AHRN Antitrust Counterclaim Dismissed

A Maryland federal court has considered allegations, including antitrust allegations, against NAR and a Maryland-based multiple listing service made in a counterclaim.

Metropolitan Regional Information System, Inc. (“MRIS”) operates a multiple listing service in the mid-Atlantic region.  In 2012, MRIS brought a copyright infringement lawsuit against the American Home Realty Network, Inc. (“Website Operator”), which operates a website known as “NeighborCity.com” (“Website”) that purports to offer a national real estate search and provides rankings of real estate professionals. The trial court entered a preliminary injunction barring the Website Operator from using MRIS’s copyrighted information. 

Following the issuing of the preliminary injunction, the Website operator answered MRIS’s complaint and filed a counterclaim against MRIS, adding the National Association of REALTORS® (“NAR”) to the counterclaim.  The counterclaim contained a wide array of state and federal claims, including antitrust allegations. 

The core theory advanced in the counterclaim was that: MRIS created a copyright program to register and obtain “sham” copyrights for its compilation of MLS listings; cooperatively worked to deny licenses for MLS data to the Website Operator; made false statements about the Website Operator; and passed anticompetitive rules designed to drive innovators like the Website Operator out of business.  The MRIS copyright program was created by the MLS in 2005, and was a two-part guidance paper designed to help MLS’s “administer, secure, and enhance the value of real estate listing content.”  MRIS and NAR filed motions to dismiss the counterclaim.

The United States District Court for the District of Maryland, Southern Division, dismissed the Website Operator’s entire counterclaim, although the court did give the Website Operator the option of refiling some of the allegations in a new complaint.  The court first looked at the false advertising allegations, based on a section of the federal Lanham Act.   This section prohibits a party from placing a false or misleading fact in commercial advertising that misrepresents some aspect of his or her goods, services, or commercial activities. 

The court found that the Website Operator had failed to plead facts that could support the false advertising claim and so the court dismissed this count with prejudice.  The Website Operator claimed MRIS had made false statements during its promotion of the copyright program, and also claimed that NAR had made other unidentified false statements.  However, a Lanham Act violation cannot be based on opinions, but rather requires statements about facts.  MRIS’s statements about its copyright program were merely legal opinions.  Further, there is no evidence that the statements were made in commercial advertisements, another Lanham Act requirement.  Thus, the court ruled that the Website Operator had failed to plead a false advertising claim.

Next, the court looked at the antitrust allegations.  The Website Operator claimed that NAR and MRIS conspired to bring this “sham” lawsuit, basing these allegations on similar cease and desist letters that the Website Operator had received from MLS’s around the country as well as meetings between NAR and MLS representatives about the Website.  NAR and MRIS argued that they had Noer-Pennington antitrust immunity.  Noer-Pennington is a doctrine that allows parties to work together free of antitrust scrutiny  to create laws, regulation, or collaborate on litigation, even if this would create a restraint or monopoly, so long as the parties are acting in good faith and not taking the actions merely to interfere with the business of another.

The court found that NAR and MRIS are entitled to Noer-Pennington antitrust immunity.  Copyright litigation like the MRIS lawsuit, where the parties have a mutual interest, falls within the Noer-Pennington doctrine.  The Website Operator claimed that MRIS had committed fraud in registering its copyrights and so this made its litigation a “sham”, but the court rejected this argument as there were no facts to support the argument.  The court further rejected the notion that this was “sham” litigation, since the court had already entered a preliminary injunction in favor of MRIS. 

After finding that there was Noer-Pennington immunity for NAR and MRIS, the court rejected the Website Operator’s antitrust claims.  The Website Operator had not produced any other evidence of an agreement between the parties to support its antitrust conspiracy allegations, other than their efforts to enforce the copyrights which were immune from antitrust scrutiny because of the Noer-Pennington doctrine.  While the court stated that it had “serious reservations about [the Website Operator’s] ability to set forth a cognizable” antitrust complaint, the court dismissed the antitrust allegations but did allow the Website Operator to file an amended claim if it chooses to do so.

The court also dismissed the Website Operator’s state law unfair completion claims, finding these arguments were premised on grounds similar to those that the court had already rejected, but allowed the Website Operator to refile these claims at a later date if it chooses to do so.  The court dismissed the remainder of the Website Operator’s claims with prejudice, as the court noted that it would be “futile” for the Website Operator to attempt to fix the deficiencies identified in those allegations.

Metro. Reg’l Info. Sys. v. Am. Home Realty Network, 12-CV-00954-AW, 2013 WL 2477260 (D. Md. June 10, 2013).  Metro. Reg’l Info. Sys. V. Am. Home Realty Network, 948 F. Supp. 2d 538 (D. Md. 2013)