Park v. El Paso Board of REALTORS®: Fifth Circuit Finds Price Fixing Conspiracy Among Brokerages

In Park v. El Paso Board of REALTORS®, the Fifth Circuit addressed allegations of a group boycott and price fixing against a Board of REALTORS® (Board) and several real estate firms. The court held that the jury's finding that boycotting and price fixing occurred was substantiated by the evidence, but that the Board was not liable, as it had not condoned or supported the actions.

In 1975, Park organized Action Real Estate (Action), which operated on a flat-fee commission basis. In 1976, Park applied for membership with the Board and the MLS and was accepted to both. Action's sales initially rose rapidly, then plummeted from 1978 to 1980. Park felt that this downfall was due to price fixing in the market. Park sued the Board and 68 real estate firms, alleging that other brokers felt threatened by his flat-fee commissions and conspired to drive him out of business. A jury found that the Board and six firms had violated the Sherman Antitrust Act and awarded Park nearly $2.5 million. The Board and two of the firms appealed.

In addressing the group boycott claim, the Fifth Circuit found that a plaintiff must prove: (1) a conspiracy to boycott existed; (2) the defendants participated in the conspiracy; (3) the conspiracy had a sufficient nexus with interstate commerce; (4) the conspiracy injured the plaintiff; and (5) the approximate amount of damages. The court found that if there was substantial evidence in support of the jury verdict, then it must be upheld. The court found that there was sufficient evidence to show that a conspiracy existed. The court based this conclusion on the following facts: (1) other brokers attempted to impose punitive commission splits (as opposed to normal 50-50); (2) other brokers made disparaging comments regarding Action (i.e. that it was not reputable, did not do a good job selling its listings, etc.); (3) other brokers stated that they would show Action homes only as a "last resort" or would "avoid them like the plague"; and (4) one broker stated that Action would not survive for long because other brokers were going to drive Park out of business.

After finding that a conspiracy existed, the Fifth Circuit addressed the second element of a conspiracy to boycott: the participation of the Board and several firms. The court held that because Park failed to show that the Board had participated in or condoned the alleged violations, it did not conspire to boycott. However, regarding the real estate firms, the court found that the evidence substantially supported the allegations that the firms had participated in the conspiracy.

The Fifth Circuit next addressed the third and fourth elements: the nexus with interstate commerce and injury to the plaintiff. The court found that the financing of real estate loans, the furnishing of title insurance, and the advertising of properties for sale had a signficant effect on interstate commerce. Further, the court found that Park was injured, as in the absence of a boycott, Park would have attracted more listings, sold more properties, and earned more profits.

Finally, the Fifth Circuit addressed the amount of damages. The court stated that it could support a jury verdict which had a reasonable basis. However, the court found that the expert testimony upon which the jury award was based was too speculative to support the amount granted by the jury. The court then remanded the case with orders for a more concrete showing of damages.

Park v. El Paso Board of REALTORS®, 764 F.2d 1053 (5th Cir. 1985).

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