Holter v. Moore and Co., 81-1088

• Decision Date: 21 March 1983
• Docket Number: No. 81-1088,81-1088
• Citation: 702 F.2d 854
• Parties: 1983-1 Trade Cases 65,286 Dwight J. HOLTER and Sandra A. Holter, individually and on behalf of others similarly situated, Appellants, v. MOORE AND COMPANY, William M. Moore, individually, and Timothy M. Miller, individually, and on behalf of a class composed of all other sales associates of Moore and Company acting as real estate agents for sellers of residential properties, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 854

702 F.2d 854

1983-1 Trade Cases 65,286

Dwight J. HOLTER and Sandra A. Holter, individually and on behalf of others similarly situated, Appellants, v. MOORE AND COMPANY, William M. Moore, individually, and Timothy M. Miller, individually, and on behalf of a class composed of all other sales associates of Moore and Company acting as real estate agents for sellers of residential properties, Appellees.

No. 81-1088.

United States Court of Appeals Tenth Circuit.

March 21, 1983.

Phillip S. Figa, Denver, Colo. (with Hugh A. Burns, Denver, Colo., on the brief) of Burns & Figa, P.C., Denver, Colo., for appellants.

James M. Lyons, Denver, Colo. (with James R. Everson, Denver, Colo., on the brief) of Rothgerber, Appel & Powers, Denver, Colo., for appellees.

Before HOLLOWAY, McKAY and LOGAN, Circuit Judges.

McKAY, Circuit Judge.

Appellants sold their house through defendant Moore and Company (a Colorado real estate broker) and one of its licensed sales agents. Moore charged them its standard seven percent commission for the sale. They then brought this antitrust suit against Moore, its president, and all of Moore's sales agents on behalf of themselves and a class of plaintiffs similarly situated. They alleged that the seven percent commission Moore charges for sales of residential housing and the acquiescence in that rate by Moore's sales agents is resale price maintenance between Moore and the agents as well as horizontal price fixing among the agents. The trial court granted the defendants' motion for summary judgment. It held as a matter of law that Moore and the agents constitute a single economic entity incapable of conspiring under section 1 of the Sherman Act, 15 U.S.C. Sec. 1 (1976).

Section 1 of the Sherman Act can be violated only by concerted action by a plurality of actors. Blankenship v. Herzfeld, 661 F.2d 840, 846 (10th Cir.1981). Since a corporation has no way of acting except through officers and employees, the officers and employees are part of the same economic unit as the corporation for antitrust purposes. Thus, officers and employees of a corporation are generally incapable of conspiring with the corporation or with each other. ¹ Schwimmer v. Sony Corp. of America, 677 F.2d 946, 953 (2d Cir.1982); Tose v. First Pa. Bank, 648 F.2d 879, 893-94 (3d Cir.), cert. denied, 454 U.S. 893, 102 S.Ct. 390, 70 L.Ed.2d 208 (1981); H & B Equipment Co. v. International Harvester Co., 577 F.2d 239, 244 (5th Cir.1978). In addition, antitrust defendants with separate legal labels--e.g., corporation-agent--are not always capable of conspiring; they must be separate economic entities in substance as well. See Card v. National Life Insurance Co., 603 F.2d 828, 834 (10th Cir.1979) (general insurance agents incapable of conspiring with insurance company). Thus, even though Moore's sales agents are taxed as independent contractors, that fact is not dispositive of this case. While a corporation acting through its officers and employees can conspire under section 1 with some outside contractors, we face here an antecedent question: whether the licensed real estate agents employed by the broker are employees or outside agents for purposes of the Sherman Act. ²

Whether the relationship of the parties is employer-employee or principal-outside agent is normally a question of fact. See Blankenship v. Herzfeld, 661 F.2d at 846. However, the sufficiency of the evidence to create an issue of fact for the jury is solely a question of law. See Ogilvie v. Fotomat Corp., 641 F.2d 581, 589-90 (8th Cir.1981); 9 C. Wright & A. Miller, Federal Practice and Procedure Sec. 2524 (1971). Keeping in mind that summary judgment should be granted sparingly in antitrust cases, Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962), we must determine whether there was sufficient evidence in the record to create an issue of fact for the jury on whether the defendants were separate vertical and horizontal economic units rather than a firm and its employees.

Although existing cases dealing with the "single enterprise" doctrine have been criticized as lacking in certainty, ³ we think that the immense diversity of methods of organization and types of products makes some uncertainty unavoidable, relegating us to general guidelines and case-by-case resolutions. Some courts have attempted to set forth generalized tests for determining when formally distinct entities are in fact separate economic entities for antitrust purposes. See, e.g., Fuchs Sugars & Syrups, Inc. v. Amstar Corp., 602 F.2d 1025, 1031 n. 5 (2d Cir.), cert. denied, 444 U.S. 917, 100 S.Ct. 232, 62 L.Ed.2d 172 (1979). While we recognize that some of these criteria are at least in part question-begging, they nonetheless help to focus the inquiry, which centers on the independence of the allegedly conspiring actors.

The starting point in this case is the law of Colorado under which the parties operate. ⁴ Of course, state labels describing the relationship between the parties do not govern our application of a federal standard to determine whether the parties are separate economic entities. In this case, however, we look to state law as it actually limits the independence of the sales agents from Moore. ⁵ The sales personnel in this case are called "agents." However, a sales agent must have a license to sell real estate, Colo.Rev.Stat. Sec. 12-61-102 (Supp.1982), and he can obtain one only if he has an agreement to be hired by a broker, see id. Sec. 12-61-103(5). He may not work for any other broker. ⁶ The agents may perform real estate services only in the broker's name, 4 Colo.Admin.Code Sec. 725-1E-6 (1983), and all compensation for services must be paid to the broker--not to the agent, see Colo.Rev.Stat. Sec. 12-61-117 (1978). Finally, a "real estate broker shall not contract with the licensees in his employ so as to lose his authority to supervise [them]," 4 Colo.Admin.Code Sec. 725-1E-9 (1983), and a broker can lose his license for "failing to exercise reasonable supervision over the activities of his licensed employees," Colo.Rev.Stat. Sec. 12-61-113(1)(o ) (1978).

In addition to this legally required supervision, Moore supplies offices, secretaries, and real estate listings, and pays some expenses for the licensed agents. The appellants rely on the following indicia of economic separateness: (a) the agents are paid a commission, (b) Moore withholds no income or FICA taxes, or retirement benefit payments from the commissions, (c) each agent must be licensed by the state, (d) agents control their own hours, and (e) the agents pay some of their own expenses.

Our judgment is that the Colorado statutory scheme restricts the independence of the agents so much that they must be considered "employees" under section 1 of the Sherman Act. The Colorado provisions simply do not allow the agents to take any independent course of action that would be competitive with Moore. The nature of the relationship that Moore and the agents are legally required to maintain is so overwhelmingly one of superior and subordinate that the indicia relied on by the appellants are inconsequential. Payment by commission and the agents' concomitant incurrence of some costs are not dispositive factors in determining whether there is one or many entities. See American Oil Co. v. McMullin, 508 F.2d 1345, 1351-52 (10th Cir.1975). The requirement that the agents have licenses is consistent with their status as employees; it is no different from the case of beauticians employed by a single beauty parlor, Colo.Rev.Stat. Sec. 12-8-120(2) (1978), or associates employed by a law firm, id. Sec. 12-5-112. The...