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Pomanowski v. Monmouth County Board of Realtors

Decided: May 10, 1982.

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



On certification to the Superior Court, Chancery Division, whose opinion is reported at 175 N.J. Super. 212 (1980).

For reversal and remandment -- Chief Justice Wilentz and Justices Pashman, Clifford, Schreiber and Handler. For affirmance -- None. The opinion of the Court was delivered by Clifford, J.

Clifford

[89 NJ Page 309] Defendant Monmouth County Board of Realtors (MCBR or the Board) is a trade association affiliated with defendants New

Jersey Association of Realtors and National Association of Realtors (registered).*fn1 MCBR makes available to its members the Monmouth County Multiple Listing Service (MCMLS), which operates as a committee of the Board. A by-law of the MCBR requires that as a precondition to access to MCMLS, a real estate broker be a member of the Board. The principal issue is whether that arrangement constitutes a violation of the New Jersey Antitrust Act, N.J.S.A. 56:9-1 to -19, as held by the court below, Pomanowski v. Monmouth County Board of Realtors, 175 N.J. Super. 212 (Ch.Div.1980). We hold to the contrary and hence reverse.

I

Plaintiff, Wayne Pomanowski, a licensed real estate broker, operates the Thompson Agency in Tinton Falls, Monmouth County. From 1972 until 1977 plaintiff was a member of both MCBR and MCMLS and had access to the multiple listing service as a member of the Board. In April 1977 plaintiff terminated his membership in the Board by not paying dues for himself and his salespeople. He was thereupon denied participation in MCMLS.*fn2

Shortly thereafter, plaintiff commenced this suit against MCBR; MCMLS; the National Association of Realtors; William G. Kircher, executive officer of MCBR; and Charles Darrah, president of MCBR. By amended complaint plaintiff alleged that in conditioning participation in MCMLS on membership in MCBR, defendants had restrained trade and conspired to restrain and monopolize trade in violation of N.J.S.A. 56:9-3 and

-4 (the monopoly theory was not pursued). Plaintiff sought injunctive relief under N.J.S.A. 56:9-10 and treble damages under N.J.S.A. 56:9-12 (the claim for damages was later waived).

On defendants' motion for summary judgment, the trial court entered judgment in favor of plaintiff pursuant to R. 4:67-5, declaring the limitation of participation in the multiple listing service to members of MCBR an unlawful restraint of trade. Pomanowski v. Monmouth County Board of Realtors, 152 N.J. Super. 100, 109 (Ch.Div.1977). The court recognized that alleged anticompetitive activity is generally analyzed under one of two standards: either it is condemned automatically as a per se violation of the antitrust law, or it is evaluated to determine whether it in fact causes significant harm relative to the business justification. The latter test -- the rule of reason -- is applied where restrictive conduct is not "manifestly anticompetitive," so that searching inquiry into both the degree of harm and the proferred business rationale is warranted. Continental T.V. v. GTE Sylvania Inc., 433 U.S. 36, 49, 97 S. Ct. 2549, 2557, 53 L. Ed. 2d 568, 580 (1977). Adopting this "rule of reason" analysis, the court found that because Board membership is "totally unrelated" to the operation of the multiple listing service, there existed no bona fide justification for restricting multiple listing service access to Board members only. 152 N.J. Super. at 108. Both MCBR and MCMLS were enjoined from denying non-members equal access to the multiple listing service. Inasmuch as the declaratory and injunctive remedy afforded plaintiff complete relief, the court entered judgment in favor of the other named defendants. Id. at 109.

On the appeal of MCBR and MCMLS the Appellate Division agreed that the "rule of reason" analysis was appropriate; it concluded that since membership in the MCBR was available on payment of dues to all New Jersey real estate brokers, and since plaintiff had been a member but had resigned voluntarily, the membership requirement was not "manifestly anticompetitive." Pomanowski v. Monmouth County Board of Realtors, 166 N.J. Super. 269, 271-72

(1979). However, inasmuch as the "rule of reason" analysis normally requires "'an ascertainment of the facts peculiar to the particular business,'" id. at 274, quoting White Motor Co. v. United States, 372 U.S. 253, 261, 83 S. Ct. 696, 700, 9 L. Ed. 2d 738, 745 (1963), and because the trial court's conclusions were based upon an inadequate factual basis, the Appellate Division remanded the case for a plenary hearing, on the basis of which the trial court was to "construct [its] determination with the bricks and mortar of detailed findings of fact and conclusions of law." 166 N.J. Super. at 274. We denied certification, 81 N.J. 260 (1978).

On remand plaintiff sought to establish that MCMLS controlled the real estate market in Monmouth County, so that an individual broker's participation in the service was essential to his continued ability to compete. Plaintiff argued that far from being a mere service to members of MCBR, the MCMLS was a practical economic necessity to small brokers like himself. Finally, he contended that there was no adequate business justification for conditioning access to MCMLS on Board membership.

Defendants urged that the MCMLS share of the real estate market was far smaller than plaintiff alleged, and that in any event, restricting MCMLS access to Board members was reasonable. They argued that inasmuch as membership in the Board is open to all licensed brokers, and since neither the Board dues nor MCMLS fees are exorbitant, a requirement of Board membership has no anticompetitive effect. As additional support for their position they emphasized the linking of MCBR to MCMLS as evidenced by the many hours of volunteer services, arbitration and grievance functions, and educational benefits supplied by Board members to MCMLS.

After a hearing in which both the Attorney General, on behalf of the Antitrust Section of the Division of Criminal Justice, and the National Association of Realtors participated as amici curiae, the trial court entered judgment for plaintiff. It determined that through MCMLS, the MCBR controlled at least 50% of the

residential real estate business of Monmouth County. 175 N.J. Super. at 216. The asserted advantageous nexus between the MCBR and the MCMLS in the form of volunteer activities was not considered sufficiently important to outweigh the anticompetitive effect of the non-access rule. Id. at 218-19. Therefore the court enjoined MCBR from requiring membership in the Board as a precondition to participation in the MCMLS. In addition it awarded attorney's fees and costs of suit to plaintiff.

On this appeal on grant of direct certification, 87 N.J. 426 (1981), defendants claim that the trial court erred, both in its analysis of the defendants' market share and in its determination that membership in MCBR posed an unreasonable condition on access to the MCMLS. They contend that controlling weight must be given to federal case law, and that federal cases raising the question at issue here have all been decided in their favor. In addition, defendants have moved to suppress the brief and appendix of the amicus curiae Attorney General. Decision on that motion was reserved until disposition of the appeal.

II

This Court recently recognized certain aids in the determination of the antitrust implications of arrangements such as that structured by the MCBR-MCMLS, in the light of our relatively new Antitrust Act, N.J.S.A. 58:9-1 to -19.

[C]onsonance between the federal and state enactments is required. Courts in assessing state antitrust acts patterned after the federal Sherman Act, as is the New Jersey act, have concluded that federal court interpretations of federal law constitute persuasive authority as to the meaning of the particular state enactments. Moreover, the New Jersey act is to be construed "in harmony with ruling judicial interpretations of comparable Federal antitrust statutes and to effectuate, insofar as practicable, a uniformity ...


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