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A Wisconsin federal court has rejected a challenge to a multiple listing service's requirement that only members of a REALTOR® association could participate in the multiple listing service.
Jay Reifert ("Member") is a member of the REALTORS® Association of South Central Wisconsin, Inc. ("Association"). The Association owns 100% of the stock for the South Central Wisconsin Multiple Listing Service Corporation ("MLS"). Only members of a REALTOR® association can participate in the MLS. The Association provides real estate services such as dispute resolution, code of ethics enforcement, education programs, legal information, forms, publications, lobbying, professional recognition, and referral programs.
The Member claimed that he tried to purchase MLS services without joining the Association, but the MLS denied his request. Therefore, he purchased the allegedly unwanted Association services in order to receive MLS access. After four years of paying the allegedly unwanted membership dues, the Member brought an antitrust lawsuit against the MLS, Association, and the Association's directors claiming that they illegally tied Association membership to MLS services. The Member also claimed that conditioning access to MLS services on Association membership constituted a group boycott. The Member had sought class certification for his lawsuit, but the court denied his motion- click here to read the earlier summary. Both parties filed motions with the trial court seeking judgment in their favor.
The United States District Court for the Western District of Wisconsin ruled in favor of the Association, the Association's directors, and the MLS, dismissing the Member's lawsuit. In order to allege a per se tying violation, a party must allege 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 Association and MLS argued that the Member had failed to adequately establish the third and fourth elements. Additionally, the parties had argued that the Member had failed to demonstrate an antitrust injury.
First, the court considered whether the Member had demonstrated the third element of a tying claim. A tying arrangement only violates antitrust law if the arrangement itself forecloses a substantial volume of interstate commerce. The Member argued that requiring Association membership foreclosed MLS participants from joining other real estate associations, listing the following associations: National Association of Exclusive Buyer Agents ("NAEBA"), Colorado Exclusive Buyer Agents Association ("CEBAA"), Massachusetts Association of Buyer Agents ("MABA"), The Appraisal Institute ("AI"), National Association of Independent Fee Appraisers ("NAIFA"), National Association of Real Estate Appraisers ("NAREA"), the Asian Real Estate Agent Association ("AREAA"), Chinese Real Estate Association of America ("CREAA"), National Association of Hispanic Real Estate Professionals ("NAHREP"), and the National Association of Independent Real Estate Brokers ("NAIREB"). The Member produced expert testimony stating that between 19% and 24% of the MLS participants would not have joined the Association but for the tying arrangement. This finding was based on analysis of the Alaska and Massachusetts markets, where it was asserted that association membership is not required for MLS participation.
The court determined that the Member had failed to show that competition for real estate services like those offered by the Association had been foreclosed in south central Wisconsin. The court stated that simply showing that some customers had purchased unwanted services was insufficient to establish the third element; instead, the Member was required to show that the alleged tying arrangement foreclosed competition which had a substantial impact on interstate commerce. While there were superficial similarities between all of the associations such as having conventions and education programs, none of the various associations identified by the Member offered real estate services like the Association. NAEBA, CEBAA, and MABA only have exclusive buyer agents as members. AI, NAIFA, and NAREA only offer membership services to real estate appraisers. AREAA, CREAA, CAREPA, and NAHREP all serve distinct ethnic communities and do not offer services which could be substituted for the Association's services. Finally, NAIREB serves independent brokers and encourages its members to also join REALTOR® associations. The court found there was no evidence that a single person had not joined one of these associations because he or she was required to join the Association. The court also stated that the Member's expert evidence was flawed, as the survey failed to account for unique market factors such as population density and other demographic data.
The court distinguished the evidence in this case from Thompson v. Metropolitan Multi-List, Inc., 934 F.2d 1566 (11th Cir. 1991), where the Eleventh Circuit had found an unlawful tying arrangement between an association and a multiple listing service. Click here to read a summary of the decision. In that case, the evidence showed that a competing association did offer services similar to the association "tied" to the multiple listing service and that hundreds of individuals would have joined the other association except for the tying arrangement. However, the Member had produced no such evidence in this case. Thus, the court found that Member had failed to demonstrate his tying claim and so the Association, its directors, and the MLS were entitled to judgment on the tying allegations.
Finally, the court considered the boycott allegations. To advance his boycott allegations, a party must show that the membership rule has adverse impact on competition in the relevant market. As set forth above, since the Member had produced no such evidence, the court rejected this argument as well. Thus, judgment was entered on behalf of the Association, its directors, and the MLS.
Reifert v. S. Cent. Wis. MLS Corp., No. 04-C-969-S, 2005 WL 2055958 (W.D.Wis. Aug. 25, 2005), appeal docketed, No. 05-3601 (7th Cir. Sept. 7, 2005). [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].