Income Realty & Mortg., Inc. v. Denver Bd. of Realtors

• Citation: 578 F.2d 1326
• Decision Date: 02 June 1978
• Docket Number: No. 77-2051,77-2051
• Parties: 1978-1 Trade Cases 62,079 INCOME REALTY & MORTGAGE, INC., Plaintiff-Appellant, v. DENVER BOARD OF REALTORS, Fritchle & Co., Moore & Co., the Trowbridge Agency, Inc., United Real Estate, Inc., John Marshall, C. D. Fritchle, Keith Schaefer, C. A. "Chuck" Trowbridge and Ken G. Grady, Defendants-Appellees. and Fuller & Co. and Donald L. Kortz, Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 1326

578 F.2d 1326

1978-1 Trade Cases 62,079

INCOME REALTY & MORTGAGE, INC., Plaintiff-Appellant, v. DENVER BOARD OF REALTORS, Fritchle & Co., Moore & Co., the Trowbridge Agency, Inc., United Real Estate, Inc., John Marshall, C. D. Fritchle, Keith Schaefer, C. A. "Chuck" Trowbridge and Ken G. Grady, Defendants-Appellees and Fuller & Co. and Donald L. Kortz, Defendants.

No. 77-2051.

United States Court of Appeals Tenth Circuit.

Submitted March 29, 1978.

Decided June 2, 1978.

Joseph A. Davies, P. C., Rasband & Davies, Denver, Colo., for plaintiff-appellant.

John L. Ferguson and Robert E. Warren, Jr., Gorsuch, Kirgis, Campbell, Walker & Grover, Denver, Colo., for defendant-appellee Denver Bd. of Realtors.

James M. Lyons and James R. Everson, Rothgerber, Appel & Powers, Denver, Colo., for defendants-appellees Moore & Co. and Keith Schaefer.

Before PICKETT, BARRETT and LOGAN, Circuit Judges.

PICKETT, Circuit Judge.

Income Realty and Mortgage, Inc., a corporation and duly licensed real estate broker in Colorado, brought this action against Denver Board of Realtors, an association of Denver real estate brokers, and other real estate brokers in the Denver, Colorado area, asking for injunctive relief and damages resulting from alleged violation of United States antitrust laws, 15 U.S.C. §§ 1 and 2. The trial court sustained motions to dismiss the action, holding that "the complaint fails to present any substantial economic effect on interstate commerce, and thus fails to present a basis for federal jurisdiction." In other words, the trial court was of the opinion that the activities of the parties were wholly local and had no substantial adverse effect upon interstate commerce. We agree with this conclusion.

The complaint alleges that the Board and other defendants who were licensed Colorado real estate brokers doing business in the Denver metropolitan area, in the course of their business, "engaged in a combination or conspiracy to restrain trade or to reduce competition in the business of real estate brokerage by attempting to destroy the business of the Plaintiff, or to coerce Plaintiff into conducting its business in a manner and upon terms controlled by the Defendants." It was alleged that in furtherance of the conspiracy the defendants employed the following unfair trade practices:

a) Publishing false and defamatory statements concerning the Plaintiff, its officers and its business practices.

b) Accusing the Plaintiff of illegality, immorality, and lack of ethics in its business dealings.

c) Disparaging the reputation and integrity of the Plaintiff and its officers.

d) Stating that the Plaintiff was unworth(y) of membership in the Defendant, DENVER BOARD OF REALTORS.

e) Stating that, due to the unethical practices of the Plaintiff, other real estate brokers would not deal with the Plaintiff.

f) Inferring that the Plaintiff, because of its lack of ethics and integrity, was to be deprived of its license to engage in real estate brokerage in the State of Colorado.

g) Soliciting for the purpose of harassing and embarrassing the Plaintiff, grievances to be filed with the Colorado Real Estate Commission, a public body charged with the regulation of the business of real estate brokerage in the State of Colorado.

h) Inferring that the Plaintiff, in order to conceal unethical, immoral, and illegal business practices, refuses to enter into co-brokerage agreements with the Defendants and other real estate brokers.

It is further alleged that the actions of the defendants were undertaken to monopolize the business of real estate brokerage in the Denver metropolitan area.

The Sherman Antitrust Act, Section 1, prohibits every contract, combination or conspiracy "in restraint of trade or commerce among the several States . . . ." Section 2 makes it unlawful to monopolize or conspire to monopolize "any part of trade or commerce among the several States . . . ." Section 15 authorizes those injured by violations of the antitrust laws to sue in the United States Courts. In determining whether there has been a violation of the Sherman Act the test is whether the acts complained of substantially and adversely affect interstate commerce. United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947); Wolf v. Jane Phillips Episcopal-Memorial Med. Ctr., 513 F.2d 684 (10th Cir. 1975). In Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 194, 95 S.Ct. 392, 398, 42 L.Ed.2d 378 (1974), the Court said: "The jurisdictional reach of § 1 thus is keyed directly to effects on interstate markets and the interstate flow of goods." In Spears Free Clinic and Hospital v. Cleere, 197 F.2d 125, 126-127 (1952), this court said:

To come within the purview of the Sherman Act the restraint of commerce or the obstruction of commerce must be direct and substantial and not merely incidental or remote. The conspiracy or combination must be aimed or directed at the kind of restraint which the Act prohibits, or such restraint must be the natural and probable consequence of the conspiracy.

The rules in cases where jurisdiction in questionable are summed up in Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 743, 96 S.Ct. 1848, 1851, 48 L.Ed.2d 338 (1976), as follows:

. . . It is settled that the Act encompasses far more than restraints on trade that are motivated by a desire to limit interstate commerce or that have their sole impact on interstate commerce. "(W)holly local business restraints can produce the effects condemned by the Sherman Act." United States v. Employing Plasterers Assn., 347 U.S. 186, 189, (74 S.Ct. 452, 454, 98 L.Ed. 618, 623) (1954). As long as the restraint in question "substantially and adversely affects interstate commerce," Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 195, (95 S.Ct. 392, 398, 42 L.Ed.2d 378, 386) (1974); Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. (219), at 234, (68 S.Ct. 996 at 1000, 92 L.Ed. 1328 at 1333), the interstate commerce nexus required for Sherman Act coverage is established. " 'If it is interstate commerce that feels the pinch, it does not matter how local the operation which applies the squeeze.' " Gulf Oil Corp. v. Copp Paving Co., supra, 419 U.S. at 195, (95 S.Ct. 392 at 398), quoting United States v. Women's Sportswear Assn., 336 U.S. 460, 464, (69 S.Ct. 714, 716, 93 L.Ed. 805, 811) (1949).

The allegations in Income's complaint as they relate to the effect upon interstate commerce are limited to the conclusory statement that the parties were "engaged in interstate brokerage of real estate." No facts are alleged which show any interstate involvement in the transactions of any of the parties to the litigation. A similar question arose in Bryan v. Stillwater Board of Realtors, et al., 578 F.2d 1319 (10th Cir. 1977). In that case the court recognized the rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. The parties in the Bryan case were in the same relation to each other as those in the case at bar. ¹ Bryan sought injunctive relief and damages resulting from violations of the antitrust act. Unlike the present case, there were allegations in the Bryan case of activities that had some relation to interstate commerce. The court characterized those activities as being too unrelated and only incidental to interstate commerce and not a part thereof within the meaning of the Sherman Act. With reference to the inadequacy of the complaint, the court said:

. . . The complaint does not contain any factual averments, even by inference, constituting a conspiracy in restraint of interstate commerce actionable under the federal antitrust laws and none supporting an unlawful monopoly or attempt to monopolize trade or commerce. . . . It is the rule that in pleading the requisite anti-competitive effect in a federal antitrust suit, there must be some allegation of ultimate facts sufficient to show restraint on interstate commerce. . . . (Bryan, supra, at 1323.)

We conclude that the activities complained of in Income's complaint were wholly local and had no adverse effect or impact on interstate commerce as condemned by the Sherman Act. The trial court did not err in sustaining the motions to dismiss.

AFFIRMED.

LOGAN, Circuit Judge, concurring in part, dissenting in part:

The dismissal of the complaint by the court below was without leave to amend, apparently as contemplated under Fed.R.Civ.P. 12(b)(6). Thus this Court's affirmance of necessity is a ruling that not only is the complaint defective, but in the words of the trial court below, "The complaint, even if well pleaded, would not state a claim for relief under the Sherman Act. Thus, amendment is not practical or warranted in the premises." (R. 101).

In coming to its conclusion the lower court understandably relied upon our opinion in Bryan v. Stillwater Board of Realtors, 578 F.2d 674 (10th Cir. 1978). In my view while that opinion was probably correct on the facts in language it went too far, and the majority opinion in the instant case now compounds the error.

It seems to me certain that the Denver Board of Realtors and the prominent individuals and brokerage firms sued here, while operating essentially intrastate, have a sufficient connection with interstate commerce to come within the ambit of the Sherman Act, with respect to some of their activities. The Supreme Court has held recently that complaints alleging activities by a city-owned public utility to prevent competition by foreclosing markets, engaging in boycotts and utilizing sham litigation stated a cause of action under the Sherman Act. City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 392 n. 5, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978). It has also held valid as stating a cause under the Sherman Act, a complaint against individuals and hospitals...