A lawsuit filed this week in California Superior Court alleges that two San Diego-area lawyers “sold out” members of a multiple listing service price-fixing lawsuit.
Barry & Associates, a San Francisco law firm known for real estate-related antitrust litigation against Realtor associations and MLSs, launched the lawsuit on behalf of Arleen Freeman and James Alexander, real estate professionals who were members of Sandicor, a regional MLS formed by San Diego-area Realtor associations.
The latest lawsuit, which seeks $60 million in damages, alleges attorneys Daniel J. Mogin and Alexander M. Schack “secretly filed a class-action suit” in July 2004 – Hemphill v. San Diego Association of Realtors – that was adverse to a price-fixing litigation initiated by Freeman and Alexander, and in September 2004 “secretly settled” the case.
Mogin could not be reached for comment today.
Schack said that the allegations in the lawsuit “are untrue” and that there was “nothing secret” about the settlement process that he engaged in.
“Sometimes in class-actions, when you get to the settlement stage, people have a divergence of views about settlements,” he said. There will be a hearing on Jan. 28 in federal court in San Diego County to consider the fairness of the settlement, he said. “What the court does is it conducts a fairness hearing and class members are allowed to voice their opinions.”
Schack said the settlement package that he put together with Mogin has a total value of about $6 million. Schack said he has worked on antitrust cases for over 15 years and class-action cases for over a decade. Barry, he said, “attempted to get a class certified four separate times and was denied each time. “That speaks for itself,” he said.
Freeman, represented by David Barry, in 1997 filed a class-action lawsuit in California Supreme Court in San Diego County against Sandicor and five Realtor associations. In March 2003, the Ninth Circuit Court of Appeals found that there was illegal price-fixing for MLS services in San Diego County.
According to the lawsuit filed this week, Mogin and Schack associated with the Barry & Associates’ legal team in mid-2003 to assist with the ongoing legal work relating to the Freeman case. The lawsuit alleges that Mogin and Schack settled their lawsuit for about $168 per user of the MLS service, which is about 3 percent of the amount originally sought in the Freeman vs. San Diego Association of Realtors lawsuit.
Mogin and Schack allegedly recruited Alan Hemphill to act as a class representative after the court in December 2003 found that Freeman and Alexander were not eligible as representatives for the class, according to the Barry & Associates lawsuit. Later, in May 2004, Mogin and Schack revealed a settlement plan “that was wholly adverse to the settlement plan” that was favored by Freeman and Alexander, the lawsuit also charges.
“The likely judgment for each member of the class (sought in the Freeman case) was $5,884, amounting to over $65 million for the class,” the lawsuit alleges.
The suit further alleges that that the two lawyers “abandoned plaintiffs, accepted the adverse representation of Hemphill, and sold out the victim class so that (they) could receive an attorney’s fee of $1.125 million as part of the Hemphill settlement,” and the lawsuit seeks a declaration that the lawyers “committed perjury,” “obstruction of justice,” and “violated duties of fidelity and confidentiality” relating to their representation of Hemphill.
Because of “procedural maneuvers” conducted by Mogin and Schack, Freeman and Alexander concluded that it was “futile to oppose the Hemphill settlement,” the lawsuit charges.
A federal court in January 2004, issued an injunction against price-fixing by Sandicor and the five Realtor associations that own the MLS – the San Diego Association of Realtors, North County Association of Realtors, Pacific Southwest Association of Realtors, East San Diego Association of Realtors and the Coronado Association of Realtors.
The injunction was filed Jan. 21, 2004, in the federal district court for the Southern District of California in San Diego.
The associations had argued that their MLS pricing structure was designed to avoid the possible closure of the smaller less-efficient associations at the time the regional MLS was established. The court rejected that argument as a defense against the price-fixing allegations.
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