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Sitzer v. The National Association of Realtors

United States District Court, W.D. Missouri, Western Division

October 16, 2019

JOSHUA SITZER AND AMY WINGER, SCOTT AND RHONDA BURNETT, and RYAN HENDRICKSON, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
THE NATIONAL ASSOCIATION OF REALTORS, REALOGY HOLDINGS CORP., HOMESERVICES OF AMERICA, INC., BHH AFFILIATES, LLC, HSF AFFILIATES, LLC, RE/MAX LLC, and KELLER WILLIAMS REALTY, INC. Defendants.

          ORDER

          STEPHEN R. BOUGH UNITED STATES DISTRICT JUDGE.

         Before the Court is a Motion of the National Association of Realtors (“NAR”) to Dismiss the Association for Lack of Personal Jurisdiction and to Dismiss the Complaint for Failure to State a Cause of Action (Doc. #76) and Corporate Defendants' Motion to Dismiss (Doc. #78). For the following reasons, NAR's motion is DENIED and Corporate Defendants' motion is DENIED.

         I. LEGAL STANDARD

         A. Personal Jurisdiction

         When a defendant seeks dismissal for lack of personal jurisdiction under Rule 12(b)(2), “the plaintiff bears the burden to show that jurisdiction exists.” Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 820 (8th Cir. 2014) (citing K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d at 591-92 (8th Cir. 2011)). The plaintiff's prima facie showing of personal jurisdiction “must be tested, not by the pleadings alone, but by the affidavits and exhibits presented with the motions and in opposition thereto.” Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072-73 (8th Cir. 2004) (internal quotation marks omitted) (quoting Block Indus. v. DHJ Indus., Inc., 495 F.2d 256, 259 (8th Cir. 1974)).

         Plaintiffs filed suit in federal court under Section 1 of the Sherman Act, 15 U.S.C. § 1. The Sherman Act permits nationwide service of process for corporate defendants. See 15 U.S.C. § 12. “When a federal court is attempting to exercise personal jurisdiction over a defendant in a suit based upon a federal statute providing for nationwide service of process, the relevant inquiry is whether the defendant has had minimum contacts with the United States.” Aviva Life & Annuity Co. v. Davis, 20 F.Supp.3d 694, 703 (S.D. Iowa 2014); In re Fed. Fountain, Inc., 165 F.3d 600, 601 (8th Cir. 1999) (en banc).

         B. Failure to Dismiss a Claim

         Pursuant to Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed for “failure to state a claim upon which relief can be granted.” “To survive a motion to dismiss [for failure to state a claim], a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (internal citations omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ash v. Anderson Merchs., LLC, 799 F.3d 957, 960 (8th Cir. 2015) (quoting Iqbal, 556 U.S. at 678) (internal quotations omitted).

         The Court must consider all facts alleged in the complaint as true when considering a motion to dismiss. See Data Mfg., Inc. v. United Parcel Service, Inc., 557 F.3d 849, 851 (8th Cir. 2009) (noting “[t]he factual allegations of a complaint are assumed true and construed in favor of the plaintiff, even if it strikes a savvy judge that actual proof of those facts is improbable”). However, allegations that are “legal conclusions or [a] formulaic recitation of the elements of a cause of action . . . may properly be set aside.” Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting Iqbal, 556 U.S. at 677) (internal citations omitted). Ultimately, dismissal under Rule 12(b)(6) should be granted “only in the unusual case in which a plaintiff includes allegations that show, on the face of the complaint, that there is some insuperable bar to relief.” Strand v. Diversified Collection Serv., Inc., 380 F.3d 316, 317 (8th Cir. 2004) (internal quotations and citations omitted); see also Double D Spotting Serv., Inc. v. Supervalu, Inc., 136 F.3d 554, 560 (8th Cir. 1998) (“We note that courts are hesitant to dismiss antitrust actions before the parties have had an opportunity for discovery, because proof of illegal conduct lies largely in the hands of the alleged antitrust conspirators.”).

         II. BACKGROUND

         A vast majority of residential real estate sales and purchases in the United States occur on a Multiple Listing Service (“MLS”) marketplace.[1] An MLS is a database of properties listed for sale within a defined geographic region accessible to real estate brokers, their realtors, and agents. In a standard real estate transaction, the home seller retains a seller-broker and a home buyer separately retains a buyer-broker. Both brokers utilize a regional MLS listing to sell or locate a given property for their client. Generally, real estate brokers receive compensation in the form of a commission calculated as a percentage of a home's sale price. A seller-broker's compensation is set forth in a listing agreement, a contract between the home seller and broker containing the terms of the listing. A home buyer enters a similar contract with a buyer-broker, which typically states the buyer-broker's compensation will be paid out of the seller-broker's total commission-a commission paid by the home seller once the property is sold.

         Plaintiffs Joshua Sitzer and Amy Winger, Scott and Rhonda Burnett, and Ryan Hendrickson (“Plaintiffs”) filed their FAC on June 21, 2019. (Doc. #38). Plaintiffs are home sellers who listed their homes on one of four MLS marketplaces: Kansas City MLS (“Heartland MLS”), St. Louis MLS (“MARIS MLS”), Springfield, Missouri MLS (“Southern Missouri Regional MLS”), and Columbia, Missouri MLS (“CBOR MLS”) (collectively, “Subject MLS”). The Subject MLS are governed by local realtor associations that are members of NAR and must adhere to NAR rules and policies. Defendant NAR is a trade association for the real-estate industry that promulgates professional standards and policies its members and affiliates must abide by, including specific guidelines for listing properties on MLS marketplaces. Corporate Defendants are national real estate broker franchisors who each operate brokerage subsidiaries, franchisees, and/or affiliates within the geographic regions covered by the Subject MLS: Realogy Holdings Corp.; Homeservices of America, Inc.; BHH Affiliates, LLC; HSF Affiliates, LLC; RE/MAX, LLC; and Keller Williams Realty, Inc. (collectively, “Corporate Defendants”).

         Plaintiffs allege Defendants adopted and imposed anticompetitive restraints that inflated residential real estate commissions throughout Missouri, focusing primarily on Section 2-G-1 of NAR's MLS Listing Handbook-what Plaintiffs refer to as the “Adversary Commission Rule.” Plaintiffs allege “[t]he cornerstone of Defendants' conspiracy is NAR's adoption and implementation of a rule that requires all seller's brokers to make blanket, unilateral and effectively non-negotiable offer [sic] of buyer broker compensation (“the Adversary Commission Rule”) when listing a property on a [MLS].” (Doc. #38, p. 3). Plaintiff's FAC includes three counts against Defendants: (1) Count I: Violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; (2) Count II: Violation of the Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.010 et seq.; and (3) Count III: Violation of the Missouri Antitrust Law, Mo. Rev. Stat. § 416.031. NAR asks the Court to dismiss it from the action for lack of personal jurisdiction under Rule 12(b)(2) or, alternatively, to dismiss Plaintiffs' FAC under Rule 12(b)(6) for failure to state a claim. Corporate Defendants seek dismissal of Plaintiffs' FAC only pursuant to Rule 12(b)(6).

         III. DISCUSSION

         A. Lack of Personal Jurisdiction

         Only NAR argues dismissal is appropriate under Rule 12(b)(2) for lack of personal jurisdiction. In an Order previously denying NAR's Motion to Transfer (Doc. #82), this Court found personal jurisdiction existed under Section 12 of the Clayton Act. The result here is the same. For the reasons discussed in this Court's prior Order, the Court may properly exercise personal jurisdiction over NAR and its motion to dismiss due to lack of personal jurisdiction is accordingly denied.

         B. Count I: Violation of Section 1 of the Sherman Act

         Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.” 15 U.S.C. § 1. To establish a claim under Section 1 of the Sherman Act, a plaintiff must plead evidentiary facts which, if true, will prove: (1) there was a contract, combination, or conspiracy; (2) the agreement unreasonably restrained trade under either a per se rule of illegality or a rule-of-reason analysis; and (3) the restraint affected interstate commerce.[2]See HM Compounding Servs., Inc. v. Express Scripts,Inc., No. 4:14-CV-1858-JAR, 2015 WL 4162762, at *3 (E.D. Mo. July 9, 2015) (citations omitted). A plaintiff must additionally “demonstrate that he has suffered an ‘antitrust injury' as a result of the ...


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