Housing Bubble
San Diego realtors fixing prices, declares Appeals Court
March 11, 2003
SAN DIEGO, /PRNewswire/ -- The 9th Circuit Court of Appeals has ruled that all five Boards of Realtors in San Diego County fixed prices. In a ruling published Monday, Mar. 10th, the federal appeals court returned the class action to the district court for hearings on plaintiffs' requested injunction and determination of damages.
The case as filed in 1998 by two real estate agents who claimed the realtor boards were fixing the prices of multiple listing services (MLS) to all 8,000 realty agents in San Diego County. The plaintiffs seek $60 million in damages, after tripling as provided under the Sherman Antitrust Act.
The case arose from a coffee-shop meeting in Washington, D.C., at which officers of the five Boards of Realtors received approval for a price fixing scheme from the California Association of Realtors and the National Association of Realtors. After prices were raised, an outcry by San Diego realty agents led to the lawsuit.
The Court also affirmed a sanctions award against the Realtor Boards for intentionally withholding evidence of an unsuccessful attempt to end the price fixing. The cover-up was discovered with the aid of a dying man, William Stegall. After a diagnosis of terminal cancer, and given a year to live, Stegall advised Barry the Realtor Boards had covered up his unsuccessful efforts to end price fixing. The District Court lashed the Realtor Boards, declaring their acts "egregious."
San Francisco attorney David Barry, representing plaintiffs Arleen Freeman and James Alexander, stated, "The Realtor Associations swindled real estate agents out of millions of dollars. Now they're going to have to pay it back, going back to 1994."
The opinion by Circuit Judge Alex Kozinski commented on the admission of price fixing by the boards of realtors, stating, "Rarely do antitrust defendants serve up their own heads on so shiny a silver platter," at page 3593 of the text edition of the case.
All homes for sale in San Diego County are maintained in a multiple listing service (MLS) run by a corporation called Sandicor, which achieves $8 billion a year of real estate sales. Sandicor does not sell MLS services directly to real estate agents. Instead, Sandicor sells exclusively through the five realtor boards, acting as retailers. The five realtor boards fixed their retail prices to the 8,000 realty agents in San Diego County, overcharging them by $2 million per year, according to the suit. The realtor boards charge agents $45 per month for MLS services, while the suit alleges the true cost is $25 per month, an overcharge of about $20 per agent per month. The lawsuit by Barry seeks to collect overcharges to those 8,000 realty agents, including triple damages under the antitrust laws.
The five realtor boards own Sandicor. The boards asserted their ownership made them immune from price fixing lawsuits. The 9th Circuit rejected that defense.
There are over 1,600 local boards of realtors in the United States, and half of them have regional MLSs, estimates Barry. "This decision affects hundreds of MLSs across the United States," states Barry. He asserts that overcharges to realty agents of millions of dollars are passed on to consumers, and that today's decision will lead to lower commission rates charged to the public.
Source: Barry & Associates
A full copy of today's opinion is available online
