges that an appraisal following these standards is itself part of illegal conduct, since it brings about the racially discriminatory denials of loans. Since there can be no question that the United States may legitimately regulate lending transactions, Laufman v. Oakley, supra., whatever "expression" is contained in an appraisal or in the defendant's alleged standards has a "clear relationship" to "an activity that the government was legitimately regulating," and may constitutionally be regulated. Birelos v. Virginia, supra. 421 U.S. at 825, fn. 10.