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Two Michigan brokers and an agent have clapped back at the National Association of Realtors’ attempt to have their antitrust suit tossed out of court, saying they want Michigan to join the few other states where Realtor membership cannot be a requirement to subscribe to a multiple listing service.
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In a Feb. 21 response, the plaintiffs scorned a motion to dismiss filed by NAR and the other defendants in the case.
“While Defendants allege that Plaintiffs seek to challenge the mandatory requirement of membership to access the MLS but want to retain the full benefits membership provides, such an allegation is false,” the filing reads.
“Plaintiffs only seek access to the MLS much in the same way the states of California, Georgia and Florida allow without any other requirements or obligations to the Defendant organizations.”
The filing notes previous court decisions, particularly Thompson v. Metropolitan Multi-List Inc. where, in 1991, the Eleventh Circuit Court of Appeals ruled that tying MLS access and association membership violated federal antitrust law and said the plaintiffs “seek a similar outcome here.”
The Thompson decision only applies to Alabama, Georgia and Florida. In another case, the California Supreme Court ruled in 1976 that a Realtor association in affluent Marin County violated the state’s antitrust law by denying nonmembers access to its MLS.
However, in several other occasions, state and federal courts have backed the right of Realtor associations to limit MLS access to Realtors, including in cases that reached the 1st, 5th, 6th and 7th federal circuit courts of appeals.
This particular case was filed on Aug. 12 by Douglas Hardy, M.D., the broker-owner of Signature Sotheby’s International Realty in Southeastern Michigan, which has about 100 agents and brokers; Glenn Champion, Esq., a primary broker for the same brokerage; and Dylan Tent, an agent with the same brokerage.
The suit, filed in the U.S. District Court for the Eastern District of Michigan, names NAR, the Michigan Association of Realtors, the Grosse Pointe Board of Realtors, the Greater Metropolitan Association of Realtors, the North Oakland County Board of Realtors, and Michigan’s largest MLS, Realcomp II, as defendants.
The suit accuses them of civil conspiracy, economic coercion and unfair restraint of trade in violation of the federal Sherman Antitrust Act and the Michigan Antitrust Reform Act.
According to a disclosure statement, Realcomp II is owned by the Detroit Area Board of Realtors, Eastern Thumb Association of Realtors, Lapeer and Upper Thumb Association of Realtors, Detroit Association of Realtors, and the Livingston County Association of Realtors, but those trade groups are not named as defendants.
“Defendants’ conduct as illustrated through their mandatory requirement that all brokers and agents be members of their organizations in order to access the MLS and the associated ability to market properties is unlawful and creates Antitrust violations, and their uniform enforcement of those practices to control the market creates a conspiracy,” the Feb. 21 filing reads.
The complaint seeks to represent a class made up of all Michigan agents and brokers who are required to be members of NAR, MAR, the local Realtor associations, and/or those who must use Realcomp II in order to access the MLS.
A NAR policy known as “the three-way agreement” requires that agents and brokers join a local, state and the national association in order to be Realtors. NAR does not require Realtor membership for MLS access — that is left up to MLSs and the Realtor associations that own them.
“The Defendants’ practices are not limited to Michigan and in fact are present in most states where these requirements are similarly dictated by the NAR and the state and local boards,” the filing says.
“Defendants coerce Plaintiffs to belong to their organizations by wielding their market power and thereby force brokers and agents into membership and paying their requisite fees.”
The Hardy plaintiffs’ filing asserts that the tying of Realtor membership to MLS access has a “substantial effect” on interstate commerce.
“In Southeastern Michigan alone, there are over 16,000 members in Defendant organizations and over 35,000 members in the State of Michigan paying tens of millions of dollars annually to Defendants to access the MLS and market real estate listings,” the filing says.
“Plaintiffs seek to challenge this compulsory membership and Defendants’ policies as unlawful.”
The Hardy plaintiffs decided to file the suit after NAR came to a proposed settlement of multiple antitrust lawsuits, whose rule changes the pros say will harm agents, brokers and consumers.
Specifically, the plaintiffs allege that the unilateral decision to do away with “the guaranteed broker commission” as part of the settlement “greatly diminished any value created by the compulsory membership requirement” promulgated by the defendants.
But the settlement was not the only factor in the tarnishing of the associations’ value to the plaintiffs. The filing pointed to the various scandals that have rocked NAR recently.
“[T]he NAR has been the subject of much scrutiny over the last 12 months as several investigations into the practices of the NAR have yielded multiple examples of gross financial mismanagement, sexual misconduct by its leadership and other improprieties,” the filing says.
“These developments have furthered Plaintiffs’ dissatisfaction with the Boards and the required membership requirements.
“By bringing this action, Plaintiffs seek to have the same option as is being afforded those brokers and agents in Georgia, California, Florida and Arizona.”
NAR submitted its second motion to dismiss the Hardy suit in January. Friday’s filing urged the U.S. District Court for the Eastern District of Michigan to deny that motion, saying their claims are “plausible” and “viable” and should be allowed to proceed.
Should the court find that the current complaint, which has already been amended once, is “deficient,” the plaintiffs asked that they be allowed to file another amended complaint.
The Michigan agent and brokers are not the only ones to object to the requirement many MLSs have that they join NAR in order to access the MLS. Lawsuits challenging the requirement that agents belong to local, state and national Realtor organizations in order to access the MLS have been filed in Pennsylvania, Texas, and Louisiana.
Read the plaintiffs’ response to NAR’s motion to dismiss (re-load the page if document is not visible):
Email Andrea V. Brambila.
