By E. Darius Sturmer, J.D.
A Detroit area multiple listing service (MLS) operator and its shareholder boards did not unlawfully monopolize or restrain competition in the market for the listing and sale of real estate in southeastern Michigan by implementing rules and policies tying MLS access to membership in one of the shareholder boards, the federal district court in Detroit has decided. The plaintiff in the case, an attorney who was denied such membership for lack of a real estate broker license, lacked antitrust standing to assert the claims, the court held. Further, the alleged misconduct would not have amounted to monopolization or tying prohibited by the Sherman Act. The defendants’ motions to dismiss were therefore granted (Findling v. Realcomp II, Ltd., March 22, 2017, Friedman, B.).
The plaintiff’s complaint described the MLS as a closed database system, managed by Realcomp II Ltd. and controlled by eight local shareholder boards and associations of realtors, that provides past and current listings of properties for sale in the Detroit metropolitan area. According to the plaintiff, access to the database is critical to successfully evaluate, market, and sell real property in that market. However, he added, the restriction of that access to member brokers or affiliates necessitates that he join one of the boards or associations.
The plaintiff is an attorney whose practice involves serving as a bankruptcy receiver and trustee. As such, he averred, he is exempt under state law from the licensure requirements for the sale of real property. The attorney alleged that fulfilling his receiver and trustee roles required him to engage and compensate a listing broker or realtor to list properties for sale, which was a financial burden on an insolvent estate and caused unnecessary costs to be incurred. Therefore, in July 2016, he submitted an application for membership to the Great Metropolitan Association of Realtors (GMAR), one of the MLS’s owner/operators. However, his application was denied because he did not have a valid real estate broker or salesperson’s license, the attorney charged.
His complaint contended that the rules and policies of Realcomp and its shareholder boards and associations requiring the licensure as a broker or salesperson for membership lacked a cognizable procompetitive justification and there was no evidence of any actual procompetitive benefits. Additionally, the plaintiff avowed, they amounted to an unlawful tying arrangement between the membership and access to Realcomp’s MLS, since that access could not be obtained without purchasing a membership with a Realcomp shareholder board.
Antitrust injury. The court found, however, that the attorney lacked standing to pursue any of his antitrust claims because he failed to sufficiently allege antitrust injury. The pleadings contained no allegation of market-wide impact. The product market at issue in the case, the court observed, was not actually real estate but instead a real estate advertising platform—the MLS. Yet the plaintiff failed to allege any facts about the real estate advertising market or who the major real estate advertising competitors may be. His "vague allegations about injuries to the unidentified ‘others’" were "wholly conclusory" and "not enough" under Iqbal. No reasonable inference of a market-wide injury could be made without sufficient allegations of a market, competitors, or any other injury, the court stated.
Moreover, the plaintiff failed to show that the defendants’ MLS was anticompetitive. Contrary to the plaintiff’s contention, "the complained-of practice—Realcomp’s MLS administration—actually promotes competition," the court said. As an information-aggregating advertising platform, the MLS merely provided customers with streamlined information—and "data and choices breed competition," the court observed. "[A]bsent allegations of unfair discrimination, it is hard to imagine that any MLS is a net-anticompetitive force or violates Sec. 1 [of the Sherman Act]," the court remarked.
The plaintiff also failed to show antitrust injury because he failed to allege that Realcomp’s tying of access to the MLS to membership in a defendant real estate association foreclosed other sales. The complaining attorney made no assertion that he would have joined a different realtor association absent the alleged tie. Thus, there was no competitor losing a sale, the court concluded.
Sufficiency of allegations. Even if it had found that the plaintiff possessed antitrust standing, the court added, it could not reasonably infer that the defendants’ membership requirements unreasonably restrained trade. The restraint at issue—the tying of MLS access to membership—was not sufficiently alleged to amount to a Sec. 1. violation. The plaintiff claimed only that Realcomp was a voluntary trade association with membership benefits, one of which was access to the MLS. That, without more, was "not a Sec. 1 violation," as it was "widely recognized that private organizations may reasonably tie their benefits and services to membership," the court stated. Furthermore, the complaint made no claim that the defendants were unreasonably or discriminatorily restricting access, the court noted.
Nor were the plaintiff’s allegations of monopoly power adequate to maintain a Sec. 2 claim, in the court’s view. He failed to offer any facts showing the current state of the alleged Southeast Michigan real estate market. His charge that Realcomp had, a decade earlier, possessed substantial market power was not enough for a reasonable inference that it currently "possesses §2 monopoly market power," in the court’s view.
The case is No. 17-CV-11255.
Attorneys: Eric H. Lipsitt (The Findling Law Firm, PLC) for David Findling. Harvey R. Weingarden (Lippitt O'Keefe Gornbein, PLLC) for Realcomp II, Ltd. d/b/a Realcomp, Inc. Gregory L. McClelland (McClelland & Anderson, LLP) for Greater Metropolitan Association Realtors d/b/a Western Wayne Oakland County Association of Realtors and Dearborn Area Board of Realtors.
Companies: Realcomp II, Ltd. d/b/a Realcomp, Inc.; Greater Metropolitan Association Realtors d/b/a Western Wayne Oakland County Association of Realtors; Dearborn Area Board of Realtors
MainStory: TopStory Antitrust MichiganNews
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