A federal antitrust lawsuit, brought by a company that formerly offered low-cost real estate brokerage services, targets two Michigan multiple listing services that last year were hit with separate and unrelated antitrust complaints filed by the U.S. Federal Trade Commission.
Home Quarters Real Estate Group LLC charges in its complaint, filed in U.S. District Court for the Eastern District of Michigan, that MiRealSource and Realcomp II MLSs sought to block the company’s access to MLS data “as part of their efforts to destroy (its) innovative business model and to thwart competition,” and that the MLSs’ actions ultimately drove the company out of business. Home Quarters is seeking damages in excess of $10 million.
Home Quarters provided a service that allowed consumers to sign up online as clients to access the company’s private, password-protected Web site to search a range of MLS-supplied information on for-sale homes, according to the lawsuit.
The company offered a cash rebate of up to 1 percent of the sale price to buyers who used the company’s services, and for sellers the company typically offered to list a property for a total commission of 4.5 percent of the home’s selling price, which is lower than the typical commission rate.
The FTC in October 2006 filed antitrust lawsuits against MiRealSource and Realcomp II over MLS restrictions on property listings, based on the type of contracts that consumers enter into with MLS participants. The FTC in February announced a formal settlement with MiRealSource, and earlier settled similar allegations against five other MLSs.
Realcomp II remains the lone holdout in the series of related FTC actions announced in October. A trial date has been set for June 19 for that lawsuit, said Karen S. Kage, Realcomp’s CEO, and the trial is expected to last two weeks.
A chief administrative law judge on May 21 denied a motion by Realcomp for a judgment on the case — the judge ruled that “there are numerous areas of factual dispute, which need to be addressed at trial.”
Realcomp has two months to respond to the Home Quarters complaint, filed May 14, Kage said, and she had no comment about that case. A representative for MiRealSource was not immediately available for comment Wednesday, and lawyers for Home Quarters had no comment about the case.
Home Quarters in November 2003 settled another antitrust lawsuit against MiRealSource after that MLS cut off the company’s access to a property listings data feed for alleged MLS rule violations.
Realcomp II, owned by seven shareholder Realtor boards and associations, is Michigan’s largest Realtor-owned MLS with about 14,500 members, and MiRealSource is the state’s largest broker-owned MLS with about 8,000 participants.
Home Quarters became a member of MiRealSource MLS in April 2002 and joined Realcomp MLS in October 2001, according to the complaint.
In May 2003, Home Quarters “received notification from MiRealSource that MiRealSource was terminating (Home Quarters’) rights to access MiRealSource MLS compilation data, claiming that (its) use of that data was in violation of the rules and regulations,” the complaint alleges.
A few days later, the complaint charges, “Realcomp terminated (Home Quarters’) right to access Realcomp MLS compilation data, claiming that (its) use of that data was in violation of the Realcomp rules and regulations. The lawsuit also states that Realcomp “partially restored … access in some regards,” though that MLS “persisted in asserting its right to deny (Home Quarters) access based on purported rule violations.”
The lawsuit also alleges that both MLSs shut off Home Quarters’ MLS access within a 24-hour period around May 20. Home Quarters “subsequently received restored access in August 2003 but, by that time, (its) business was in disarray. Home Quarters was forced to refund a substantial amount of fees collected prior to (the MLSs’) shutting off of their respective MLS services and also to lay off employees,” the company alleges in its complaint.
The MLSs then allegedly “enacted new rules that prohibited Home Quarters’ business model and thus would have required that Home Quarters comport with the ‘traditional’ business model dictated by defendants,” the lawsuit states, and also alleges that Home Quarters “was in compliance with the respective rules and regulations at issue of MiRealSource and Realcomp” at all times relevant to its complaint.
Home Quarters also charged that it had over 6,000 registered clients during its short-lived operating history in the Southeastern Michigan and Macomb County, Mich., areas.
Home Quarters alleges that both MLSs violated state and federal antitrust laws and interfered with the company’s contractual relationships with clients.