The Supreme Court of Texas upheld a law that requires someone be licensed before they are employed or seeking employment as a public insurance adjuster, according to an opinion delivered last week.

According to the opinion, the law also exempts anyone to work as a public insurance adjuster or advertise public adjuster services, if they work as a contractor or may work as a contractor for any property the services involve.

Stonewater Roofing, LTD. Co., a professional contractor that provides roofing services to residential and commercial customers, filed a collateral declaratory judgment suit against the Texas Department of Insurance (TDI) and its commissioner to invalidate both the advertising and contractor restrictions.

The company alleged in the claim that the restrictions infringed on his speech protected by the First Amendment and are void for vagueness under the Fourteenth Amendment’s due process clause.

Stonewater filed their suit after “a dissatisfied commercial customer” sued Stonewater for violating the law, the opinion says.

The opinion says Stonewater runs a website advertising the company as an “insurance specialist” and “the leader in insurance claim approval.”

TDI filed a dismissal motion arguing that Stonewater’s claims had no basis because the law regulates professional conduct, which is not protected by the First Amendment, and challenged the roofer’s “facial vagueness” regarding the Fourteenth Amendment.

A trial court sided with TDI but a court of appeals reversed and remanded the decision. It claimed the regulations trigger the First Amendment because the business of public insurance adjusting necessarily and inextricably involves speech. It also upheld Stonewater’s Fourteenth Amendment claims because it said the TDI dismissal motion failed to fully develop its argument.

The Supreme Court then accepted a petition by TDI to review and address questions in the case.

“…government has a much freer hand in regulating commerce and conduct, such laws generally do not offend the First Amendment and are often upheld under rational-basis review,” the opinion says.

It adds that the law pertains to status or capacity, neither of which is speech.

“There is no question that if the State may permissibly require a license to engage in the profession, it may permissibly prohibit false commercial speech about the same,” the opinion says.

Restrictions on being a contractor of a property, while also handling an insurance claim, also do not conflict with constitutional rights, the opinion says.

“Section 4102.163(a) compels an economic choice about which line of business to pursue; it does not purport to dictate, proscribe, or otherwise limit expression,” the opinion says.

Regarding the Fourteenth Amendment, the opinion also found that Stonewater failed to provide cognizable claims in the suit.

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