Challenge to MLS Access Dismissed

Read the full decision: Findling v. Realcomp II, Ltd

Michigan federal court dismisses lawsuit filed by attorney seeking MLS access without joining a REALTOR® association, with the court finding that the membership requirement isn’t a restraint on competition and it is reasonable for associations to tie membership to MLS access.

A lawyer in Michigan acting as a court-appointed receiver (“Receiver”) for certain properties sought to list his properties on a local multiple listing service (“MLS”) without joining the MLS. In Michigan, a lawyer acting as a receiver is exempted from the real estate license law for those properties. The MLS requires that all participants in the MLS become a member or affiliate with one of the eight shareholder REALTOR® associations that own the MLS and also hold an active broker’s license. Because the Receiver was not a member of a shareholder association nor licensed as a real estate broker, the only way for him to list his properties on the MLS was either to pay a listing fee to a MLS participant or obtain a real estate license and join a shareholder REALTOR® association.

The Receiver applied for membership in a shareholder association, but the association denied the Receiver’s application because the Receiver did not hold a real estate license. The Receiver argued that he was exempt from the licensing requirements and so the association could not deny him membership. The Receiver filed a lawsuit against the MLS and its shareholder associations, alleging that they were maintaining an illegal monopoly for the listing of real estate and illegally tying association membership to participation in the MLS. The MLS and the associations filed a motion to dismiss the lawsuit.

The United States District Court for the Eastern District of Michigan dismissed the Receiver’s lawsuit. The court first examined whether the Receiver had antitrust standing to bring a lawsuit challenging the MLS’s membership requirements. Standing is judicially created doctrine that requires a party seeking judicial relief to allege an injury that could entitle the party to relief. Antitrust standing requires a court to examine five factors, and here the court focused on one of those factors: whether the plaintiff’s alleged injury is the type for which the antitrust laws were intended to provide redress.

The court ruled that the Receiver had failed to allege an antitrust injury and so lacked standing to bring an antitrust lawsuit. In order to show antitrust injury, a party must show that the injury caused harm to the market, not just harm to the party bringing the lawsuit. MLS services was the relevant market, but the only harm alleged by the Receiver were his own costs for advertising and he failed to allege any harm to the overall market for MLS services. The Receiver’s allegations that association membership was illegally tied to MLS participation also failed to allege antitrust harm, as the tying arrangement did not harm any competitors and so did not cause an antitrust injury. Thus, the Receiver lacked standing to bring his lawsuit.

Next, the court considered whether the tying arrangement between association membership and MLS access unreasonably restrained trade, even though the Receiver lacked standing to bring the allegations. A tying arrangement occurs when a party with market power (here, the MLS) requires the buyer to purchase a second product or service (here, association membership).

While association membership is tied to MLS access, the court determined that this arrangement was a reasonable requirement for the association and did not violate the federal antitrust laws. Courts have ruled that membership organizations can restrict access to its services so long as the organization is not arbitrarily denying membership in the organization. The Receiver did not allege that he would have been denied MLS access if he had qualified for association membership and paid dues. The court found that the Receiver wanted membership benefits without incurring the costs and the association’s denial of the Receiver’s request was reasonable. Thus, the court ruled that the Receiver had failed to allege antitrust violations and so dismissed the lawsuit.

Findling v. Realcomp II, Ltd., No. 17-CV-11255, 2018 WL 1425952 (E.D. Mich. Mar. 22, 2018). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information.]