Homelight, Inc. v. Shkipin

Background

HomeLight operates an online platform that connects real estate agents with homebuyers and sellers. An agent who accepts a referral that results in a sale must pay HomeLight 25% of the agent’s commission. Dmitry Shkipin operates HomeOpenly, an alternative agent-matching platform that does not charge referral fees and instead earns revenue through advertising and related services.

HomeLight sued Shkipin and HomeOpenly, Inc., alleging that they made false and misleading claims about HomeLight and misused or imitated HomeLight’s logo. Shkipin later filed a countercomplaint against HomeLight under Section 1 and Section 2 of the Sherman Act, Section 43(a) of the Lanham Act, and California’s Unfair Competition Law. He alleged that HomeLight’s referral-fee network restrained competition and that HomeLight made false statements about its services. The court had previously denied Shkipin’s motion for a preliminary injunction.

HomeLight moved to dismiss the counterclaims under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a pleading does not allege enough facts to support a legally recognized claim. The court accepted the countercomplaint’s factual allegations as true for purposes of the motion but did not accept unsupported legal conclusions.

Restraint-of-Trade Claim

The court held that Shkipin did not plausibly allege that HomeLight’s referral agreements with partner agents unreasonably restrained trade. The court treated HomeLight’s referral as an input into an agent’s eventual sale rather than as an agreement between horizontal competitors to charge customers the same price. The agreements required agents to pay HomeLight 25% of the gross commission from a sale involving a HomeLight referral, but did not require agents to charge customers a particular total commission.

Because the allegations did not establish a per se price-fixing violation, the court applied the rule of reason, which examines whether an agreement has substantially harmed competition. Shkipin did not allege that HomeLight had market power or facts showing actual competitive harm, such as reduced output, increased prices, or decreased quality. The court also found that agents were free to seek leads elsewhere and were not required to accept HomeLight’s leads.

The court separately rejected Shkipin’s hub-and-spoke theory. Although Shkipin identified HomeLight as the hub and its partner agents as the spokes, he did not plausibly allege the required horizontal agreement among the agents or facts showing that HomeLight’s agreements enabled the agents to coordinate prices. The court noted that the alleged standard commissions extended beyond HomeLight’s network and that Shkipin did not allege HomeLight required its agents to charge the same commission or excluded agents that charged less.

The court also found that Shkipin did not allege an antitrust injury. HomeOpenly claimed lost advertising revenue, lost profits, reduced business value, and weakened network effects. But the court found that these injuries were attributed to shoppers’ and agents’ decisions not to use or advertise on HomeOpenly, rather than to consumer injuries caused by HomeLight’s allegedly anticompetitive agreements.

Attempted-Monopolization Claim

The court held that Shkipin did not adequately plead attempted monopolization under Section 2 of the Sherman Act. Such a claim requires allegations of anticompetitive or predatory conduct, specific intent to monopolize, and a dangerous probability of obtaining monopoly power.

The court found no plausible allegation that HomeLight’s agreements were predatory or anticompetitive, and no facts showing that HomeLight intended to control prices or unreasonably destroy competition rather than grow its business. Shkipin also did not define a relevant product or geographic market or allege facts showing that HomeLight could control prices or exclude competition. The countercomplaint identified at least fourteen other referral-fee networks, several of which had grown substantially.

False-Advertising Claim

The court held that Shkipin did not state a false-advertising claim under Section 43(a) of the Lanham Act. The claim required a false factual statement in a commercial advertisement, actual or likely deception of a substantial part of the audience, materiality, use in interstate commerce, and injury or likely injury to the plaintiff.

The court first found that Shkipin did not adequately allege the type of commercial injury required to sue. HomeLight’s statements did not refer to or disparage HomeOpenly, and the alleged connection between statements on HomeLight’s website and HomeOpenly’s lost advertising revenue was too indirect. The court also noted another plausible explanation for shoppers choosing HomeLight’s website: HomeLight’s substantial online and television advertising.

The court then considered the specific statements identified by Shkipin. It found that the countercomplaint did not plausibly allege that HomeLight’s statement that its service was “100% free” materially deceived a substantial portion of its audience, particularly because a HomeLight webpage disclosed that HomeLight received part of an agent’s commission as a referral fee. The statement that HomeLight operated in compliance with housing laws was treated as a legal conclusion rather than an actionable factual statement. Statements that recommended agents could “typically” save customers thousands, that HomeLight could find the “perfect” agent, and that its recommendations were “unbiased” were treated as non-actionable general statements, or puffery. Shkipin also did not plead facts contradicting HomeLight’s numerical statements about the number of agents, transactions, or brokerages it analyzed.

California Unfair-Competition Claim

The court held that the California Unfair Competition Law claim also failed. That claim was based on the alleged violations underlying the first three counterclaims, and those violations had not been adequately pleaded.

Disposition and Other Orders

The court granted HomeLight’s motion to dismiss with leave to amend and dismissed Shkipin’s countercomplaint under Rule 12(b)(6). Any amended countercomplaint was due within 21 days of the order. The court did not decide whether RESPA prohibited HomeLight’s referral payments, whether HomeLight’s business model was generally lawful, or whether other participants in the real estate market had violated antitrust laws.

The court withdrew its limited-purpose referral of Shkipin to the Federal Pro Bono Project because the settlement conference had not resulted in a settlement and no further settlement proceedings were scheduled. It also stated that Shkipin could not represent HomeOpenly in future proceedings because he was not a licensed attorney. Finally, the court set deadlines for fact discovery, expert discovery, dispositive motions, the pretrial conference, and trial.