Friday, August 31, 2007

Significant rulings in Hackman v. Dickerson Realtors, et al

It has been some time since I last wrote about Greg Hackman's private antitrust lawsuit filed against multiple real estate players in Rockford, Illinois. But earlier today Judge Bucklo issued a 50 page opinion in the case, ruling on a number of motions that have been pending before her. Here's a summary of her decision, which is more or less broken down by the relevant defendants.

Century 21. Apparently plaintiffs have settled with Century 21 Country North, Inc. and dismissed it from the case.

Diane Parvin. Parvin asked the court to compel arbitration of plaintiffs' tortious interference claim, in light of an agreement Hackman made as a member of the Rockford Association of Realtors ("RAAR"). Plaintiffs had alleged that in August 2006 Parvin falsely told Hackman that a property was not available for his client to see, preventing Hackman from submitting an offer.

After analyzing the Federal Arbitration Act, Association bylaws, the Code of Ethics and Arbitration Manual, and determining whether Hackman's beef constituted a contract dispute, the court ruled that "[n]o matter how Hackman defines his own claim, disputes between realtors concerning violations of the MLS rules are 'contractual disputes' under Article XVII [of the RAAR bylaws]. Therefore, they are subject to arbitration."

However, the court ruled that Hackman's separate allegations that Parvin "interfered with his valid business relationships with potential clients by making derogatory statements about Hackman is . . . a tort claim . . . [and] is not subject to arbitration." But see my discussion below with respect to the inadequacy of the tort claim against Parvin. Finally, the court denied Parvin's request to suspend the entire judicial proceeding while the MLS rule matter is being arbitrated.

Rockford Association of Realtors/Illinois Association of Realtors. Dismissing Sherman Act and Illinois Antitrust Act claims against RAAR, the court relied in part on the U.S. Supreme Court's recent ruling in Bell Atlantic Corp v. Twombly, noting that "an allegation of encouragement is not a sufficient allegation of fact that raises Hackman's right to relief above a speculative level." Also, the court - citing lack of jurisdiction - dismissed requests by Hackman to enjoin RAAR and IAR from conducting an ethics hearing against Hackman and to grant declaratory relief.

Prudential/Jessica Licary. The court also dismissed Hackman's state and federal antitrust claims against Prudential and Licary, again referring to Bell Atlantic:
In the antitrust context, the holding of Bell Atlantic requires that an antitrust plaintiff pleading the existence of a conspiracy or agreement to monopolize or restrain trade do more than conclusorily plead the existence of an agreement or conspiracy, but rather “a complaint with enough factual matter (taken as true) to suggest that an agreement was made.”
Like above, the court found Hackman's complaint insufficient here, noting that he "presents no evidence of an agreement other than evidence of parallel conduct." The court also dismissed a claim for what turned out to be "tortious interference with prospective economic advantage," noting the absence of any specific allegations of wrongful conduct by Prudential or Licary. Such tort-like claim against Parvin was also dismissed. However, a defamation per se claim against Prudential and Licary survived the court's ruling.

Melissa Smith/Lori Reavis/Ray Young. The court denied motions to dismiss the tortious interference with prospective economic advantage claims against these defendants, finding that Hackman's allegations against them did not require an allegation that a contract existed. The court added that Hackman has acknowledged that he did not intend to include Ray Young in his defamation claim, and denied Reavis' request that Hackman elaborate on the tort claim.

Young/Michael Dunn/Smith/Dickerson Realtors. Requests to disaggregate compound allegations were denied as to the antitrust claims, but granted as to the defamation and tortious interference counts. Thus Hackman will presumably be filing an amended complaint in the near future, perhaps not just to comply with this final part of the opinion, but to strengthen, if possible, his antitrust claims against various defendants so that they comply with Bell Atlantic.

WHAT DOES THIS OPINION TEACH US? First, as expected, Bell Atlantic has some serious teeth. For a Section 1 claim, if you don't have good, preferably direct, evidence of an agreement, and instead are simply relying on observed, parallel conduct, your claim is unlikely to survive a motion to dismiss. But note the court cited Bell Atlantic when considering Hackman's Section 2 claim and his defamation claim as well. Bell Atlantic means business, in the Section 1 arena and beyond.

Second, this opinion should remind all nontraditional brokers/agents out there that the antitrust laws are not your only potential weapons against objectionable practices. The court sustained several defamation claims and claims of tortious interference with prospective economic advantage. As Judge Bucklo explained in detail, the latter has the benefit of not requiring proof of a contract, and both claims, of course, do not require proof of a conspiracy. Each can be used, when appropriate, against unilateral conduct. And in the Hackman case, neither claim appears to be subject to arbitration.

I know it was issued just in the last few hours, and I've only read through it once, but I think that Judge Bucklo's opinion is a must read for any and all brokers/agents who may be contemplating legal action against "difficult" brokers/agents in their area. While bylaws will vary from association to association, and the common law will vary from state to state (here Judge Bucklo looked to Illinois law when considering plaintiffs' tort claims), the applicability of Bell Atlantic, and the potential utilization of tort claims against actionable, unilateral conduct, should be considered by all potential plaintiffs, regardless of jurisdiction.

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