Brown v. Indianapolis BOR: Federal Court Rules Membership-Based Access to MLS Is Reasonable and Not in Violation of Antitrust Laws

In Brown v. Indianapolis Board of REALTORS®, the district court addressed the limitations on MLS access that required membership in a Board of REALTORS® (Board). The court held that the limitations the Board applied to MLS participation were reasonable and did not violate the Sherman Antitrust Act.

Brown was a licensed real estate broker in Indiana. The Indianapolis Board was an affiliate of the NATIONAL ASSOCIATION OF REALTORS®, and complied with the membership policies of that association. One of those policies, the "8 Point Membership Criteria" policy, was described as "the most rigorous qualification which may be required by a Board in consideration of an applicant for active membership." One of the eight points required that a prospective member hold a favorable business reputation in the community.

In 1973 and 1975, Brown, who sought access to the MLS, applied for Board membership. On each occasion, Brown was denied Board membership for failure to establish that he had a favorable business reputation in the community. Access to the MLS required membership on the Board. Brown sued the Board claiming that the Board's actions constituted an unreasonable restraint of competition, a group boycott, and a conspiracy in restraint of trade.

The district court found that the procedure adopted by the Board for processing membership applications was fair and lawful. The court stated that Brown was provided with a full opportunity to provide whatever information he wanted in support of his application for membership. The court found that the 8 Point Membership Criteria policy, particularly the requirement that an applicant for membership establish and provide the Board evidence that he has obtained a favorable business reputation in the community, were each reasonable. The court then held that a voluntary business or membership organization may lawfully adopt reasonable standards of membership, and having done so, it may thereafter restrict the incidents and advantages and benefits of membership to its members.

The district court also noted that there were instances where Board members refused to deal with Brown, but found no evidence that the refusals were the result of any agreement, express or implied, with any other party. The court also found that in each instance the refusal appeared to have been without question the individual act of the individual person for his individual motives. The court then held that although a concerted refusal to deal, or a group boycott, generally violates federal antitrust laws, such individual and unilateral refusals to deal were not prohibited by federal antitrust laws.

Brown v. Indianapolis Board of REALTORS®, 1977-1 Trade Cases (CCH) P 61,435, 1977 WL 1405 (S.D. Ind. 1977). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]