Top Agent Network, Inc. v. National Association of Realtors

Background

The National Association of Realtors (NAR) and its local chapters operate multiple listing services, or MLSs, that licensed real estate agents can access by paying subscription fees and agreeing to NAR’s rules. NAR adopted the MLS Clear Cooperation Policy, which generally requires an agent who markets a property publicly to submit the listing to the local MLS within 24 hours. The policy also limits an agent’s ability to market a property through another listing service without listing it on the MLS.

Top Agent Network (TAN) operates a competing, private listing service available only to a small group of agents it considers “top agents.” TAN also offers a matchmaking service for private home sales. TAN’s members subscribe to NAR-affiliated MLSs and use the information available through those services. TAN alleged that the Clear Cooperation Policy made its members list properties on the MLS, reducing TAN’s exclusivity and causing its membership to decline.

TAN claimed that the policy was an unreasonable restraint of trade under Section 1 of the Sherman Antitrust Act. It characterized the policy as a group boycott—an agreement among competitors to cut off a business’s access to resources needed to compete. TAN also brought claims under California’s Cartwright Act, California common law for intentional interference with contractual relations, and California’s Unfair Competition Law.

Antitrust injury

The court explained that an antitrust plaintiff must allege “antitrust injury,” meaning harm caused by the anticompetitive effects of the challenged conduct. A competitor’s loss of business is not enough if the loss results from an aspect of the defendant’s conduct that benefits competition.

The court stated that TAN’s complaint plausibly alleged that the policy could harm competition in the broader market for home sales. The policy might reduce consumer choice by limiting private, off-MLS sales and might make it harder for alternative listing services to survive. The court also said that NAR’s control over MLS rules was not necessarily good for competition and that an open, nonexclusive competing listing service might have a plausible antitrust claim if the policy caused it to lose members.

But the court distinguished TAN because TAN’s service was intentionally exclusive. TAN limited membership to a small group of agents while its members continued to benefit from the open access provided by NAR-affiliated MLSs. The court reasoned that allowing TAN members to keep listings exclusively within TAN would reduce competition for those homes by preventing most agents from seeing them. Requiring those listings to appear on the open MLS therefore increased the information available to buyers and agents.

The court concluded that TAN’s membership losses resulted from the policy’s procompetitive effect—keeping listings available to a much larger group—not from an anticompetitive effect. Because TAN’s desired business model itself allegedly restricted competition, the court held that TAN could not use antitrust law to recover for the loss of that business model. The court further stated that TAN could not allege antitrust injury from the policy, so amendment would not cure the problem.

Other California claims and disposition

The court held that TAN’s Cartwright Act claim failed because that claim requires the same antitrust-injury showing as the Sherman Act claim. TAN’s intentional-interference claim also failed because TAN alleged only that its members chose not to renew their memberships, not that NAR induced them to breach existing contracts. The Unfair Competition Law claim failed because TAN had not stated a violation of another law on which that subsidiary claim could rest.

The court granted the defendants’ motion to dismiss, and the complaint was dismissed with prejudice. Under the court’s classification convention, this is a procedural order because it was decided on a motion to dismiss, even though the court analyzed the antitrust-injury issue.

Outcome

The defendants’ motion to dismiss was granted. The complaint was dismissed with prejudice, including TAN’s Sherman Act claim and its three California claims.