Glendale BOR v. Hounsell: California Appellate Court Holds Membership-Based Access to MLS Violates State Antitrust Statute
In Glendale Board of REALTORS® v. Hounsell, the California Court of Appeal addressed the practice of the Glendale Board of REALTORS® which denied non-members access to a multiple listing service (MLS). The court held that the Board's denial of access led to adverse consequences for non-members with respect to their ability to compete effectively, and was a violation of the Cartwright Act (California Antitrust Statute).
Hounsell was a licensed real estate broker who worked in Glendale. The Glendale Board of REALTORS® (Board) operated the only MLS in the city. Hounsell, who was not a member of the Board, applied to participate in the MLS. The Board advised Hounsell that his request to participate would be granted as soon as he became a member of the Board. When Hounsell declined this invitation to join the Board, the Board sought a declaratory judgment that its exclusion of Hounsell from its MLS was lawful. The trial court granted the Board's request for declaratory judgment.
The California Court of Appeal reversed the trial court, and held that the findings of Marin County Board of REALTORS®, Inc. v. Pallson, 16 Cal. 3d 920, 549 P.2d 833, 130 Cal. Rptr. 1 (1976) were controlling. The court of appeal construed Pallson's directive to the Marin County Board of REALTORS® to open its MLS to non-members and to eliminate its "primarily engaged" membership criteria as holding that each of these rules violated the Cartwright Act without regard to the other.
The California Court of Appeal then stated that the only issue left open was whether the Board's MLS was a significant competitive advantage for those who participated in it. The court concluded that it was. As evidence, the court cited the expert opinion of a long-time leading Glendale REALTOR® that a real estate broker practicing his profession in Glendale must have access to the MLS if he or she is to compete effectively against fellow brokers enjoying such access. Thus, because access to the MLS constituted a significant advantage, the court held that the rule excluding non-members from access was illegal.
Glendale Board of REALTORS® v. Hounsell, 72 Cal. App. 3d 210, 139 Cal. Rptr. 830 (Cal. Ct. App. 1977).