Feldman v. Sacramento Bd. of Realtors, Inc.

• Decision Date: 29 May 1981
• Citation: 119 Cal.App.3d 739,174 Cal.Rptr. 231
• Court: California Court of Appeals Court of Appeals
• Parties: , 1981-2 Trade Cases P 64,167 Barney FELDMAN, Plaintiff and Appellant, v. SACRAMENTO BOARD OF REALTORS, INC., Los Angeles Board of Realtors, Beverly Hills Board of Realtors, Oxnard Harbor Board of Realtors, San Francisco Board of Realtors, San Fernando Valley Board of Realtors, United Multiple Listing Service, Inc., California Association of Realtors, National Association of Realtors, Defendants and Respondents. Civ. 19647.

Page 231

174 Cal.Rptr. 231

119 Cal.App.3d 739, 1981-2 Trade Cases P 64,167

Barney FELDMAN, Plaintiff and Appellant, v. SACRAMENTO BOARD OF REALTORS, INC., Los Angeles Board of Realtors, Beverly Hills Board of Realtors, Oxnard Harbor Board of Realtors, San Francisco Board of Realtors, San Fernando Valley Board of Realtors, United Multiple Listing Service, Inc., California Association of Realtors, National Association of Realtors, Defendants and Respondents.

Civ. 19647.

Court of Appeal, Third District, California.

May 29, 1981.

As Modified on Denial of Rehearing June 24, 1981.

Barry & Finley, Steven C. Finley and David Barry, San Francisco, for plaintiff and appellant.

Moses Lasky, John E. Munter, Lasky, Haas, Cohler & Munter, San Francisco, for all defendants and respondents, excepting Multiple Listing Service, Inc.

Dahl, Hefner, Stark & Marois, Sacramento, for defendant and respondent Sacramento Board of Realtors.

Condon & Condon and Michael J. Festa, Santa Monica, for defendant and respondent Multiple Listing Service, Inc.

CARR, Associate Justice.

Plaintiff appeals from the judgment of dismissal of his second cause of action after a motion for summary judgment was granted. ¹ For reasons which follow, we reverse and remand for further trial proceedings.

Plaintiff's second amended complaint contains two causes of action. ² The first is against Sacramento Board of Realtors (SBOR) and alleges plaintiff had been engaged by a client to sell certain real property in Sacramento; that he sought to list this property in the multiple listing service (MLS) operated by defendant Sacramento Board of Realtors and offered to pay the cost of such listing; that he was refused because he lives in Los Angeles and does not maintain an office in the territory serviced by the SBOR. Plaintiff further alleges this rule of SBOR is designed to prevent competition in violation of Business and Professions Code section 16720 et seq. (Cartwright Act). Triple damages are sought.

The second cause of action, with which we are here concerned, is labeled "Group Boycott" and is against all defendants, including SBOR. Each defendant is either a realty board operating a multiple listing service, an association of realtors on a state and national basis, or a multiple listing service. This count essentially alleges that plaintiff is a real estate broker who practices his profession throughout the State of California, including those areas serviced by the defendants; that he is not a member of any of the defendant boards or associations but wishes to make occasional use of their (MLS) on a book-by-book basis, ³ alleged to cost less than $50 per MLS book. Further that plaintiff has requested of each defendant board that he be allowed to use its MLS for the per capita cost of his use, but all have refused, and insist upon the payment of an initiation or participation fee ⁴ plus a "substantial" quarterly fee.

In concert with defendant boards, defendants California Association of Realtors and the National Association of Realtors are alleged to require defendant boards to submit MLS participation fees to them for approval and do not permit fees based on the "actual per capita cost of use." In addition, defendant United Multiple Listing Service would require plaintiff to procure the signed recommendations of two members of that listing service.

By reason of these "excessive" financial and other requirements for participation in the respective listing services, plaintiff alleges he is unable to make effective use of the listing services on a book-by-book basis and to practice his state-wide real estate business. This conduct by defendants has created a group boycott injuring plaintiff and he seeks compensatory and treble damages as well as injunctive relief.

Defendant United Multiple Listing Service, Inc., filed a general demurrer and motion for summary judgment to the second cause of action. The remaining defendants joined in a general demurrer, motion for summary judgment and motion to strike as to the second cause of action.

Defendant United Multiple Listing Service, Inc., filed a declaration in support of its summary judgment motion averring it was not a realty board, had no organizational relationship to any realtor organization, was not a member of either of the defendant associations but simply an independent multiple listing business open to any real estate broker licensee willing to join. That there are no restrictions on membership and inferentially all members are charged the same fee.

In support of their motions for summary judgment the other defendants realty boards filed declarations that each MLS is open to board members and nonmembers alike, that the participation fees are the same for both board members and nonmembers, and that these fees cover only the cost of operating the MLS. That after payment of the initial fees, the listing services of the Sacramento and San Fernando boards are available on a book-by-book basis although the other four boards charge quarterly fees.

In a declaration in opposition to defendants' motions for summary judgment, plaintiff averred in relevant part that the purchase of an MLS book from the several boards is essential to his state-wide business as a real estate broker and that he cannot afford to pay all the initiation and MLS fees requested.

The trial court granted defendants' motions for summary judgment on the ground that none discriminate in offering and pricing their listing services. ⁵ Plaintiff's appeal ensued.

On the ground stated, summary judgment was improper. Non-discrimination alone is insufficient to withstand a challenge under our state antitrust laws.

As stated in Marin County Bd. of Realtors, Inc. v. Palsson (1976) 16 Cal.3d 920, 930, 130 Cal.Rptr. 1, 549 P.2d 833: "... The threshold question is whether the practices ... should be judged per se violations of the Cartwright Act or reviewed under the 'rule of reason' standard. In general, only unreasonable restraints of trade are prohibited. (Standard Oil Co. v. United States (1911) 221 U.S. 1 (31 S.Ct. 502, 55 L.Ed. 619)) However 'there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.... Among these per se violations is the concerted refusal to deal with other traders, or, as it is often called, the group boycott. (Ibid.; Klor's v. Broadway-Hale Stores (1959) 359 U.S. 207, 212 (79 S.Ct. 705, 709, 3 L.Ed.2d 741))" In Palsson, the court then determined the "rule of reason," rather than any "per se" rule, is the applicable standard in determining whether a realty board's requirements for participation in its listing service in an unreasonable restraint of trade under California antitrust law. (See also Glendale Bd. of Realtors v. Hounsell (1977) 72 Cal.App.3d 210, 212-213, 139 Cal.Rptr. 830.)

Holding the rule of reason standard as employed in federal cases interpreting the Sherman antitrust act to be applicable, the court in Palsson considered, in terms of the relevant real estate market, the anticompetitive effects of a realty board's rule limiting access to its MLS only to board members. (At pp. 934-936, 130 Cal.Rptr. 1, 549 P.2d 833; see also generally Von Kalinowski (1980) Business Organizations: Antitrust Laws and Trade Regulation, § 6102(4) (a), pp. 6-123 to 6-125.) Finding substantial anticompetitive effects, the court then weighed these effects against countervailing justifications for the access rule (Palsson, supra, at p. 937, 130 Cal.Rptr. 1, 549 P.2d 833) and determined that access to the MLS was so essential to competition within particular market that the board's rule denying access to nonmember licensed real estate salesmen and brokers constituted an unreasonable restraint of trade. (Id., at p. 938, 130 Cal.Rptr. 1, 549 P.2d 833, accord, Hounsell, supra, 72 Cal.App.3d 210, 139 Cal.Rptr. 830.) In remanding the case to the trial court for the fashioning of an appropriate injunctive decree, the court in dicta provided guidance as follows: "The board's rules denying access of nonmembers to the multiple listing service must be eliminated, although nonmembers may be charged a reasonable fee for use of the service consistent with the per-capita costs of operation." (Palsson, supra, at p. 940, 130 Cal.Rptr. 1, 549 P.2d 833. ⁶ )

The rule of reason requires the fact-finder to weigh all the circumstances of the case (see id., fn. 10, at p. 934, 130 Cal.Rptr. 1, 549 P.2d 833; Continental T. V. Inc. v. GTE Sylvania Inc. (1977) 433 U.S. 36, 49, 97 S.Ct. 2549, 2557, 53 L.Ed.2d 568, 580), including the facts peculiar to the business to which the restraint is applied, the nature of the restraint, and its effects (Pomanowski v. Monmouth County Bd. of Realtors (1979) 166 N.J.Super. 269, 399 A.2d 990, 992 (1979-1 Trade Cases P 62,603, pp. 77,491 and 77,493, citing Board of Trade v. United States (1918) 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683, 687; Pomanowski v. Monmouth Bd. of Realtors (1980) 175 N.J.Super. 212, 417 A.2d 1119 (1980-2 Trade Cases P 63, 487, p. 76569)). Stating the rule in the present context, the reasonableness of the requirements for MLS participation and the extent to which those requirements act as a deterrent to participation must be considered where such participation affords traders a substantial competitive advantage. (See Opinion of the Attorney General of North Carolina (1980) 1980-1 Trade Cases P 53,217, p. 78,040.) A showing only that the participation requirements in defendant boards' listing services are not discriminatorily priced as between real estate brokers who are board members and those who are not is highly relevant but insufficient to sustain a summary judgment in defendants' favor that such requirements do not unreasonably...