REAL ESTATE, REAL COMPETITION & THE LAW

What I've been up to - AgentsCompared.com

2009-08-03T14:46:00.007-05:00

It's been awhile since I last posted here, and for good reason. Going back to the summer of 2007 I've been developing an idea I've had about helping home buyers and sellers make more informed decisions when selecting a local real estate agent. Last month it came to fruition - AgentsCompared.com. Here's the text of our launch announcement:

FOR IMMEDIATE RELEASE:

Consumer-centric AgentsCompared.com Helps Prospective Chicagoland Home Buyers and Sellers Make More Informed Decisions When Selecting a Real Estate Agent

Chicago, IL – July 7, 2009 – Consumer-centric website AgentsCompared.com, launching today in Chicagoland, helps prospective home buyers and sellers make more informed decisions when selecting a real estate agent. The site lets consumers efficiently discover, evaluate and compare – on an apples to apples basis – competing local agents on the criteria most important to them, such as an agent’s track record (success stories, relevant statistics, etc.), price (commissions, rebates, etc.), specialties (first time buyers, short sales, REOs, etc.), local market knowledge, and over a dozen others. Prospective home buyers and sellers can use AgentsCompared.com to see how a referral stacks up against competing agents, and find other local agents that may offer better value, greater expertise, etc.

“I’m not a Realtor®, but I think it’s fair to say that none of the current “Find an Agent” websites appear to have been created with the consumer firmly in mind,” explained Chicago lawyer Michael Erdman, founder of AgentsCompared.com. “The space has unfortunately become stagnant, to the detriment of both consumers and agents. AgentsCompared.com will deliver some much needed innovation to the process of selecting a local real estate agent,” Erdman added.

AgentsCompared.com is unlike existing “Find an Agent” websites. It does not restrict the number or types of agents that can join the site or appear in relevant search results, or attempt to match consumers with agents. “Featured” placements and broker advertisements are not displayed in search results. Consumers simply run a search, review the results, and choose whether to make direct contact with an agent. They are not asked to pay a fee, register, provide personal information, navigate through multiple pages, or wait for an email in order to search the site or obtain results.

“Who you choose as your real estate agent can obviously make a big difference to your bottom line, end result, and overall experience when buying or selling real estate. AgentsCompared.com helps prospective home buyers and sellers understand their choices and ask important questions when selecting an agent, something that is especially important in the current housing market,” stated Erdman.

For Chicagoland real estate agents, AgentsCompared.com offers an opportunity to stand out from competing agents, and attract prospective home buyers and sellers that are looking for a local agent, by distinguishing themselves across a variety of categories that are important to consumers, and on a level playing field.

For additional information contact:

Michael Erdman
President & Founder
AgentsCompared.com
merdman@AgentsCompared.com

or visit www.AgentsCompared.com

Features, pricing, availability and specifications set forth herein are subject to change without notice.

# # #

Overview of USA v. NAR proposed Final Judgment

2008-05-27T12:47:00.019-05:00

Here's a quick overview of the proposed Final Judgment ("PFJ") filed earlier today in USA v. National Association of Realtors. Note that before Judge Kennelly will consider and potentially enter the judgment, one or both parties will need to formally file a motion requesting same with the Court.

For a period of ten years, the settlement would prohibit NAR from adopting, maintaining or enforcing any rule, or entering into or enforcing any agreement or practice, that directly or indirectly:

prohibits a Broker from using a VOW or prohibits, restricts, or impedes a Broker who uses a VOW from providing to Customers on its VOW all of the Listing Information that a Broker is permitted to Provide to Customers by hand, mail, facsimile, electronic mail, or any other methods of delivery;
unreasonably disadvantages or unreasonably discriminates against a Broker in the use of a VOW to Provide to Customers all of the Listing Information that a Broker is permitted to Provide to Customers by hand, mail, facsimile, electronic mail, or any other methods of delivery;
prohibits, restricts, or impedes the referral of Customers whose identities are obtained from a VOW by a Broker who uses a VOW to any other Person, or establishes the price of any such referral;
imposes fees or costs upon any Broker who operates a VOW or upon any Person who operates a VOW for any Broker that exceed the reasonably estimated actual costs incurred by a Member Board in providing Listing Information to the Broker or Person operating the VOW or in performing any other activities relating to the VOW, or discriminates in such VOW related fees or costs between those imposed upon a Broker who operates a VOW and those imposed upon a Person who operates a VOW for a Broker, unless the MLS incurs greater costs in providing a service to a Person who operates a VOW for a Broker than it incurs in providing the same service to the Broker; or
is inconsistent with the Modified VOW Policy (an exhibit to the PFJ).

Furthermore, NAR must (i) repeal the ILD Policy and direct each Member Board that adopted Rules implementing the ILD Policy to repeal such Rules; (ii) direct Member Boards that adopted Rules implementing the VOW Policy to repeal such Rules; (iii) adopt the Modified VOW Policy; (iv) direct Member Boards to adopt the Modified VOW Policy, and to thereafter maintain, act consistently with, and enforce Rules implementing the Modified VOW Policy; and (v) direct Member Boards not to adopt, maintain, or enforce any Rule or practice that NAR would be prohibited from adopting, maintaining, or enforcing pursuant to the PFJ. In other words, out with the VOW Policy and its successor, the ILD Policy. In with the Modified VOW Policy, a ten pager attached to the PFJ as an exhibit.

I haven't studied it yet, but the Modified VOW Policy appears to be based upon the original 2003 VOW Policy adopted by NAR on May 17, 2003. The 2003 VOW Policy was rescinded on August 31, 2005 in favor of the ILD Policy. If/when the Court enters the PFJ, I will highlight the changes contained in the Modified VOW Policy in a separate post.

The PFJ also gives NAR the green light to effectuate changes to the definition of “Participation” contained in the Statement of MLS Policy and previously adopted by NAR on 8/31/05 . This change impacts the definition of MLS Participant, which will now presumably read, in part, as follows:

[U]nder no circumstances is any individual or firm, regardless of membership status, entitled to MLS ‘Membership’ or ‘Participation’ unless they hold a current, valid real estate broker’s license and offer or accept cooperation and compensation to and from other Participants or are licensed or certified by an appropriate state regulatory agency to engage in the appraisal of real property. (emphasis added).

A "Note" accompanies the revised definition and directs that “[t]he requirement that an individual or firm ‘offers or accepts cooperation and compensation’ means that the Participant actively endeavors during the operation of its real estate business to list real property of the type listed on the MLS and/or to accept offers of cooperation and compensation made by listing brokers or agents in the MLS.” The PFJ prohibits member boards from suspending or expelling any broker on account of the new definition until May 27, 2009.

Here's a link to the DOJ's press release.

Settlement in USA v NAR?

2008-05-27T12:29:00.004-05:00

A stipulation signed by attorneys for both parties and a proposed final judgment (not yet entered by Judge Kennelly) just appeared on the Court's online docket.

Perhaps the July 7 trial, which was to last approximately a month, has been averted? Keep in mind that a final judgment and/or other dispositive order has not yet been entered by the Court. In a related filing today, the United States stated that it will be filing a motion for entry of the proposed Final Judgment.

UPDATE: Read a summary of the proposed settlement.

Ninth Circuit: Roommates.com largely unprotected by Section 230

2008-04-03T20:29:00.006-05:00

Earlier today the U.S. Court of Appeals for the Ninth Circuit, in Fair Housing Council of San Fernando Valley, et al v. Roommate.com, LLC, issued an en banc ruling that rejects the majority of the website's assertions of Section 230 immunity. For purposes of this (lengthy) post, I will assume you are familiar with the facts of the case and previous rulings. If that's not the case, check out my May 2007 summary of the three judge panel's decision reversing the District Court's application of Section 230 immunity.

The en banc panel here consisted of eleven Circuit Judges: Alex Kozinski, Stephen Reinhardt, Pamela Ann Rymer, Barry G. Silverman, M. Margaret McKeown, William A. Fletcher, Raymond C. Fisher, Richard A. Paez, Carlos T. Bea, Milan D. Smith, Jr. and N. Randy Smith.

The Court's opinion was authored by Chief Judge Kozinski, and a partial Concurrence/partial Dissent was issued by Judge McKeown, who was joined by Judges Rymer and Bea.

The bottom line you ask? Jump to page 28 of the slip opinion, wherein the Court advises that "[t]he message to website operators is clear: If you don’t encourage illegal content, or design your website to require users to input illegal content, you will be immune." Now for the loooong version, which excludes any consideration of the partial concurrence/dissent (maybe later).

We are of course dealing with a statute here, and the Court appropriately begins by asking what Congress had in mind when it enacted the law.

In passing section 230 . . . Congress sought to immunize the removal of user generated content, not the creation of content: “[S]ection [230] provides ‘Good Samaritan’ protections from civil liability for providers . . . of an interactive computer service for actions to restrict . . . access to objectionable online material." (quoting from a 1996 Conference Report)

I'm not so sure the "Good Samaritan" phrase is properly applied to Section 230(c)(1), but I think the point being made here is valid: In the online context, acting as an editor is generally protected. Acting as an author is not.

The Court proceeds to consider the challenged portions of the Roommates.com website. As to the questions asked of prospective subscribers during registration (disclosure of sex, family status, and sexual orientation), including the choice of answers provided by Roommates.com and offered in pull-down menus, the Court opines that

Roommate created the questions and choice of answers, and designed its website registration process around them. Therefore, Roommate is undoubtedly the “information content provider” as to the questions and can claim no immunity for posting them on its website, or for forcing subscribers to answer them as a condition of using its services. . . . The CDA does not grant immunity for inducing third parties to express illegal preferences. Roommate’s own acts—posting the questionnaire and requiring answers to it—are entirely its doing and thus section 230 of the CDA does not apply to them. Roommate is entitled to no immunity.”

Although it is purportedly just focused on the question of whether immunity applies, the Court further notes that "asking questions certainly can violate the Fair Housing Act and analogous laws in the physical world." More on this apparent divergence from the topic at hand (immunity) later.

The Court treats subscriber profiles the same way:

Although it is the subscriber that has answered the questions that are ultimately displayed in his or her profile, same “does not preclude Roommate from also being an information content provider by helping “develop” at least “in part” the information in the profiles. . . . By any reasonable use of the English language, Roommate is “responsible” at least “in part” for each subscriber’s profile page, because every such page is a collaborative effort between Roommate and the subscriber.

In other words, Roommates.com has again crossed the Section 230 line:

By requiring subscribers to provide the information as a condition of accessing its service, and by providing a limited set of pre-populated answers, Roommate becomes much more than a passive transmitter of information provided by others; it becomes the developer, at least in part, of that information. And section 230 provides immunity only if the interactive computer service does not “creat[e] or develop[]” the information “in whole or in part.”

The Court also declines to extend immunity to Roommate.com’s operation of its search system and email notification system. Observing that “Roommate designed its search system so it would steer users based on the preferences and personal characteristics that Roommate itself forces subscribers to disclose[,]” the Court addresses head-on the question of when does a website create or develop information:

We believe that both the immunity for passive conduits and the exception for co-developers must be given their proper scope and, to that end, we interpret the term “development” as referring not merely to augmenting the content generally, but to materially contributing to its alleged unlawfulness. In other words, a website helps to develop unlawful content, and thus falls within the exception to section 230, if it contributes materially to the alleged illegality of the conduct.” [this holding presumably explains the Court's delving into the underlying legality of some of Roommate.com's alleged actions here].

The preceding paragraph is a significant development in Section 230 jurisprudence, and merits close attention. What it seems to be saying is that for purposes of determining whether Section 230 immunity applies, we don't just look at whether the site created or developed the subject content. We must also examine whether the website "contributed materially to the alleged illegality of the conduct."

Based upon this new standard, the Court rules that Roommate.com "is sufficiently involved with the design and operation of the search and email systems—which are engineered to limit access to housing on the basis of the protected characteristics elicited by the registration process—so as to forfeit any immunity to which it was otherwise entitled under section 230." Rejected again.

However, the Court does rule that Roommate.com is immune to claims based upon third party submissions under the “Additional Comments” section of the site.

The case concludes with what could be construed as both a warning to the plaintiffs' bar and an encouraging word (?) to website operators:

[T]here will always be close cases where a clever lawyer could argue that something the website operator did encouraged the illegality. Such close cases, we believe, must be resolved in favor of immunity, lest we cut the heart out of section 230 by forcing websites to face death by ten thousand duck-bites, fighting off claims that they promoted or encouraged—or at least tacitly assented to—the illegality of third parties . . .. [I]n cases of enhancement by implication or development by inference—such as with respect to the “Additional Comments” here—section 230 must be interpreted to protect websites not merely from ultimate liability, but from having to fight costly and protracted legal battles.

The Court remands the case to the District Court for a consideration of the claims not immunized by Section 230.

I'm still digesting this thing (and may alter some of this post upon further reflection), but will say that I definitely anticipate a certiorari petition in the not too distant future. In the meantime, I recommend you give it a read. Check out the favorable language directed at search engines and sites that, like Roommate.com and the one in Carafano, classify user data. Also look for several generic examples offered by the Court of situations where immunity would and would not apply, and "clarifications" of two prior Ninth Circuit rulings (Carafano and Batzel).

I'm looking forward to getting through Judge McKeown's accompanying opinion and hearing what others have to say about the case.

Victory for ZeroBrokerFees.com in New Hampshire

2008-04-01T11:45:00.003-05:00

Yesterday Magistrate Judge James Muirhead ruled in favor of ZeroBrokerFees.com in the website's suit challenging the applicability of the New Hampshire Real Estate Practice Act - specifically the licensure requirement - to the operation of ZeroBrokerFees.com. The court ruled that pursuant to a statutory exemption for newspapers, ZeroBrokerFees.com was not obligated to obtain a brokerage license in New Hampshire before advertising real estate online.

For a refresher, see my post from last May.

Here is a copy of ZBF's lawyers' announcement, and a copy of the court's 33 page order.

7th Circuit rules in favor of Craigslist

2008-03-14T14:39:00.004-05:00

Here's the decision. It looks like my prediction was pretty much on the mark.

In an opinion by Judge Easterbrook, the 7th Circuit has affirmed Judge St. Eve's grant of Craigslist's motion for judgment on the pleadings. In other words, the Court ruled that Section 230 protects Craigslist from the Fair Housing Act claims contained in plaintiff's complaint.

In emphasizing that Section 230(c)(1) does not grant absolute immunity, though, Judge Easterbrook takes the opportunity to cite some of his dictum in Doe v. GTE. This did not seem necessary, particularly given the fact that today's ruling does not adopt the 'definitional' reading of Section 230(c)(1) that was first presented in Doe.

Instead the Court concedes that "subsection (c)(2) does not deal with the liability of speakers and publishers, the subject of subsection (c)(1). We read each to do exactly what it says." Noting that "'information' is the stock in trade of online service providers," the opinion concludes that "given §230(c)(1) [appellant] cannot sue the messenger just because the message reveals a third party’s plan to engage in unlawful discrimination." In other words, appellant sought to treat Craigslist as a publisher of third party content, and Section 230(c)(1) forbids such treatment.

What I found most interesting was the fact that, in the course of rejecting appellant's argument that Craigslist 'caused' the discriminatory ads (a term that appears in the Fair Housing Act provision at issue in this case), the Court alluded to a scenario where a website may indeed become a 'causer' (not just a publisher) and thus expose itself to liability:

Nothing in the service craigslist offers induces anyone to post any particular listing or express a preference for discrimination; for example, craigslist does not offer a lower price to people who include discriminatory statements in their postings.

While the statement was made in reference to the FHA, this sentence suggests that website inducement combined with certain statutory language could result, in some cases, in website liability. We'll probably here more about this point in the Ninth Circuit's much anticipated en banc Roommate.com decision.

Illinois anti-rebate legislation (HB 4313)

2008-02-18T13:11:00.005-06:00

An Illinois broker recently informed me that State Representative Robert Molaro (who himself does not appear to be a licensed broker or salesperson in Illinois) has introduced anti-rebate legislation in Springfield. The bill is scheduled to be heard this Thursday by the Judiciary I - Civil Law Committee.

Here's the synopsis offered on the legislature's website:

Amends the Real Estate License Act of 2000. Provides that no licensee shall give or pay cash rebates, cash gifts, or cash prizes to an unlicensed person who is a party to a contract to buy or sell real estate. Provides that a licensee may offer compensation, including prizes, merchandise, services, rebates, discounts, or other consideration to an unlicensed person who is a party to the lease of real estate, so long as the offer complies with certain provisions of the Act. Effective immediately.

If you have any additional information, please share it here.

Seventh Circuit considers whether Section 230 protects Craigslist from Fair Housing Act claims

2008-02-18T13:06:00.007-06:00

Last Friday the U.S. Court of Appeals for the Seventh Circuit, based here in Chicago, heard oral arguments in the plaintiff’s appeal of Chicago Lawyers’ Committee for Civil Rights Under Law, Inc. (“CLC”) v. Craigslist Inc. (“Craigslist”). CLC, as you may recall, is appealing District Judge St. Eve’s ruling that Section 230 protects Craigslist from liability for housing ads placed on the site by third parties that allegedly violated the federal Fair Housing Act ("FHA"). The case, the last one scheduled for the week, was clearly the most popular one of the day, with at least forty people in attendance in the gallery (none of whom left early notwithstanding an ominous, overhead announcement that interrupted the arguments, advising that a fire had been reported in another part of the twenty-seven story building, but that an evacuation was unnecessary). It apparently was a false alarm, but given I arguably risked my life to hear the arguments in their entirety, which took place on the 27th floor mind you, please show me some love and let me know where you think this case is headed (and/or if you think I'm a moron for sticking around to the end).

The three judge panel consisted of Judges Frank H. Easterbrook, Diane P. Wood and Terence T. Evans. You may recall that both Judges Easterbrook and Wood were on the panel that heard Doe v. GTE Corp. in 2003, the only other Section 230 case argued before the Seventh Circuit. Attorney Stephen D. Libowsky argued on behalf of CLC, and Attorney Patrick Carome argued on behalf of Craigslist. Each attorney was allotted fifteen minutes (with appellant CLC going first), and CLC’s counsel was offered an additional one minute for rebuttal. Of course the case was fully briefed before Friday's arguments.

Judge Wood didn’t waste any time. Sure, Congress, when it enacted Section 230, did not want online services to be penalized for filtering objectionable content. But does it follow, she asked, that Congress wanted to make life more difficult for online services that do not employ blocking technologies? She asked CLC’s counsel why is it that a service that takes a neutral position regarding filtering is subject to liability?

CLC's counsel's response seemed to be that, like it or not, this is what the statute provides. In some cases where an online service employs filtering, it may be immune pursuant to 230(c)(2). But if such immunity does not apply, there is no protection for the online service under Section 230. In other words, CLC’s position seems to be that Section 230(c)(1) does not offer any protection for an online service that does not employ any filtering mechanisms. This of course flies in the face of over a dozen federal appellate decisions ruling to the contrary.

Judge Easterbrook - who wrote the court's opinion in Doe v. GTE, which was heavy on dictum and suggested that Section 230(c)(1) indeed may only be definitional and not substantive - followed up, asking whether liability here boils down to whether Craigslist is a publisher (in other words, if liability requires treating Craigslist as a publisher, there can be no liability per Section 230). CLC’s counsel disagreed, asserting that under the FHA all Craigslist has to be is a “causer” of certain prohibited conduct. Judge Easterbrook acknowledged cases where newspapers were found liable (presumably under the FHA), such papers being the publishers of certain materials. But CLC's counsel countered that those courts did not specify the basis for liability, and that in one case the court referred to a newspaper as having “carried” an ad. CLC's counsel acknowledged, however, that such phrase does not appear in the FHA.

Judge Easterbrook noted that Section 230(c)(1) is not, contrary to what other courts have held, an immunity provision (technically it’s hard to argue with him given the paragraph makes no express reference to immunity). Instead (c)(1) is saying that an ISP cannot be treated as a publisher in some cases. This left me with the impression, when factoring in his line of questioning, that Judge Easterbrook may have had a partial change of heart since he wrote Doe v. GTE Corp., wherein he suggested in dictum that (c)(1) may just be definitional and a lead-in to the immunity provision contained in paragraph (2). Now he seems to be saying that (c)(1) can do some real work (not immunization, mind you). If I had to guess, if CLC, to prove a violation of the FHA, must show that Craigslist published a discriminatory ad, Judge Easterbrook would likely conclude that Section 230(c)(1) shields Craigslist from liability. But he probably wouldn't use the word "immunize."

Judge Evans then joined the discussion, asking how could Craigslist, with its 30 million posts per month and 30 employees, possibly be expected to filter each posting. He quickly dismissed CLC’s counsel’s comparison to the responsibility of newspapers, again emphasizing the massive number of postings made on Craigslist. He seemed to disregard CLC’s counsel’s assertions that Craigslist has essentially conceded that filtering is possible, given its purported efforts in this area to date, and that Craigslist could reduce the occurrence of inappropriate ads by employing dropdown menus (for example (mine), one could choose to exclude smokers, but would have no way to indicate a desire to exclude minorities, because that wouldn't be among the dropdown choices).

Judge Easterbrook similarly did not buy the filtering argument. He offered an example of someone looking to rent out an apartment located near a Buddhist church. Should Craigslist prevent that person from using the word “Buddhist” in describing nearby landmarks, because the term could also be used in a discriminatory fashion? Of course such filtering is technically possible, but does the FHA require Craigslist to do so?

CLC’s counsel's response was that (c)(1) is not absolute, and that it must be read in conjunction with (c)(2). By that I think CLC is saying that Craigslist – as a carrier or “causer” – is beyond the scope of (c)(1) protection (if any such protection exists), and that (c)(2) immunity is not available here because Craigslist did not filter, or attempt to filter, the allegedly discriminatory ads. CLC's counsel also referred to Doe v. GTE, seemingly hoping Judge Easterbrook would stand by his suggestions therein that (c)(1) does not in and of itself offer any protection, and that the alternative reading would "gut" (c)(2). From my vantage point I did not get the impression that any of the panelists accepted these arguments.

Next up was Craigslist’s counsel. He directed the panel’s attention to Congressional committee reports prepared in connection with the 2002 Dot Kids statute which expressed approval for the federal courts' interpretation of Section 230 to date, citing the Zeran decision in particular.

Judge Easterbrook again asked whether there was any way that Craigslist could be liable if it could not (per Section 230) be treated as a publisher. Craigslist’s counsel responded, of course, in the negative. Pressing the issue, Judge Easterbrook returned to the newspaper cases, asking whether the website could somehow be held liable as a carrier. Judge Easterbrook offered the hypothetical of a phone bank being employed to put out discriminatory messages. Would the phone company be liable in such a case for FHA violations? To my surprise, Craigslist’s counsel responded “maybe.” Putting aside for the moment whether it's appropriate to compare carrier cases to ISP (or, more properly, Interactive Computer Service) cases, I have a hard time conjuring up a scenario where AT&T would be liable for a third party's use of its phone lines to make calls spewing discriminatory statements.

My overall take? Judge Evans didn’t say much, but what he did volunteer was favorable to Craigslist. Based upon her articulated understanding of the statute, Judge Wood also seems inclined to side with Craigslist. Last, but certainly not least, I’m thinking that Judge Easterbrook was not persuaded by CLC's arguments. However, and to his credit, he did demonstrate a willingness to consider an alternative basis for liability that would not implicate Section 230 protections. But I don't think CLC satisfied its burden in this regard.

I expect a unanimous ruling affirming Judge St. Eve’s decision that will relieve concerns website operators may have about some of the four year old dictum in Doe v. GTE. Your thoughts?

Click here to listen to the oral arguments yourself (QuickTime streaming).

Oral Argument in Craigslist Litigation

2008-01-07T14:46:00.001-06:00

The Seventh Circuit will hear oral argument (fifteen minutes per side) in Chicago Lawyers Committee for Civil Rights Under the Law, Inc. v. Craigslist Inc. on February 15, 2008. We won’t know the panel’s composition until the morning of, but I’m crossing my fingers Judge Easterbrook will be selected so we can see how his thinking has evolved, if at all, since the Circuit’s 2003 GTE ruling. The GTE panel also included Circuit Judges Bauer and Wood.

While I don’t expect to be live-blogging the argument, I will certainly be there scratching out some notes. Please tap me (the tie-less guy) on the shoulder if you’re able to make it to Court that day.

For a refresher, check out my 2006 guest post on May It Please The Court. Interested in reading the appellate briefs? Click here, and enter the case number (07-1101).

Realcomp wins Round 1 with the FTC

2007-12-13T09:28:00.000-06:00

Here's an excerpt from today's press release from the Federal Trade Commission:

In an initial decision filed on December 10, 2007 and announced today, Chief Administrative Law Judge (ALJ) Stephen J. McGuire dismissed a Federal Trade Commission complaint issued last year against a realtors’ group in southeast Michigan, ruling that “upon review of the totality of the evidence . . . it is determined that Complaint Counsel has not met its burden” of demonstrating that the policies of Realcomp II, Ltd. (Realcomp) have unreasonably restrained or substantially lessened competition in the relevant market. McGuire accordingly concluded that Complaint Counsel had not shown that the group’s policies resulted in “actionable consumer harm” in violation of Section 5 of the FTC Act.

Here's a link to ALJ McGuire's initial decision (be patient, it's a 144 page, 11mb file).

I have looked over the decision, and note the following-

While the “dual-listing” option noted in the Initial Decision may get an Exclusive Agency listing on Realtor.com, it will not get such a listing on MoveInMichigan.com or Realcomp’s IDX feed, both popular methods for Michigan consumers to view listings. And as for that Realtor.com listing, it will be inferior to the same listing that would show up on Realtor.com if it was submitted directly by Realcomp. This is because different MLSs use different data fields, and certain local data (i.e., the names of appropriate schools) will not appear on such dual-listings. Perhaps most importantly, the dual-listing option is dependent upon the “bypass” MLS maintaining its current Realtor.com upload policies. Such policies are likely to change should this Initial Decision stand.

I have a hard time accepting the procompetitive justifications offered by Realcomp for its Website Policy, in light of the National Association of Realtors’ prior statement that Exclusive Agency listings on IDX feeds “would not detract from the purposes of the MLS.”

To sum it up, this ruling essentially concludes that Realcomp’s Website Policy reasonably restrains the public exposure of non-Exclusive Right to Sell listings. I don’t think there is very much reasonable about it.

Another MLS settles with the FTC over alleged anticompetitive practices

2007-12-12T13:49:00.000-06:00

From the Federal Trade Commission's press release of earlier today:

The Federal Trade Commission today charged Multiple Listing Service, Inc. (MLS), a group of real estate professionals based in Milwaukee, Wisconsin, with violating the antitrust laws by adopting rules that withheld valuable benefits of the multiple listing service it controls from consumers who chose to enter into non-traditional listing contracts with real estate brokers. The rules blocked non-traditional, less-than-full-service listings from being transmitted by MLS to popular Internet web sites, but provided this important benefit for traditional forms of listings.
In settling the charges, MLS is barred from adopting or enforcing any rule that treats one type of real estate listing agreement more advantageously than any other, and from interfering with the ability of its members to enter into any kind of lawful listing agreement with home sellers. The order applies not only to MLS, but to other entities it controls, including MetroMLS and any affiliated Web site it operates. The settlement announced today follows the FTC’s 2006 announcement of a sweep alleging similar conduct by multiple listing services in other local areas in several states.

“The Commission action announced today reconfirms our commitment to ensuring that consumers can freely enter into lawful agreements with real estate brokers for help in selling their homes,” said Jeffrey Schmidt, Director of the FTC’s Bureau of Competition. “Homeowners should be able to lawfully contract with a broker on the terms that they choose, without facing interference by the broker’s competitors.”

For those of you interested, here are links to the FTC's complaint, order and analysis.

Judgment entered against Idaho class on tying claims

2007-12-04T11:14:00.001-06:00

It's been over six months since anything material has come out of the four class actions pending in federal district court in Idaho. You'll recall the court previously certified the following class in these cases, which allege that each defendant illegally tied the purchase of undeveloped land to payment of a commission based upon the value of the land plus anticipated development thereon:

All persons who: (1) bought an undeveloped lot in a subdivision in either Ada, Boise, Canyon, Gem or Owyhee county, Idaho between August 18, 2001 and February 28, 2006 in which Defendant has or had the exclusive right to market or sell the subdivision lots on behalf of the developer; (2) were required to build a house on the lot in order to buy the lot; and (3) were required to pay Defendant a commission based on the cost of the lot plus the actual or estimated cost of the house in order to buy the lot.

The wait is over. Last Friday District Judge Winmill granted summary judgment in favor of the four defendants on the state and federal tying claims. After identifying the relevant legal issue as "whether Defendants, in allegedly forcing Plaintiffs to buy Defendants' services on the sale of the subject homes built on the lots, foreclosed other brokerages from selling the same product to Plaintiffs," the court concluded that the defendants demonstrated that plaintiffs “lack evidence of foreclosure by pointing out that Plaintiffs did not want to purchase the tied product from any source.”

The plaintiffs' Idaho Consumer Protection Act claims remain before the court at this time.

Court denies majority of Missouri Real Estate Commission's Motion to Dismiss KCPA's complaint

2007-11-27T17:09:00.000-06:00

After the defendants filed their motion to dismiss over the summer, it's been pretty quiet in Kansas City Premier Apartments v. Missouri Real Estate Commission, et al. [In a nutshell, KCPA filed suit earlier this year in a Missouri state court, seeking a declaration that MREC cannot require KCPA - which operates a website that displays apartments available for rent - to obtain a real estate license. For more details, check out my original, first follow-up and second follow-up posts.] Not any more.

Yesterday Judge Hull denied, in part, the defendants' motion to dismiss plaintiff’s complaint. While the court did dismiss Count II (alleging due process violations), and the individual MREC commissioners and executive director (as parties), the remaining claims survived (alleged violations of applicable statutory exemptions, free speech, equal protection, and procedural failings), and MREC remains as a defendant.

This case is far from over.

Court denies motion for arbitration in Home Quarters litigation

2007-11-05T15:27:00.000-06:00

It has been several months since I last wrote about the Home Quarters v. Realcomp action pending in Michigan.

Last month, Magistrate Judge Whalen denied defendant MIRealSource's motion to compel arbitration and stay the litigation. The court relied in part on Judge Bucklo's recent decision in the Hackman suit pending in Illinois, stating that "[f]or virtually identical reasons, present Plaintiff's antitrust claims fall outside the 'disputes' contemplated by NAR's Manual, which, as in Hackman, was incorporated in its entirety into the arbitration agreement." (emphasis in original).

Accordingly we can expect this case to proceed in federal court, with the record available to the public for review.

Federal antitrust enforcer pursues another MLS

2007-10-17T10:11:00.001-05:00

Perhaps you've already read about it over at the InmanBlog, but if not, I see that the Department of Justice has reached a tentative settlement with the Multiple Listing Service of Hilton Head. The agreement would require the rescission of discriminatory membership rules which burdened non-traditional brokers, minimum service requirements, and the authority of the MLSs' trustees to adopt rules that could directly regulate commissions. Unreal.

While the proposed settlement apparently has not yet been made public, a summary is contained in the DOJ's Competitive Impact Statement (see page 9 thereof), which was filed along with a civil complaint yesterday with the Clerk of the U.S. District Court for the District of South Carolina.

10/18/07 UPDATE: A kind media acquaintance has supplied me with a copy of the proposed final judgment (settlement) in this case. I'm looking forward to reviewing it.

Chicago Lawyers' Committee files appellate brief in Craigslist litigation

2007-10-13T10:12:00.000-05:00

Complying with the recently announced filing deadline, the Chicago Lawyers' Committee has filed an appellate brief in its case against Craigslist, presently pending before the Seventh Circuit.

Buried in a footnote is where I found the only reference to the Ninth Circuit's now-benched Roommate.com decision. While the issues presented in the two Fair Housing Act cases are not identical, I would have expected CLC's counsel to try to make more of the Ninth Circuit's decision. I suppose it's basically a moot point now.

I'm very much looking forward to attending the oral argument in this one.

New federal website addresses competition in the real estate brokerage industry

2007-10-10T13:12:00.000-05:00

Earlier today Inman News' InmanBlog posted on a new website created by the U.S. Department of Justice's Antitrust Division that is intended to shine some light on anticompetitive real estate brokerage practices. A DOJ press release accompanied the site's launch.

I see the new website includes a link for anticompetitive MLS practices, information on discriminatory state laws, and an email address for reporting questionable conduct. As you may recall, the joint FTC/DOJ report on industry competition issued last spring recommended, among other things, that DOJ "promote consumer understanding of marketplace options. . . . Competition in the real estate brokerage industry would likely be enhanced if consumers had better access to such information." Good to see the DOJ following through on this point.

Update on Chicago Lawyers' Committee v. Craigslist

2007-09-24T16:41:00.000-05:00

For those of you unfamiliar with this case, check out my guest post that appeared on May It Please The Court just after Judge St. Eve ruled last year on Craigslist's motion for judgment on the pleadings. After the court denied plaintiff's subsequent motion to reconsider, plaintiff appealed, and for the last six months the Seventh Circuit has suspended briefing, presumably to allow for a negotiated resolution.

Apparently a quick settlement isn't in the cards. Late last week the Court of Appeals jump-started the case by issuing a briefing schedule. Appellant Chicago Lawyers' Committee for Civil Rights Under Law, Inc.'s ("CLC") brief is due October 9, Appellee Craigslist's brief is due November 20, and CLC's reply brief is due December 7, 2007.

It will be interesting to see how the the Ninth Circuit's Roommate.com decision figures in to the parties' briefs.

UPDATE: U.S.A. v. National Association of Realtors

2007-09-11T10:16:00.000-05:00

District Judge Filip held a status hearing this morning in US v. NAR.

Discovery closes in a few months (November 21), and NAR's counsel stated that his client would "quite likely" be filing a motion for summary judgment thereafter. The court directed that such motion should be filed no later than January 14, 2008. The court set response and reply deadlines, and anticipated ruling on such motion (if filed) around April 25, 2008.

The parties expect a four week bench (non-jury) trial, and Judge Filip estimated that the trial would commence in early June 2008 (3 full days, one partial day, per week). Of course if NAR does file a motion for summary judgment, and the court rules in its favor, a trial would not be necessary.

A status hearing was scheduled for November 28, 2007 at 9:30 a.m. before Judge Filip.

Federal judge enters preliminary injunction against KREC Commissioners, rules certain state laws unconstitutional

2007-09-04T18:43:00.001-05:00

I've written about River Oaks Management v. Kentucky Real Estate Commission on several occasions (most recently here), and about an hour ago an anonymous commenter to an earlier post advised me that the court had ruled on several pending motions. Whoever you are, thank you! Here is a link to today's Order and accompanying Opinion.

As you can see, Judge Simpson granted plaintiffs' request for a preliminary injunction, thereby prohibiting KREC's Executive Director and Commissioners from (1) enforcing the prohibition against splitting fees with or compensating a real estate broker licensed in another state for the interstate brokerage of Kentucky real estate, and (2) enforcing the prohibition against aiding and abetting a real estate broker licensed in another state in the interstate brokerage of Kentucky real estate.

The court also ruled that a statutory provision at issue and a related regulation were unconstitutional. To learn more, click on the "Opinion" link, above.

Significant rulings in Hackman v. Dickerson Realtors, et al

2007-08-31T14:55:00.001-05:00

It has been some time since I last wrote about Greg Hackman's private antitrust lawsuit filed against multiple real estate players in Rockford, Illinois. But earlier today Judge Bucklo issued a 50 page opinion in the case, ruling on a number of motions that have been pending before her. Here's a summary of her decision, which is more or less broken down by the relevant defendants.

Century 21. Apparently plaintiffs have settled with Century 21 Country North, Inc. and dismissed it from the case.

Diane Parvin. Parvin asked the court to compel arbitration of plaintiffs' tortious interference claim, in light of an agreement Hackman made as a member of the Rockford Association of Realtors ("RAAR"). Plaintiffs had alleged that in August 2006 Parvin falsely told Hackman that a property was not available for his client to see, preventing Hackman from submitting an offer.

After analyzing the Federal Arbitration Act, Association bylaws, the Code of Ethics and Arbitration Manual, and determining whether Hackman's beef constituted a contract dispute, the court ruled that "[n]o matter how Hackman defines his own claim, disputes between realtors concerning violations of the MLS rules are 'contractual disputes' under Article XVII [of the RAAR bylaws]. Therefore, they are subject to arbitration."

However, the court ruled that Hackman's separate allegations that Parvin "interfered with his valid business relationships with potential clients by making derogatory statements about Hackman is . . . a tort claim . . . [and] is not subject to arbitration." But see my discussion below with respect to the inadequacy of the tort claim against Parvin. Finally, the court denied Parvin's request to suspend the entire judicial proceeding while the MLS rule matter is being arbitrated.

Rockford Association of Realtors/Illinois Association of Realtors. Dismissing Sherman Act and Illinois Antitrust Act claims against RAAR, the court relied in part on the U.S. Supreme Court's recent ruling in Bell Atlantic Corp v. Twombly, noting that "an allegation of encouragement is not a sufficient allegation of fact that raises Hackman's right to relief above a speculative level." Also, the court - citing lack of jurisdiction - dismissed requests by Hackman to enjoin RAAR and IAR from conducting an ethics hearing against Hackman and to grant declaratory relief.

Prudential/Jessica Licary. The court also dismissed Hackman's state and federal antitrust claims against Prudential and Licary, again referring to Bell Atlantic:

In the antitrust context, the holding of Bell Atlantic requires that an antitrust plaintiff pleading the existence of a conspiracy or agreement to monopolize or restrain trade do more than conclusorily plead the existence of an agreement or conspiracy, but rather “a complaint with enough factual matter (taken as true) to suggest that an agreement was made.”

Like above, the court found Hackman's complaint insufficient here, noting that he "presents no evidence of an agreement other than evidence of parallel conduct." The court also dismissed a claim for what turned out to be "tortious interference with prospective economic advantage," noting the absence of any specific allegations of wrongful conduct by Prudential or Licary. Such tort-like claim against Parvin was also dismissed. However, a defamation per se claim against Prudential and Licary survived the court's ruling.

Melissa Smith/Lori Reavis/Ray Young. The court denied motions to dismiss the tortious interference with prospective economic advantage claims against these defendants, finding that Hackman's allegations against them did not require an allegation that a contract existed. The court added that Hackman has acknowledged that he did not intend to include Ray Young in his defamation claim, and denied Reavis' request that Hackman elaborate on the tort claim.

Young/Michael Dunn/Smith/Dickerson Realtors. Requests to disaggregate compound allegations were denied as to the antitrust claims, but granted as to the defamation and tortious interference counts. Thus Hackman will presumably be filing an amended complaint in the near future, perhaps not just to comply with this final part of the opinion, but to strengthen, if possible, his antitrust claims against various defendants so that they comply with Bell Atlantic.

WHAT DOES THIS OPINION TEACH US? First, as expected, Bell Atlantic has some serious teeth. For a Section 1 claim, if you don't have good, preferably direct, evidence of an agreement, and instead are simply relying on observed, parallel conduct, your claim is unlikely to survive a motion to dismiss. But note the court cited Bell Atlantic when considering Hackman's Section 2 claim and his defamation claim as well. Bell Atlantic means business, in the Section 1 arena and beyond.

Second, this opinion should remind all nontraditional brokers/agents out there that the antitrust laws are not your only potential weapons against objectionable practices. The court sustained several defamation claims and claims of tortious interference with prospective economic advantage. As Judge Bucklo explained in detail, the latter has the benefit of not requiring proof of a contract, and both claims, of course, do not require proof of a conspiracy. Each can be used, when appropriate, against unilateral conduct. And in the Hackman case, neither claim appears to be subject to arbitration.

I know it was issued just in the last few hours, and I've only read through it once, but I think that Judge Bucklo's opinion is a must read for any and all brokers/agents who may be contemplating legal action against "difficult" brokers/agents in their area. While bylaws will vary from association to association, and the common law will vary from state to state (here Judge Bucklo looked to Illinois law when considering plaintiffs' tort claims), the applicability of Bell Atlantic, and the potential utilization of tort claims against actionable, unilateral conduct, should be considered by all potential plaintiffs, regardless of jurisdiction.

Online Liability Blog

2007-08-24T21:54:00.000-05:00

This post is admittedly a little off topic. No antitrust/competition angle here, but there is a real estate connection. Perhaps you recall the forsalebyowner case and/or the pending zerobrokerfees and kcpremierapts cases, each implicating licensing laws and the First Amendment? Or maybe you read about the Roommate.com or craigslist decisions involving the Fair Housing Act and potential statutory immunity? Yes? No? Either way, I'll keep it short.

I recently created a new blog that focuses on online liability issues, i.e., the circumstances under which a website (and/or other Internet-related business) may be liable for certain online conduct. I thought I'd share a link to it here, and invite you to fire off any comments you might have. Soon I hope to have a static "Real Estate" page on the blog that highlights online liability issues relating to real estate-related websites. Stay tuned.

www.onlineliabilityblog.com

Certainly feel free to share the link with others who may be interested.

Thanks.

Realcomp knowingly violates NAR rule, its CEO offers after-the-fact explanations for suspect Website Policy

2007-08-09T13:38:00.001-05:00

Last week the FTC (technically lawyers supporting the complaint) filed a post-trial brief in the FTC v. Realcomp matter. No surprises really, but I did come across two matters worth noting here.

First, in several prior posts on this blog, I have wondered how it could be that Realcomp was enforcing its Website Policy, which among other things prevents EA listings from being uploaded to Realtor.com, notwithstanding a NAR rule that prohibited such practices. The FTC’s brief shed some light on this inconsistency:

At the same time [Realcomp] voted to change the Search Function Policy, the Realcomp Board rejected a motion that would have eliminated the Website Policy. That motion proposed that Realcomp comply with a recently passed NAR rule that requires NAR associated MLSs to include all listings, regardless of listing type, in any feed to public websites and in the IDX. Compliance with this rule is mandatory, which means that NAR has determined that the rule is necessary for the proper operation of an MLS. Realcomp had urged NAR not to pass this mandatory rule, but NAR rejected Realcomp's arguments. [citations omitted].

Thus we now learn that Realcomp has been knowingly violating the NAR rule. The brief elaborates further-

The National Association of Realtors - the organization whose purpose is to promote the interests of Realtors such as Realcomp's members – considered and rejected Realcomp's arguments. NAR has made it mandatory for every one of its hundreds of associated MLSs to include all listings, regardless of listing type, in any feed to public and IDX websites. Realcomp tried to convince NAR not to do this, arguing the very same thing it does here - that allowing Exclusive Agency listings "is in direct conflict with the very purpose of the MLS" because the seller could avoid paying a commission. But NAR, through its general counsel, squarely rejected Realcomp's arguments. NAR explained that including Exclusive Agency listing on feeds to public websites and the IDX is not a problem because (1) "the seller had engaged the services of a real estate professional"; (2) these listings include "an offer of cooperation and compensation to MLS participants"; and (3) if a cooperating broker brings a buyer, "that broker is entitled to the compensation communicated to the MLS participants by the listing broker." Thus, concluded NAR, including Exclusive Agency listings on these feeds would not detract from the purposes of the MLS. [citations omitted].

Accordingly, Realcomp’s Website Policy has not only triggered an FTC enforcement action alleging anticompetitive conduct in violation of the Federal Trade Commission Act, it has also knowingly contravened, and continues to contravene, a NAR rule directly on point.

In this light, perhaps my second observation will not be too surprising. I noticed this paragraph in a footnote toward the end of the brief:

While Realcomp elicited testimony from Karen Kage [Realcomp’s CEO] regarding the reason the Board adopted the Website Policy, not a single member of the Board of Governors could testify as to these reasons. Moreover, Ms. Kage's testimony is not supported by a single contemporaneous document. Instead, the contemporaneous documents indicate that Realcomp wanted to exclude Exclusive Agency listings entirely. Realcomp's supposed reasons for the Website Policy should therefore be viewed as post hoc rationalizations, which deserve no weight. [citations omitted]

Thus Realcomp has not only (i) promulgated, and declined the opportunity to rescind, a policy that it knows is in violation of what appears to be a carefully considered NAR rule, and (ii) subsequently been charged by the Federal Trade Commission with anticompetitive conduct, it would appear that (iii) its CEO has offered justifications for the policy that the governing board couldn’t even recite, and, regardless, were “not supported by a single contemporaneous document.”

Amended Complaint filed in Louisville Price-Fixing litigation

2007-08-06T15:12:00.001-05:00

Late last week the remaining plaintiff in the Louisville price-fixing class action filed an amended complaint with the Clerk. I have not had an opportunity to review the filing, but understand that the only changes relate to the identities of certain parties.

As you may recall, I previously wrote about the case here.

Realcomp update

2007-08-02T12:26:00.000-05:00

Earlier this week Realcomp filed its post-trial brief in the FTC v. Realcomp matter.

You'll recall that this case relates to Realcomp's "Web Site Policy" and its "Search Function Policy". Perhaps sensing a weakness in its case, Realcomp confirmed in its brief that "[i]n April, 2007, Realcomp repealed the Search Function Policy. It also repealed the definitional requirement that ERTS listings be full-service brokerage agreements."

According to the brief, Realcomp's Web Site Policy "provides that Listing information downloaded and/or otherwise displayed pursuant to IDX (Internet Data Exchange) shall be limited to properties listed on an exclusive right to sell basis." In other words, "[t]he Web Site Policy limits the distribution of EA listings to certain Internet cites and the IDX." Realcomp can't just come out and say what this means - no EA listings on Realtor.com, among other popular sites. And how does Realcomp justify its policy? "Brokers Can Easily Obtain Exposure on Realtor.com by Dual-Listing" with another MLS. Furthermore, "Problems That EA Brokers Face in Southeast Michigan Are More Likely a Function of Their Business Model." Allow me to translate - #1, if some of you brokers want to innovate, it's going to cost you (and consumers), and, #2, you innovative brokers wouldn't have so much trouble (see #1) if you'd just knock off all the innovating. Pitiful.

In an Order entered yesterday by the ALJ, closing arguments are scheduled for September 6, 2007.