Realtor groups score win in antitrust suit

A local Realtor association in Kentucky is not violating federal antitrust law by requiring Realtor membership as a condition to participation in its local multiple listing service, the U.S. District Court for the Eastern District of Kentucky has ruled in a case brought against the association by a broker member.

Participants in the Northern Kentucky MLS — which is a wholly owned subsidiary of the Northern Kentucky Realtor Association — are required to be members of the National Association of Realtors, and members of this national association are also members of state and local Realtor associations.

U.S. District Court Judge William O. Bertelsman ruled that the plaintiff Sherry Edwards, a real estate broker with Buyer’s Corner Realty, failed to explain how she had been harmed by this tying of Realtor membership with MLS participation. While Edwards may not have wanted to purchase a membership in the Realtor association to participate in the local MLS, which contains information about properties listed for sale, the court ruled that Edwards and her company “must show that they have suffered an injury caused by some anticompetitive harm or effect flowing from that requirement. This they have not done.”

David Barry, a San Francisco lawyer known for his work in filing an array of antitrust lawsuits against Realtor groups across the country over the past few decades, is representing Edwards in the case and has also filed similar lawsuits in other states. One of those cases, Hekker vs. Sarasota Association of Realtors, was dismissed in July because of health problems suffered by Lois Hekker, who filed the complaint. A federal judge dismissed a separate case, Reifert v. South Central Wisconsin MLS, in August and that case is under appeal.

Another similar lawsuit, Prencipe v. Spokane Board of Realtors, is pending in federal district court in Spokane, Wash.

At issue in these cases is whether Realtor associations should have the right to mandate Realtor association membership as a condition to participate in multiple listing services that real estate professionals use to enter and track property listings information in their market areas, or whether such requirements constitute antitrust violations.

Barry said today that he plans to appeal the Kentucky ruling. The opinion of the 7th Circuit Court of Appeals relating on the Wisconsin case will likely “carry a great deal of influence” in the Kentucky case, he said. “It is going to have a huge bearing.” The Kentucky district court, for example, cited the opinion in the Wisconsin case in its ruling.

Ralph Holmen, associate general counsel for the National Association of Realtors, said today, “We’re obviously very pleased with the decision. We think the judge got it exactly right. It is consistent with the Wisconsin case decided a couple of months ago.”

The National Association of Realtors provided financial support for the legal battle. Sidley Austin Brown & Wood LLP, the same law firm that the National Association of Realtors is using to defend itself against an antitrust lawsuit brought by the U.S. Department of Justice, is representing local Realtor associations in the Wisconsin and Kentucky cases, Holmen said. The national Realtor group, he said, is “cautiously optimistic” that the appellate court will affirm the earlier ruling in the Wisconsin case.

The Kentucky court found that the cost of joining a Realtor association did not prevent Edwards from joining another, non-Realtor real estate association. The complaint had cited an earlier case, Thompson vs. Metropolitan Multi-List Inc. — which found that an Atlanta-area tying arrangement was illegal because there was competition between two real estate groups for members in that market — though the Kentucky court ruled that the Thompson case had different circumstances.

“Here, no competing association has come forward to complain that it has lost members on account of the tie at issue,” the court found, adding that no other real estate professionals have come forward alleging that they would have joined a competing real estate association if it weren’t for the Northern Kentucky MLS’s requirement to be a member of a Realtor association.

“Therefore, because (Edwards and Buyer’s Corner Realty) have shown no antitrust injury as a matter of law, they lack standing to bring the tying claim,” according to the ruling.

Barry said, “My reaction to that is, ‘What are you talking about?'” Edwards suffered, he said, because “she is forced to subsidize an organization that is totally contrary to her beliefs.”

The finding in the Kentucky case that there was no “antitrust injury” suffered goes beyond the earlier ruling in Wisconsin, Holmen said.

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