PLS.com, LLC v. Nat'l Ass'n of Realtors

Decision Date03 February 2021
Docket NumberCase No. 2:20-cv-04790-JWH-RAOx
Citation516 F.Supp.3d 1047
CourtU.S. District Court — Central District of California
Parties The PLS.COM, LLC, Plaintiff, v. The NATIONAL ASSOCIATION OF REALTORS; Bright MLS, Inc. ; Midwest Real Estate Data, LLC ; and California Regional Multiple Listing Service, Inc., Defendants.

Adam S. Sieff, Everett W. Jack, Jr., Scott R. Commerson, Davis Wright Tremaine LLP, Los Angeles, CA, Ashlee M. Aguiar, Pro Hac Vice, John F. McGrory, Jr., Pro Hac Vice, Davis Wright Tremaine LLP, Portland, OR, Christopher G. Renner, Pro Hac Vice, Douglas E. Litvack, Pro Hac Vice, Davis Wright Tremaine LLP, Washington, DC, for Plaintiff.

Ethan C. Glass, Michael D. Bonanno, Pro Hac Vice, William A. Burck, Pro Hac Vice, Quinn Emanuel Urquhart and Sullivan LLP, Washington, DC, Robert Patrick Vance, Jr., Quinn Emanuel Urquhart and Sullivan LLP, Los Angeles, CA, for Defendant The National Association of Realtors.

Jerrold E. Abeles, Wendy Qiu, Arent Fox LLP, Los Angeles, CA, Brian D. Schneider, Pro Hac Vice, Arent Fox LLP, Ethan C. Glass, Quinn Emanuel Urquhart and Sullivan LLP, Washington, DC, for Defendants Bright MLS, Inc., Midwest Real Estate Data, LLC.

Andrea Rodriguez, Theodore K. Stream, Robert J. Hicks, Stream Kim Hicks Wrage and Alfaro PC, Riverside, CA, Ethan C. Glass, Quinn Emanuel Urquhart and Sullivan LLP, Washington, DC, for Defendant California Regional Multiple Listing Service, Inc.

MEMORANDUM OPINION ON MOTIONS OF DEFENDANTS TO DISMISS PLAINTIFF'S AMENDED COMPLAINT [ECF Nos. 50, 53, & 55] and MOTION TO STRIKE OF DEFENDANT CALIFORNIA REGIONAL MULTIPLE LISTING SERVICE, INC. [ECF No. 54]

John W. Holcomb, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This antitrust case concerns an alleged conspiracy among three regional real property multiple listing services—Defendants Bright MLS, Inc. ("Bright MLS"); Midwest Real Estate Data, LLC ("Midwest RED"); and California Regional Multiple Listing Service, Inc. ("Cal Regional MLS") (collectively, the "MLS Defendants")—and Defendant The National Association of Realtors ("NAR") to eliminate a competitor, Plaintiff The PLS.com, LLC. PLS maintains that Defendants are engaging in an unreasonable restraint of trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and California's Cartwright Act, Cal. Bus. & Prof. Code § 16720(a)(c).1

Before the Court are the three motions of Defendants Bright MLS and Midwest RED (jointly), Cal Regional MLS, and NAR, respectively, to dismiss PLS's Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.2 Also pending before the Court is the motion of Cal Regional MLS to strike the second claim for relief in PLS's Amended Complaint pursuant to California's Anti-SLAPP Statute, Cal. Civ. Proc. Code § 425.16.3 The Court held a hearing on Defendants’ three Motions to Dismiss and on Cal Regional MLS's Motion to Strike on October 15, 2020. After considering the papers filed in support of and in opposition to all four Motions4 and the arguments of counsel presented at the hearing, for the reasons explained herein, the Court will GRANT DefendantsMotions to Dismiss without leave to amend and will DENY Defendant Cal Regional MLS's Motion to Strike as moot .

II. BACKGROUND 5

Transactions for the sale of residential real estate involve a seller and a buyer who are typically each represented by a real estate professional.6 Real estate professionals are licensed real estate brokers and agents.7 Agents have the most direct relationship with the consumer; they solicit listings, work with sellers to market their homes, and work with buyers to find homes that match the buyers’ preferences.8 Brokers supervise agents and often provide branding, advertising, and other services that help agents attract sellers and buyers and complete transactions.9 Brokers and agents compete between and among themselves to provide residential real estate brokerage services to home sellers and buyers.10

A. The MLS Defendants and NAR

Most residential real property for sale in the United States is marketed through a multiple listing service ("MLS") platform.11 MLSs are joint ventures among, in effect, their members: licensed real estate professionals doing business in a particular local or regional area.12 Real estate professionals pay for membership and, therefore, access to an MLS, and those professionals must adhere to any restrictions that the MLS imposes.13 An MLS combines its members’ home sale listings information into a central database and then makes the listing data available to all of its members.14 Listing a property on an MLS enables a home seller's professional to market the property to a large set of potential buyers.15 Correspondingly, a professional who represents a buyer can search an MLS for listed homes in the area that match the buyer's preferences.16

The value of the network services provided by an MLS is largely a function of the number of members within the network.17 That is, the greater the number of members in the MLS, the greater the number of listings on the MLS, which increases the value of membership.18 Bright MLS, Cal Regional MLS, and Midwest RED are each regional MLSs: Bright MLS serves the Mid-Atlantic region;19 Cal Regional MLS serves California;20 and Midwest RED serves areas in the Upper Midwest.21

NAR is a trade association with more than 1.4 million individual members who are organized into 54 state and territorial associations and more than 1,200 local associations (the "Realtor Associations").22 NAR establishes and promulgates policies and professional standards for its individual members and for its Realtor Associations.23 Most real estate professionals in the U.S. are NAR members.24 Realtor Associations are required to adopt the rules and polices promulgated by NAR and to enforce those rules on the real estate professionals comprising the associations.25 Those policies include NAR's Handbook on Multiple Listing Policy.26

B. The NAR-Affiliated MLS System

There are around 600 MLSs nationwide that are affiliated with NAR through their ownership or operation by NAR's Realtor Associations (the "NAR-affiliated MLSs" ).27 NAR-affiliated MLSs are required to adopt new or amended NAR policies.28 All NAR-affiliated MLSs are actual or potential competitors with other NAR-affiliated MLSs.29 Bright MLS and Cal Regional MLS are NAR-affiliated MLSs,30 while Midwest RED is indirectly owned and controlled by NAR members.31 Real estate professionals are not required to be NAR members to participate in NAR-affiliated MLSs.32 Consequently, many real estate professionals who are not NAR members participate in NAR-affiliated MLSs.33

The majority of NAR-affiliated MLSs are for-profit entities that charge membership fees for access to their services.34 For years, NAR-affiliated MLSs have enjoyed a high market share across the country.35

C. Pocket Listings

MLSs generally impose specific requirements for their members’ entry of listing data regarding residential real properties. Sometimes, for a variety of reasons (including privacy), sellers of residential real property want to avoid providing all of the information required to market a listing through an MLS. A seller with those interests might ask her real estate professional to market the listing by other means, outside of an NAR-affiliated MLS system. An off-MLS listing service is referred to as a "pocket listing."36 A pocket listing allows a seller to customize and to limit the amount of information that she provides about her home, and, in this way, a pocket listing affords a seller with a level of privacy and discretion that is not available with an MLS listing.37 Historically, pocket listings were marketed bilaterally by real estate professionals—"face to face, through phone calls, or by email."38

PLS was created in 2017 in response to consumer demand for a centralized, nationwide searchable repository for pocket listings.39 Like an MLS, membership in PLS is available to all licensed real estate professionals who pay a membership fee. But unlike the many regionally-based MLSs, each of which charges its own membership fee, PLS charges a single fee to access its nationwide network.40 By joining PLS, real estate professionals can privately share pocket listings in cooperation with other members while avoiding the exposure of those listings through the NAR-affiliated MLSs.41 Also unlike MLS listings, PLS offers sellers the ability to share as much or as little information about their property as they desire.42 In sum, PLS's business model combines the network efficiencies of an MLS with the privacy and discretion of the pocket listing on a national—as opposed to a local or regional—platform.43

D. The Clear Cooperation Policy
1. Definition

On November 11, 2019, NAR adopted its "Clear Cooperation Policy."44 The text of the Clear Cooperation Policy is as follows:

Within one (1) business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays ..., digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.45

NAR created an exception to its Clear Cooperation Policy for so-called "office listings," which are listings marketed entirely within a brokerage firm without submission to an MLS.46 The Clear Cooperation Policy became effective on January 1, 2020, and it was included as a mandatory rule in the 2020 NAR Handbook on Multiple Listing Policy.47 NAR-affiliated MLSs enforce Clear Cooperation by monitoring members’ adherence to the policy, by encouraging members to report violations, and by threatening or imposing penalties on members for non-compliance.48

2. History and Adoption

In the months leading up to NAR's adoption of the Clear Cooperation...

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