RealComp, Strike two

You'll recall that earlier this month a private antitrust lawsuit was filed against RealComp in Michigan. Strike one.

In my most recent update on the Federal Trade Commission's case against RealComp, I noted that the MLS had filed a motion to dismiss. The Administrative Law Judge, in a May 21 ruling posted earlier today on the Commission's website, denied RealComp's motion.

Construing RealComp's motion as one for summary decision, the ALJ concluded that "it is abundantly clear that there are numerous genuine issues of material fact in dispute . . . [thus RealComp] has not demonstrated it is entitled to judment as a matter of law." Elaborating, the ALJ explained that "[t]he following are but a few of the relevant factual issues questions [sic] that must be resolved":

1. Whether participation in Realcomp is a service that is necessary for the provision of effective residential real estate brokerage services to sellers and buyers of real property in the Realcomp service area.

2. Whether [Realcomp] can hinder or exclude competitors in the market for real estate brokerage within its service area.

3. Whether Exclusive Agency brokers are able to continue to do business selling residential real estate in the Realcomp Service Area.

4. Whether Realcomp's Website Policy prevents information from being transmitted to various public real estate websites.

5. Whether the Website Policy and the Search Function Policy restrain competition in the provision of residential real estate brokerage services by discriminating in favor of Exclusive Right to Sell listing contracts and against "limited service" contracts.

In other words, Strike two.

RealComp's trial is scheduled to begin in June...

The Government's Concerns/Objectives in U.S.A. v. NAR

Front and center in the United States’ federal antitrust action against the National Association of Realtors (“NAR”) are NAR's Internet Listing Display (“ILD”) Policy and a revised NAR MLS membership policy (together referred to as the Modified VOW Policy in the government's Amended Complaint). The government is also challenging NAR’s initial VOW Policy, which was rescinded on August 31, 2005, but had been adopted by approximately 200 NAR-affiliated MLSs across the country at the time the lawsuit was filed here in Chicago.

Here are the government’s main concerns relating to the ILD Policy and the revised membership policy, as set forth in its Amended Complaint (with some minor modifications by me):

1. A blanket opt-out provision allows brokers to direct that their clients' listings not be displayed on any competitor's Internet site. When exercised, this provision prevents a broker from providing over the Internet the same MLS information that brick-and-mortar brokers can provide in their offices. Also, NAR's ILD specifically exempts its own "Official Site," Realtor.com, from the blanket opt out that applies to all Internet sites operated by brokers.

2. MLS membership and access to listings is denied to brokers operating referral services. This policy effectively forbids Internet-based brokers from referring their customers to other brokers for a fee.

3. MLSs are permitted to downgrade the quality of the data feed they provide brokers, effectively restraining brokers from providing innovative, Internet-based features to enhance the service they offer their customers.

4. MLSs are permitted to interfere with efficient "cobranding" relationships between brokers and entities that refer potential customers to the broker.

In its Amended Complaint, the government seeks, among other relief, the following (presumably to address allegedly anticompetitive elements of the ILD Policy and the revised MLS membership policy, as well as the initial VOW Policy):

• Restrain NAR from requiring or permitting its member boards or the MLSs with which they are affiliated to adopt rules implementing the opt-out provisions.
  
• Restrain NAR from requiring or permitting its member boards or the MLSs with which they are affiliated to adopt rules implementing the anti-referral provision contained in the initial VOW Policy or an MLS membership restriction that denies MLS access to operators of Internet-based referral services.
• Restrain NAR from requiring or permitting its member boards or the MLSs with which they are affiliated to adopt rules that restrict — or condition MLS access or MLS participation rights on — the method by which a broker interacts with his or her customers, competitor brokers, or other persons or entities.
  

As you probably know, last year the Court denied NAR’s motion to dismiss the Amended Complaint, and the parties are continuing with fact and expert discovery.

Not so fast, New Hampshire Real Estate Commission

I recently wrote about a motion for summary judgment filed by the defendants in the ZeroBrokerFees.com ("ZBF") federal lawsuit pending in New Hampshire. The motion referred to a April 19, 2007 New Hampshire Real Estate Commission meeting at which the Commission apparently indicated that ZBF was not subject to the New Hampshire Real Estate Practice Act. I (and perhaps the Commission and others) figured that was a victory for plaintiff, case closed. Not so fast.

An attorney with the Institute for Justice ("IJ"), which is representing ZBF in this matter (and represented ForSaleByOwner.com in its successful 2004 action against the California Real Estate Commissioner on a very similar free speech issue), recently shared a April 24 IJ press release with me that states that because the Commission's action is apparently not binding, and only applicable to ZBF, plaintiff and IJ intend to push forward with the case against the Commission officials. Here's an excerpt from the press release:

“The Real Estate Commission could have exempted ZeroBrokerFees.com and other for-sale-by-owner websites from the law at any time, but instead it has fought tooth-and-nail to stifle online entrepreneurs,” said Valerie Bayham, an IJ staff attorney representing ZeroBrokerFees.com. “The Commission only budged once it was facing a federal lawsuit. Real estate websites and the consumers who use them need stronger protection than a temporary and limited exemption.”

IJ and ZeroBrokerFees.com will go forward with their legal challenge in order to secure a ruling from the courts—or a stronger decision from the Commission—that New Hampshire’s licensing scheme violates the First Amendment right to free speech and cannot apply to real estate websites.

“We are trying to protect our First Amendment rights along with the rights of anyone else who wants to advertise their home without seeking the government’s permission,” said Frank Mackay-Smith, co-founder of ZeroBrokerFees.com.

It sounds like ZBF is not ready to stand down, and has very competent counsel representing it in this important case. Stay tuned.

Update on Tennessee anti-rebate bill

As of this afternoon it is my understanding that Tennessee Governor Phil Bredesen has neither signed nor vetoed the bill passed by both bodies of the Tennessee legislature earlier this month that would prohibit TN real estate brokers from giving rebates to their customers.

After digging around on the TN Assembly website, and speaking with the Governor's Office and State Senator Black's office, I believe this is a copy of the bill passed by the legislature and awaiting the Governor's attention.

Much thanks to Valerie of Senator Black's office for making sense of the Assembly's website for me!

To be continued.

ZeroBrokerFees.com Victory in New Hampshire?

Apparently on the heals of an April 19, 2007 ruling by the New Hampshire Real Estate Commission that the New Hampshire Real Estate Practice Act “does not apply to" ZeroBrokerFees.com, the defendants in the New Hampshire ZeroBrokerFees litigation – officials of the New Hampshire Real Estate Commission and the state Attorney General – recently filed a motion for summary judgment against plaintiff.

To summarize, the defendants again assert that the New Hampshire Real Estate Practice Act is constitutional on its face and as applied to Plaintiff, and is not the proper subject of a First Amendment challenge. Alternatively, defendants’ assert that the statute should be analyzed under the (permissive) commercial speech standard of review. Defendants maintain that the statute satisfies each element of that standard.

Defendants note the Commission’s finding regarding the inapplicability of the statute to ZeroBrokerFees.com, and add that “the plain, reasonable and common sense reasoning of the REPA shows that Plaintiff, like a newspaper, is exempt from regulation . . . [and] Plaintiffs’ admitted activities demonstrate that it does not act for another to qualify itself as a broker.”

Minutes from the Commission's April 19 meeting were attached to the motion as an Exhibit. They appear to show (starting at the bottom of page 2) that a state attorney petitioned the Commission to rule on the applicability of the Real Estate Practices Act to ZeroBrokerFees.com. If these minutes are accurate, approved, and the whole story, the defendants would appear to be correct that that most, if not all, of plaintiff’s allegations are moot in light of the Commission’s apparent finding that ZeroBrokerFees.com is not subject to the Real Estate Practices Act. Sounds like a victory for plaintiff.

FTC v. RealComp update

It has been some time since I last posted on the status of the FTC’s administrative action against RealComp. If you are interested in the nitty gritty, the FTC's complaint can be viewed here. Essentially the FTC is challenging RealComp's practice of withholding exclusive agency listings (typically used by non-traditional brokers) from its upload to Realtor.com.

Here is an update on the case:

In late April 2007 RealComp filed a Motion for Summary Decision, arguing that the FTC had failed to state a claim upon which relief can be granted. The FTC has filed a response to the Motion, and the ALJ will presumably rule upon same before the trial.

On May 7, 2007 the parties submitted another joint status report. Interestingly, the Report discloses that “Realcomp’s Board of Governors voted last week to change Realcomp’s Search Function Policy . . . Pursuant to this change, the Realcomp MLS search screen will no longer have a default with regard to listing type. The parties will address the import of this change in their respective pretrial briefs.”

A recently issued scheduling order makes no mention of a ruling on the motion to dismiss, or on the trial date, which was previously set for June 19, 2007.

Some thoughts on the FTC/DOJ Report

After reading the FTC/DOJ Competition Report cover-to-cover, one thing seemed quite clear to me: this is not the last we will be hearing from these two agencies on the subject of competition in the real estate brokerage industry. Undoubtedly Recommendations 1 and 2 of the Report are, in part, shots across the bow of continuing and future troublemakers:

1. “The Agencies should continue to monitor the cooperative conduct of private associations of real estate brokers, and bring enforcement actions in appropriate circumstances. While cooperation among brokers through a multiple listing service can provide consumers with important efficiencies, cooperation used to adopt rules that hinder rivals can be anticompetitive and, as recent Agency actions indicate, may violate the antitrust laws.” (emphasis added)

2. “The Agencies should continue to provide state legislators and industry regulators with information concerning the competitive consequences of state legislation and regulations that threaten to or already do restrict competition and consumer choice in the real estate brokerage industry, and take enforcement action in appropriate circumstances.” (emphasis added)

Also, for innovative brokers that find themselves the target of agreements among traditional brokers or others to restrain competition, remember that would-be prosecutors need solid EVIDENCE of such conduct before they will act. For example, note the quasi-invitation for evidence on page 69 of the Report (“Limiting the Effects of Steering”): “The agencies have recently investigated allegations of boycotts by groups of brokers. In those investigations, however, the Agencies have not found evidence sufficient to establish an agreement jointly to steer clients away from or boycott a particular rival and have declined to bring an antitrust case.” (emphasis added). In other words, no evidence, no case.

Private antitrust action filed against RealComp II, Ltd. and MiRealSource

On Monday a federal antitrust lawsuit was filed by Home Quarters Real Estate Group, LLC against RealComp II, Ltd. and MiRealSource in Michigan federal court. As you know, the FTC recently settled antitrust charges against MiRealSource, and is presently litigating against RealComp, in connection with allegations that the associations refused to forward certain MLS listings to public websites such as realtor.com

Plaintiff's suit explains that it is seeking damages as a result of the defendants' "prior unlawful actions and efforts to prevent [plaintiff] from providing to the public an efficient and cost-effective way to buy and sell real estate in the Detroit metropolitan area. [Plaintiff] previously operated as a licensed real estate brokerage engaged in the practice of assisting consumers with the purchase and/or sale of residential properties. [Plaintiff] provided services as an innovative realty company that developed faster and more efficient ways to provide realty services to prospective homebuyers and sellers utilizing modern internet technology. [Plaintiff] provided its customers with the same realty services and same information provided by other realtors in the State of Michigan. However, [plaintiff] did so using a different and more efficient way of doing business that passed the resulting cost savings on to its customers."

As to the defendants, whose respective memberships allegedly "overlap in substantial part," "[p]articipation in each of these MLSs, and access to MLS data provided by them, has been crucial at all relevant times for any realtor, including [plaintiff] to be able to effectively compete in the Southeastern Michigan residential real estate market (Wayne, Oakland, Macomb, Washtenaw, and Livingston Counties)."

The complaint includes individual counts against each defendant alleging violations of Section 1 of the Sherman Act, violations of the Michigan Antitrust Reform Act, and tortious interference with plaintiff's contractual relationships. Plaintiff claims that the "[d]efendants previously terminated and/or threatened to terminate [plaintiff's] right to access their MLS data as part of their efforts to destroy HQ's innovative business model and to thwart competition. Moreover, in furtherance of Defendant's boycotts denying [plaintiff] essential MLS data for conducting searches for listed properties, MiRealSource refused to permit any of [plaintiff's] listings to be posted on its MLS, and Realcomp threatened to terminate [plaintiff's] access to its MLS. These actions, among others, resulted in the cessation of [plaintiff's] business and thereby caused substantial damages to [plaintiff], including but not limited to lost market share, lost revenues and lost profits." Plaintiff asks for actual damages in excess of $10 million against each defendant, and that such amounts be trebled pursuant to federal and state law.

The complaint plus two exhibits (consisting of the defendants' rulebooks) is in excess of fifty pages, and was filed in two parts (Part One and Part Two).

Summary of the Roommates.com decision

The United States Court of Appeals for the Ninth Circuit ruled yesterday in Fair Housing Council of San Fernando Valley, et al v. Roommate.com, LLC. Signaling the differing viewpoints on the issues presented, the three judge panel - Circuit Judges Reinhardt, Kozinski and Ikuta - issued three separate opinions in the case. Circuit Judge Kozinski wrote for the Court.

Roommate.com, LLC operates an online roommate matching website - www.roommates.com (“Roommate” or “Roommates.com”). As the court explained, “[t]his website helps individuals find roommates based on their descriptions of themselves and their roommate preferences. Roommates.com has approximately 150,000 active listings and receives about a million page views per day.” Two California-based housing councils (“Councils”) alleged that Roommate violates the Fair Housing Act by (1) posting its questionnaires on its website and requiring individuals who want to take advantage of its services to complete them; (2) posting and distributing by email its members’ profiles; and (3) posting the information its members provide on a “Additional Comments” form. Thus the allegations are somewhat similar to those made in the craigslist case filed last year in Illinois and presently on appeal to the Seventh Circuit.

At issue before the Ninth Circuit was whether and to what extent the Communications Decency Act (“CDA”), 47 U.S.C. § 230(c), immunizes Roommate’s actions. Section 230(c) provides that “[n]o provider . . . of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Because the Councils do not deny that Roommate is a provider of an interactive service, “the question is whether Roommate is “responsible, in whole or in part, for the creation or development of [the] information” set forth in each category, and thus ineligible for immunity. In other words, immunity is available if Roommate “merely publishes information provided by its members[,]” but Roommate “is not immune for publishing materials as to which it is an “information content provider” (defined as “any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet.”)

Questionnaires. The Court concluded that Roommate is ‘responsible’ for the questionnaire because “it created or developed the forms and answer choices. As a result, Roommate is a content provider of these questionnaires and does not qualify for CDA immunity for their publication.” The Court left it to the district court to determine if same violates the Fair Housing Act.

Profiles. As for the user profiles, the Court declined to apply the rationale in the Ninth Circuit’s prior decision in Carafano, where (i) a prankster provided information about someone else that (ii) was not solicited by the operator of the website. Instead, the Court noted that Roommate’s “search mechanism and email notifications mean that it is neither a passive pass-through of information provided by others nor merely a facilitator of expression by individuals. By categorizing, channeling and limiting the distribution of users’ profiles, Roommate provides an additional layer of information that it is “responsible” at least “in part” for creating or developing.” Concluding that CDA immunity was not available, the Court remanded for a determination of whether the profile allegations, if proven, violate the FHA.

Additional Comments. As for the third category identified by the Councils, the Court concluded that because Roommate is not “responsible, in whole or in part, for the creation or development of its users’ answers to the open-ended 'Additional Comments' form,” it is immune from liability for publishing these responses.

We’ll have to wait and see what this means for the craigslist appeal. Of course a rehearing before the panel or en banc consideration may be forthcoming. However, to the extent the Seventh Circuit is persuaded by yesterday’s ruling (note that the Seventh Circuit is not often persuaded by the Ninth Circuit as to anything), it would seem that a careful comparison of the Roommates and craigslist mechanisms would be critical in resolving the craigslist case. Regardless, given some of the language and examples used in the Ninth Circuit’s opinion, certain sites that have garnered much attention recently – www.ripoffreport.com and www.dontdatehimgirl.com – for publishing user critiques of bad business and dating experiences, respectively, should study the Ninth Circuit's opinion carefully.

Ninth Circuit's Roommates.com ruling

While I have not yet reviewed the opinion, the Ninth Circuit has issued its decision in the Roommates.com case. Eric Goldman's very thoughtful and timely discussion of the opinion can be found here.

The Court determined that Section 230 "does not immunize Roommate for all of the content on its website and in its email newsletters." The Court remanded the case to the district court to ascertain whether Roommates.com's "non-immune publication and distribution of information violates the [Fair Housing Act]." The Court also vacated the dismissal of certain state law claims, thereby permitting the district court to reconsider whether to exercise its supplemental jurisdiction in light of" today's ruling on the federal claims.

I believe this is the first Court of Appeals to rule on the intersection of Section 230 (part of the C0mmunications Decency Act passed by Congress in 1996) and the Fair Housing Act. It will be interesting to see what happens with the Craigslist case which is presently pending before the 7th Circuit. There have not been any oral arguments yet, and the latest docket entry suggests that briefing has been suspended.

Status hearing in U.S. v. National Association of Realtors

I attended a status hearing this morning in U.S. v. National Association of Realtors. Judge Filip was primarily concerned with establishing certain deadlines ahead of the bench trial in this case, which could come in the first half of 2008. While there wasn’t anything of substance raised by the attorneys, some interesting statistics came out.

The DOJ attorney noted that the government had served 108 subpoenas in this matter, and taken 20 depositions. It was not clear whether any of these occurred during the DOJ’s pre-filing investigation. He also noted that NAR had served six subpoenas and taken one deposition. Of course each party is free to ask a deponent questions during a deposition – these figures simply refer to the number of subpoenas/depositions commenced by each party.

In support of his request for adequate time to respond to the government’s expert witness report, NAR’s attorney reminded the court that thirty-six (36) markets were at issue, the government had recently submitted a one hundred (100) page, single-spaced expert witness report, and that fifty depositions remained to be taken. The court granted NAR until August 1, 2007 to respond to the government’s report.

The next status hearing before Judge Filip will be on July 16, 2007.

TAR's antics in Tennessee (H.B. 2095)

The recently released FTC/DOJ Report on Competition in the Real Estate Brokerage industry notes that the Tennessee Real Estate Commisison has for some time been in the process of reversing its anti-rebate rule. The Report notes, at footnote 251, that the final repeal of the rule would likely take effect this month. In fact, the DOJ letter discussed below suggests that final repeal has already been achieved.

Obviously wise to the Commission's intentions, the Tennessee Association of Realtors has apparently been pressing the state legislature to counter the effect of a repeal by essentially codifying the rule in a state statute (Amendment 1 to House Bill 2095). Yesterday the Justice Department faxed a letter to the Speaker of the TN House of Representatives, emphasizing the anticompetitiveness of prohibiting rebates to consumers. DOJ's press release notes that passage would "deny Tennesseans the opportunity of receiving cash rebates from real estate brokers when they buy and sell their homes . . . [thereby] imped[ing] real estate brokers from competing on price and force Tennesseans to pay more in real estate commissions."

CommercialAppeal.com reports that TAR's lobbying efforts have paid off. Last night the Tennessee legislature apparently passed HB 2095 (including Amendment 1), which is now headed for the Governor's desk.

I don't know the Governor's intentions. But price competition may be about to take a hit in Tennessee, and I'll be not a single member of the Tennessee legislature that voted for this amendment could point to a single piece of evidence that rebates harm buyers, sellers, or, for that matter, brokers. Here's the best rationale a TAR official could offer: "Unfortunately rebates, in too many cases, take the form of cash incentives that could be used to lure consumers into risky real estate transactions. And in some cases, you could see a rebate used as part of a down payment, which could amount to mortgage fraud," said J.A. Bucy, director of governmental relations for the Tennessee Association of Realtors." (emphasis added).

ZeroBrokerFees.com lawsuit in New Hampshire

Concerned about the potential implications of a New Hampshire law compelling licensure, plaintiff Skynet Corporation, the operator of ZeroBrokerFees.com, filed a three-count federal lawsuit last year in New Hampshire against New Hampshire Real Estate Commission officials, asking the court to declare certain provisions of the New Hampshire Real Estate Practice Act unconstitutional restrictions on plaintiff’s rights to free speech.

ZeroBrokerFees.com apparently only displays properties for sale on its website, nothing more, and has asked the court to declare the relevant provisions - which prohibit plaintiff from "listing and advertising New Hampshire properties for sale on Internet websites and/or in print" - in contravention of the U.S. Constitution. Plaintiff also seeks an order prohibiting defendants from "enforcing New Hampshire's real estate licensing laws, policies, and regulations in a manner that impairs [plaintiff's] ability to disseminate information and to operate its business and from imposing fines or criminal penalties, or otherwise subjecting [plaintiffs] to harassment."

In March 2007, the Magistrate Judge assigned to the case denied the defendants’ motion to dismiss the suit, which was based upon a variety of purported procedural deficiencies.

Similar to the regulation at issue in the ForSaleByOwner.com litigation in California a few years ago (wherein the court ultimately ruled in favor of the website), the New Hampshire law allegedly requires any entity that charges a fee to disseminate information about properties being offered for sale to be licensed in New Hampshire. As did the California statute, the New Hampshire law provides an express exception for "newspaper[s] and other publication[s] of general circulation."

The court’s decision is not a substantive ruling on plaintiff’s claims. Instead it signals that the plaintiff may proceed with its case before the court. Shortly after the court's ruling, the commission officials answered the plaintiff's complaint. Their position, in part, seems to be that the subject provision is constitutional on its face and as applied, but that "it is likely that the Act does not apply to the Plaintiff."

The bench trial in this case, espected to last no more than five days, is scheduled to commence on November 6, 2007 (subject to rulings on any dispositive motions filed on or before July 16, 2007). In their revised discovery plan, the parties state that "settlement is unlikely, although not inconceivable." Presently the parties are conducting pre-trial discovery.

FTC/DOJ Competition Report

The Federal Trade Commission and the Department of Justice have issued a joint report entitled "Competition in the Real Estate Brokerage Industry." The agencies stated objective in preparing the report is “to inform consumers and others involved in the industry about important competition issues involving residential real estate, including the impact of the Internet, the competitive structure of the real estate brokerage industry, and obstacles to a more competitive environment.”

The report advises that competition “has been hindered as a result of actions taken by some real estate brokers acting through multiple listing services and the National Association of Realtors, state legislatures, and state real estate commissions.” It also notes that consumers would likely benefit from additional knowledge about the range of options available in brokerage services and fees.

The report offers the following recommendations to encourage competition and protect real estate consumers:

• The FTC and the Department should continue to monitor the cooperative conduct of private associations of real estate brokers and bring enforcement actions in appropriate circumstances. While cooperation among brokers through a multiple listing service can provide consumers with important efficiencies, cooperation used to adopt rules that hinder rivals can be anticompetitive and, as recent agency actions indicate, may violate the antitrust laws.

• The FTC and the Department should continue to provide state legislators and industry regulators with information concerning the competitive consequences of state legislation and regulations that threaten to or already do restrict competition and consumer choice in the real estate brokerage industry, and take enforcement action in appropriate circumstances.

• State legislators and industry regulators should consider repealing existing laws, rules and regulations, such as minimum-service and anti-rebate provisions, that limit choice and reduce the ability of new brokerage models (e.g., fee-for-service brokers, discount full-service brokers, virtual office Web site brokers, and broker referral networks) to compete and that do not appear to provide any consumer benefits that would justify such restrictions. They should also avoid enacting such laws, rules and regulations in the future.

• The FTC, Department, and industry regulators should promote consumer understanding of marketplace options. Some consumers may not be aware of the range of alternatives available to them when hiring a real estate broker, including the types of business models available and the negotiability of fees, for both home buyers and sellers, or may not understand the duties owed by their broker. Competition in the real estate brokerage industry would likely be enhanced if consumers had better access to such information

• The FTC, Department, and industry regulators should assess the feasibility of an empirical study of the real estate brokerage industry. Transaction-level data on commission rates and fees are not publicly available, but broad national aggregate data suggest that commission rates and fees move in tandem with housing prices. Just as a 1983 FTC study provided valuable information about how real estate brokers competed in the late 1970s and early 1980s, a new study examining how transaction-level commission rates and fees vary based on such factors as market conditions, housing prices, and regulation would provide a better understanding of the current state of competition in the real estate brokerage industry.

60 MINUTES profile

A reliable source tells me that this Sunday's (May 13) episode of 60 Minutes will feature a long-awaited piece on the state of the real estate brokerage industry. I suppose some breaking news could bump it, and the 60 Minutes website, as of today, has not been updated to preview this Sunday's show. However, I think there's a good chance the piece will finally air on Sunday.

Update on Idaho Class Actions

As you may know, before this blog kicked off, four separate class action lawsuits were filed in federal court in Idaho (originally the four were joined together in a single action filed in 2004) against four separate real estate brokerages – Aspen Realty, Inc., Holland Realty, Inc., Sel-Equity, Co., and Park Pointe Realty, Inc., alleging tying arrangements prohibited by the Sherman Act. The brokerages were accused of charging commissions based upon the price of undeveloped land plus the anticipated cost of a home to be built thereon, instead of a commission simply based upon the cost of the undeveloped land. While the plaintiffs apparently do not allege any collusion amongst the various defendants in these four suits, they allege that the sale of undeveloped land was contingent upon this arrangement. The current complaint pending against Aspen can be viewed here.

Last summer Judge Winmill granted class certification in each case, meaning that certain home buyers may be entitled to damages incurred as a result of the allegedly illegal commissions charged. Of course the plaintiffs will first have to prove their claims before the Court.

The Court originally certified the classes last June, but modified them same several weeks ago after receiving various motions from the defendants. The class presently consists of “[a]ll persons who: (1) bought an undeveloped lot in a subdivision in either Ada, Boise, Canyon, Gem or Owyhee county, Idaho between August 18, 2001 and February 28, 2006 in which Defendant has or had the exclusive right to market or sell the subdivision lots on behalf of the developer; (2) were required to build a house on the lot in order to buy the lot; and (3) were required to pay Defendant a commission based on the cost of the lot plus the actual or estimated cost of the house in order to buy the lot.”

Rockford litigation update

Last year I wrote a post about an antitrust lawsuit involving a number of real estate players in Rockford, Illinois. Since plaintiff filed his complaint, the various defendants have responded with motions to dismiss, motions for a more definite statement, Answers and Motions to Compel Arbitration/Stay Litigation. Presently Judge Bucklo estimates that her rulings will be in the mail around July 6, 2007.

In the "Report of Parties’ Planning Meeting" filed with the Court on March 27, 2007, the parties collectively estimated that they will need to take approximately seventy (70) depositions, and that the case would be ready for trial in March 2010, taking approximately thirty (30) days to complete.

I have to think that this case will settle, but you never know. While various matters will likely demand her attention beforehand, the Court has set the next status date for March 28, 2008.

Civil action against Kentucky Real Estate Commissioners

Here is a brief overview of the litigation previously reported upon in the Louisville press, and presently pending in the Western District of Kentucky (3:06CV451).

Last year six plaintiffs filed a forty-page complaint against the Executive Director of the Kentucky Real Estate Commission (“KREC”), and five KREC commissioners, all in their official capacities, challenging KREC’s “unconstitutional prohibition against cooperation between real estate brokers licensed in Kentucky and brokers licensed by other states in the interstate marketing and sale of Kentucky commercial property.” Among other things, the plaintiffs have asked the court to enjoin the defendants from (i) enforcing “the KREC’s unconstitutional turf state policy” and “their ban on cooperation between Kentucky brokers and out-of-state brokers in the interstate marketing and sale of Kentucky commercial property” and (ii) “regulating the amount or allocation of brokerage fees associated with such cooperative brokerage services.”

In response the Attorney General of Kentucky, on behalf of the defendants, asked the court to abstain from deciding the case, and asserted that the statute in question is not facially discriminatory and does not have a discriminatory purpose or effect, that there is no less restrictive alternative to satisfy Kentucky’s “legitimate local purposes,” and that the burdens placed on interstate commerce by the statute are not clearly excessive relative to the “local benefits.”

Judge Simpson is presently considering cross motions for summary judgment, which he could rule upon at any time.