A Washington federal court has considered whether an association member could challenge a multiple listing service’s requirement that only members of a REALTOR® association could participate in the multiple listing service. Federal courts in Wisconsin and Kentucky have recently rejected similar challenges- click here to read the Wisconsin summary and here to read the Kentucky summary.
Matthew Prencipe, William H. Koshman, and Robert H. Cooke (collectively, “Challengers”) are members of the Spokane Board of REALTORS® d/b/a the Spokane Association of REALTORS® (“Association”). Only members of a REALTOR® association can participate in the Association’s MLS. The Association provides real estate services such as dispute resolution, code of ethics enforcement, education programs, legislative monitoring, and technology services.
The Challengers maintained that they held membership in the Association solely to obtain MLS access. The Challengers brought an antitrust lawsuit against the Association claiming that Association membership was illegally tied to MLS services. The Challengers also claimed that conditioning access to MLS services on Association membership constituted a group boycott. The Association filed a motion with the trial court seeking judgment in its favor.
The United States District Court for the Eastern District of Washington ruled in favor of the Association and dismissed the Challengers’ lawsuit. The court considered whether the Challengers could allege an illegal “tying” arrangement. “Tying” arrangements are a type of restraint which can violate the antitrust laws. In order to allege a tying violation, a party must demonstrate the following: (1) a tying arrangement between two identifiable products or services; (2) market power in the tying market to restrain competition in the tied product market; (3) a substantial effect on interstate commerce; and finally, (4) the tying company has an economic interest in the sales of the tied product.
The court ruled that the alleged tying arrangement did not foreclose a substantial volume of interstate commerce. The Challengers argued that requiring Association membership foreclosed them from joining other real estate associations, but they failed to identify any competitors in the market for real estate services who were harmed by the membership requirement. The court also ruled that the Challengers failed to identify an antitrust injury, since no competition was restrained by the alleged tying arrangement. Since the Challengers had not demonstrated that the tying arrangement harmed competition in any way, the court ruled in favor of the Association on the tying allegations.
Finally, the court considered the group boycott allegations made by the Challengers. As set forth above, the court had determined that the Association had not engaged in behavior which harmed competition or created an antitrust injury. Since showing an antitrust injury is required to allege a group boycott claim, the court dismissed these allegations as well. Therefore, the court entered judgment in favor of the Association in the Challenger’s lawsuit.
Prencipe v. Spokane Board of REALTORS® d/b/a Spokane Association of REALTORS ®, No. CV-04-319-LRS, 2006 WL 1310402 (E.D. Wash. May 12, 2006). [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.]