Re/Max Intern., Inc. v. Realty One, Inc., 1:94-CV-0062.
| Decision Date | 19 March 1996 |
| Docket Number | No. 1:94-CV-0062.,1:94-CV-0062. |
| Citation | 924 F. Supp. 1474 |
| Parties | RE/MAX INTERNATIONAL, INC., et al., Plaintiffs, v. REALTY ONE, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
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Stephen J. Squeri, Charles M. Kennedy, IV, Leozino Agozzino, Elizabeth A. Grove, Jones, Day, Reavis & Pogue, Cleveland, OH, for Re/Max International, Inc., A.E.B.T.S., Inc., T.M.A.T.N.B., Inc., D.F.I., Inc., Joseph P. Grady, Inc., McGrew Realty, Inc., Property Professionals, Inc.
George W. Cochran, Streetsboro, OH, Edward W. Cochran, Shaker Heights, OH, for Re/Max Northeast Ohio Limited Partnership, Zames Realty, Inc., Realty Properties, Inc., True Independence Partnership.
Richard M. Markus, Porter, Wright, Morris & Arthur, Cleveland, OH, David R. Cohen, Porter, Wright & Morris, Cleveland, OH, for Realty One, Inc.
Thomas Ignatius Michals, John J. Eklund, Philip J. Carino, Nicholas A. Rossi, Maura L. Hughes, Calfee, Halter & Griswold, Cleveland, OH, for Smythe Cramer Co.
(Resolving Docket Nos. 300, 301, 304, 306, 307, 308, 310 and 312)
TABLE OF CONTENTS
I. INTRODUCTION ........................................................ 1483
II. BACKGROUND FACTS .................................................... 1484
III. SUMMARY JUDGMENT STANDARD ........................................... 1486
IV. THE MONOPOLIZATION CLAIMS ........................................... 1487
A. The Claims and Parties ........................................... 1487
B. The Underlying Law ............................................... 1488
1. Monopolization ................................................ 1489
2. Attempted Monopolization ...................................... 1489
3. Conspiracy to Monopolize ...................................... 1490
C. Analysis ......................................................... 1490
1. Plaintiffs' Expert Testimony .................................. 1490
2. The Status of Re/Max Int'l and Re/Max NE Ohio ................. 1492
3. The Monopolization Claims ..................................... 1493
a. Property Professionals v. Smythe Cramer .................... 1493
b. Five Franchisees v. Realty One ............................. 1494
4. The Attempted Monopolization Claims ........................... 1495
5. The Conspiracy to Monopolize Claims ........................... 1495
V. PLAINTIFFS' CONSPIRACY CLAIMS ....................................... 1496
VI. PLAINTIFFS' STATE LAW CLAIMS ........................................ 1501
A. Deceptive Trade Practices ........................................ 1501
1. Misrepresentation of Market Characteristics ................... 1501
2. Disparagement ................................................. 1502
B. Unfair Competition ............................................... 1503
C. Tortious Interference With Potential Business Relations .......... 1503
VII. REALTY ONE'S COUNTERCLAIMS .......................................... 1504
A. § 1 Conspiracy to Restrain Trade ............................ 1504
1. The "Cooperative Commission Conspiracy" Claim ................. 1504
2. The "Sham Litigation" Claim ................................... 1506
B. Intentional Interference With Business Relationships ............. 1507
C. Unfair Competition ............................................... 1508
VIII. CONCLUSION .......................................................... 1508
IX. RULE 54(b) CERTIFICATION ............................................ 1509
In this complex real estate antitrust case, twelve plaintiffs allege that two real estate companies have conspired to restrain trade and monopolize segments of the commercial real estate industry in parts of Northeast Ohio. Defendants in turn have filed a series of counterclaims, and the time has come to resolve a bevy of summary judgment motions.
A brief history of the pleadings is helpful in framing the case. Plaintiffs Re/Max International, Inc. ("Re/Max Int'l") and associated franchisees, A.E.B.T.S., Inc. ("Re/Max Crossroads") and T.M.A.T.N.B., Inc. ("Re/Max Affinity") filed a ten-count complaint against Defendants Realty One, Inc. ("Realty One") and Smythe Cramer Co. ("Smythe Cramer") asserting federal subject matter jurisdiction pursuant to 28 U.S.C. § 1337. Plaintiffs amended their complaint to join four additional Re/Max Int'l franchisees as plaintiffs — D.F.I., Inc. ("Re/Max Results"), Joseph P. Grady, Inc. ("Re/Max Xpress Realty"), McGrew Realty, Inc. ("Re/Max Key Realty"), and Property Professionals, Inc. ("Re/Max Property Professionals"), but the substance of the complaint's allegations remained the same (Docket No. 14).1 In addition to this initial group of seven, five more entities have since intervened as plaintiffs: Re/Max Northeast Limited Partnership ("Re/Max NE Ohio"), Zames Realty, Inc. ("Zames Realty"), Realty Properties, Inc. ("Realty Properties"), True Independence Partnership ("True Partnership"), and R.E.P., Inc. ("REP"). This second group of five has set forth its claims in the Intervening Plaintiffs' Second and Third Amended Complaints (Docket Nos. 99 and 147), which are substantially the same as the original plaintiffs' First and Second Amended Complaints.
Plaintiffs2 seek private enforcement of the antitrust laws pursuant to Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, due to defendants' alleged violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Plaintiffs also pursue pendent state law claims for violations of the Valentine Act, O.R.C. § 1331.01 et seq., and the Ohio Deceptive Trade Practices Act, O.R.C. § 4165.01 et seq.; and for unfair competition and tortious interference with potential business relations. Plaintiffs assert supplemental jurisdiction under 28 U.S.C. § 1367.
Plaintiffs' Count I alleges that the defendants conspired to restrain trade in violation of § 1 of the Sherman Act. Count II alleges that defendants conspired to monopolize in violation of § 2 of the Sherman Act. Counts III and IV, alleging § 2 violations of monopolization and attempted monopolization, respectively, are asserted against Realty One only. Counts V and VI, also alleging § 2 violations of monopolization and attempted monopolization, respectively, are asserted against Smythe Cramer only.
The remaining counts are asserted against both defendants. Count VII alleges unlawful formation of trusts under Ohio's Valentine Act. Count VIII alleges deceptive trade practices under Ohio's Deceptive Trade Practices Act. Count IX and X, asserted under Ohio law, allege unfair competition and tortious interference with potential business relations, respectively.3
Realty One counterclaims against plaintiffs, alleging violation of § 1 of the Sherman Act and tortious interference with business relations and unfair competition under Ohio law. Smythe Cramer counterclaims for a declaratory judgment on the validity of various actions taken by it in this dispute.4
At issue are the following: Realty One's motions for partial summary judgment on federal and state antitrust conspiracy claims (Docket No. 308), on the monopoly claims (Docket No. 310), and on all other state law claims (Docket No. 312); Smythe Cramer's motions for partial summary judgment on the same three sets of claims (Docket Nos. 306, 307 and 304, respectively); and original plaintiffs' and intervening plaintiffs' motions for summary judgment on Realty One's counterclaims (Docket Nos. 301 and 300, respectively). The matters have been fully briefed, and the Court has had the benefit of oral arguments.
For reasons set forth below, Realty One's and Smythe Cramer's motions are granted in full. Plaintiffs' and intervening plaintiffs' motions with respect to the counterclaims are granted in part and denied in part.
Re/Max Int'l, its associated franchisees and other intervening plaintiffs claim that Realty One and Smythe Cramer have engaged in anticompetitive conduct to prevent the expansion of the "Re/Max 100% Concept" and the creation of additional Re/Max affiliates in Northeast Ohio. Re/Max Int'l is a franchisor of a real estate broker business system. Re/Max franchises have established themselves nationwide, including in Northeast Ohio. Realty One and Smythe Cramer are long-established real estate brokerage firms with a significant presence in Northeast Ohio. Realty One and Smythe Cramer do not franchise their way of doing business.
Plaintiffs contend that ever since they entered the Northeast Ohio market, Realty One and Smythe Cramer, collectively and individually, have intentionally refused to deal with them through implementation of anticompetitive practices. Specifically, plaintiffs claim they have been the victims of a practice known in the real estate business as "adverse commission splits" ("ACS").
Commission splitting among real estate brokers and agents is not uncommon and might be summarized as follows: Prospective home buyers contact a real estate broker to express an interest in buying a home. The broker or his or her sales agent tells the home buyers that there will be no extra charge for his or her services in finding a suitable home under certain circumstances. At that point the broker presents the prospective buyers with two options. First, as agent or subagent of the home seller, the broker can show homes which are listed on a computerized, comprehensive multiple listing service ("MLS").5 If the prospective buyers purchase a home listed on the MLS, the broker, as agent or subagent for the sellers,...
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