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Pomanowski v. Monmouth County Board of Realtors

Decided: June 11, 1980.

WAYNE C. POMANOWSKI, PLAINTIFF,
v.
MONMOUTH COUNTY BOARD OF REALTORS, A NEW JERSEY CORPORATION; MONMOUTH COUNTY MULTIPLE LISTING SERVICE; NEW JERSEY ASSOCIATION OF REALTORS; NATIONAL ASSOCIATION OF REALTORS; WILLIAM G. KIRCHER; AND CHARLES DARRAH, DEFENDANTS



Yaccarino, J.s.c.

Yaccarino

This case addresses the question of whether the requirement that a real estate broker join local, state and national realtor boards before he may have access to a multiple listing service violates the New Jersey Antitrust Act, N.J.S.A. 56:9-1 et seq. On a motion for summary judgment this court, applying the rule of reason analysis, determined that such a restriction does create an unlawful restraint of trade, 152 N.J. Super. 100. On appeal, the Appellate Division agreed that the rule of reason analysis was appropriate but reversed and remanded for detailed findings of fact. 166 N.J. Super. 269. A lengthy hearing was held, at which time the court made the following findings.

Our antitrust law, as modeled after the Sherman Act, prohibits "[e]very contract, combination . . . or conspiracy in restraint of trade or commerce." N.J.S.A. 56:9-3. Not all restraints, however, are illegal. It is only those contracts which unreasonably restrain trade that are prohibited. Finlay & Assoc., Inc. v. Borg-Warner Corp. , 146 N.J. Super. 210 (Law Div.), aff'd 155 N.J. Super. 331 (App.Div. 1976). In applying the "rule of reason" analysis to determine which contracts or combinations are unduly restrictive, a court must "focu[s] directly on the challenged restraint's impact on competitive conditions." Nat'l. Society of Professional Engineers v. U.S. , 435 U.S. 679, 98 S. Ct. 1355, 1363, 55 L. Ed. 2d 637 (1978). Such a study involves an evaluation of the facts peculiar to the business, the history of the restraint and the reasons why it was imposed. Id. at 1365.

The end product is "to form a judgment about the competitive significance of the restraint; it is not to decide whether a policy favoring competition is in the public interest, or in the interest of the members of an industry." Id. (emphasis supplied).

Significant to such a determination is the percentage of business controlled, compared to the strength of the remaining competition. U.S. v. Columbia Steel Co. , 334 U.S. 495, 527, 68 S. Ct. 1107, 92 L. Ed. 1533 (1948). The impact of the Monmouth County Multiple Listing Service (MCMLS) on the real estate business in Monmouth County, whether viewed statistically or in light of the realities of the marketplace, is substantial.

The need for a multiple listing service (MLS) is twofold. The numerous listings provided through the MCMLS are important to buyers as a means of providing a wide range of selection. Similarly, most sellers prefer the increased market available to them through MLS. Consequently, when plaintiff terminated his membership with the Monmouth County Board of Realtors (MCBR) and thereby lost access to the MLS, which is provided by the Board to its members, his sales staff left him, since his own small business with its insignificant number of listings could not compete with the advantages of an office with access to MLS. See Oates v. East Bergen Cty. Multiple Listing Serv. , 113 N.J. Super. 371, 380-82 (Ch.Div. 1971); Grillo v. Bd. of Realtors of Plainfield , 91 N.J. Super. 202, 220-21 (Ch.Div. 1966).

Before discussing the impact of the MCMLS in terms of volume, it is necessary to determine the relevant marketplace. See Marin County Bd. of Realtors, Inc. v. Palsson , 16 Cal. 3d 930, 130 Cal.Rptr. 1, 549 P. 2d 833 (Sup.Ct. 1976). On this question, the court is of the opinion that the study be limited to Monmouth County, excluding those nine municipalities which comprise the Southern Monmouth County Board of Realtors. See United States v. Tracinda Investment Corp. , 477 F. Supp. 1093 (C.D.Calif. 1979). The Southern Monmouth County Board has its own MLS and defendants offered no proof to indicate that this area had any impact on the MCBR's territory. Besides the fact that the MCBR's jurisdictional territory is limited to the

county, it was clearly established that at least 85% of the listings processed by the MCMLS come from the MCBR territory. This finding is supported by the plaintiff's study of his listings available on a given date. For January 22, 1980, of 2,427 listings in the book, 2,077 of those listings were in the MCBR jurisdictional territory. Furthermore, a study conducted by William Trombetta of the Anti-trust Section of the State Division of Criminal Justice indicated that for a two-month period covering November and December 1975, only 6% to 8% of the listings were from outside the jurisdictional territory.

The court is further of the opinion that the relevant market place must be restricted to residential sales. See Marin Cty. Bd. of Realtors v. Palsson, supra. Trombetta, qualified as a marketing expert, testified that, from a marketing standpoint, residential and commercial markets are of interest to different segments of the public with different needs. In addition, in reviewing the MLS Activity Report for 1978, it appears that residential listings comprised approximately 90% of the listings. Moreover, 97% of those listings resulted in closed sales of residential property.

In light of the foregoing, the court has determined that through MLS, the MCBR controls at least 50% of the residential real estate business of the County. Defendants had stipulated to having processed 25% and 29% of all sales for the fiscal years 1978 through 1979 and 1977 through 1978. However, these figures include commercial property, farms and vacant property which should be excluded, since, as noted above, the relevant market is residential sales. By excluding the nonresidential categories of sales, the percentage is higher since the total number of relevant sales is less than as calculated by defendants. Defendants also, in this court's opinion, wrongfully excluded intra-office sales. While such property was sold by the listing broker, it was nevertheless multiple-listed and, as such, available to other brokers. It is the fact of listing and sale of residential property through MLS that is relevant to this court.

Returning to plaintiff's figures, for the calendar year 1977 there was a total of $319 million sales ...


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