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United States v. Greater Pittsburgh Board of Realtors; Motion of the United States for Modification of the Final Judgment

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Notice is hereby given that a Motion for Modification of the Final Judgment, proposed Final Judgment and proposed Order have been filed with the United States District Court for the Western District of Pennsylvania. United States of America v. Greater Pittsburgh Board of Realtors, Civil Action No. 72-499. The Realtors Association of Metropolitan Pittsburgh (“RAMP”), the successor to the Greater Pittsburgh Broad of Realtors, is bound by a Final Judgment that settled allegations defendants published, circulated, and adhered to agreed-upon uniform rates of commissions and fees in violation of the Sherman Act. The Final Judgment was entered on May 21, 1973 and prohibited the defendants from agreeing on prices and from publishing any rate or commission for the sale of real estate.

RAMP publishes Pittsburgh Homes Guide by Realtors, a real estate listings magazine. Member real estate professionals purchase advertising to describe the services they offer. At least one firm offering real estate brokerage services has attempted to purchase advertising that would contain information about discounted fees. RAMP has informed that firm that it will not published the advertising because the Final Judgment prohibits it. The modified consent decree would strike that provision and add a provision making it clear that RAMP can publish information about real estate commissions and fees set by an individual broker. If approved by the Court, the new decree will allow the public access to more information about different kinds of fees charged by real estate professionals who help sell homes. The decree will still serve its original purpose: to enjoin RAMP and its member brokers from agreeing on prices. Copies of the Motion, proposed Final Judgment and Order are available for inspection at the Department of Justice in Washington, DC in Room 200, 325 Seventh Street, NW., on the Internet at http://www.usdoj.gov/​atr, and at the Office of the Clerk of the United States District Court for the Western District of Pennsylvania, 829 United States Courthouse, 7th and Grant Street, Pittsburgh, PA 15219.

Public comment is invited within 30 days of the date of this notice. Such comments, and responses thereto, will be published in the Federal Register and filed with the Court. Comments should be directed to John R. Read, Chief, Litigation III Section, Antitrust Division, Department of Justice, 325 7th ST., NW., Suite 300, Washington, DC 20530, (telephone: (202) 616-5935).

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J. Robert Kramer II,

Director of Operations, Antitrust Division.

End Signature

United States District Court for the Western District of Pennsylvania

United States of America, Plaintiff, v. Greater Pittsburgh Board of Realtors, East Suburban Multilist Real Estate Brokers, Inc., South Hills Multilist, Inc., North Suburban Multilist, and Greater Pittsburgh Multilist Council, Defendants.

Civil No. 72-499

Filed:

Entered:

The United States moves this Court to modify the Final Judgment entered in this case.

I. Background

The Complaint, filed on June 21, 1972, alleged that the defendants violated Section 1 of the Sherman Act by agreeing to fix commission rates in connection with the sale of property in the Pittsburgh metropolitan area. The complaint alleged, inter alia, that the defendants published, circulated, and adhered to the agreed-upon uniform rates of commissions and fees. On April 16, 1973, the United States filed its proposed consent judgment. The Court entered the judgment on May 21, 1973.

The Realtors Association of Metropolitan Pittsburgh (“RAMP”) is the successor-in-interest to defendant Greater Pittsburgh Board of Realtors, RAMP is a local real estate board which governs the membership and professional responsibility of the Realtors who list and show properties in the Pittsburgh metropolitan area. Pursuant to section III of the Final Judgment, the consent decree is binding on RAMP.

Traditionally, real estate agents have charged sellers of property a commission based on a percentage of the sales price of the property sold. The majority of real estate agents will price their services in this manner. However, some real estate agents are now using alternative business models and charging flat fees for their services. Typically, these models offer property sellers savings vis a vis traditional commission based services. At least one discount broker, Help-U-Sell Dixie Realty (“HUS”), has entered the Pittsburgh market with an alternative business model.Start Printed Page 39793

In order to educate consumers about the availability of alternatively priced services, discount brokers need to advertise information about their fees and service plans. RAMP currently publishes Pittsburgh Homes Guide by Realtors (“Homes Guide”), a real estate listings magazine. The magazine contains advertisements purchased by member real estate professionals with information about available homes for sale and the services they provide. Homes Guide is the only real estate advertising publication covering all of the Pittsburgh metropolitan area. Homes Guide is a popular vehicle for Pittsburgh area real estate brokers to advertise their services to consumers and is significantly less expensive than newspaper advertising.

HUS has attempted to advertise fees and potential savings in Homes Guide. RAMP has informed HUS that it will not publish advertising containing commission rates or cost savings claims because the Final Judgment prohibits such publication. Section IV(C) of the Final Judgment enjoined the defendants from “[a]dopting, suggesting, publishing or distributing any rate or amount of commissions or other fees for the sale, lease or management of real estate. * * *”

Section IV(C) of the Final Judgment served a useful purpose and was entered to remedy the defendants' alleged price fixing which artificially raised prices above their competitive level. The intent of the decree was to eliminate collusive behavior and promote competitive commissions among real estate brokers. With the growth of discount brokerage services, however, the provision no longer serves competition and has the effect of restricting legitimate advertising of competitive rates. The United States, therefore, moves to eliminate the words “publishing” and “distributing” from section IV(C) of the judgment so that RAMP is not prohibited from publishing competing commission rates.

Because IV(C), due to changed circumstances, now serves principally to inhibit competition, the United States moves to modify section IV(C) to enjoin the defendants only from:

(C) Adopting or suggesting any rate or amount of commissions or other fees for the sale, lease or management of real estate, provided, however, that surveys and studies may be conducted, published and distributed where not forbidden by Paragraph D of this Section IV of the Modified Final Judgment.

To further clarify the decree, the United States moves to amend paragraph IX, which begins, “[n]othing in this final Judgment shall be deemed to prohibit,” to add the following language:

(C) The publication of advertisements that include the commission rates of individual brokers, provided that the Defendants shall not adopt or suggest rates as proscribed by Section IV(C).

To clarify that RAMP has not consented to the Modified Final Judgment, the United States moves to amend the preamble paragraphs of the Final Judgment. Specifically, the United States moves to replace each instance of the phrase “this Final Judgment” with “the original Final Judgment.” In addition, the United States seeks to add the clause, “and upon the United States' sole motion to modify the Final Judgment.

II. The Legal Standards Applicable to Modification of an Antitrust Judgment With the Consent of the Government

This Court has jurisdiction to modify the Final Judgment pursuant to Paragraph XI of the Judgment, the Federal Rules of Civil Procedure, Fed. R. Civ. P. 60(b)(5), and “principles inherent in the jurisdiction of the chancery.” United States v. Swift & Co., 286 U.S. 106, 114 (1932); see also In re Grand Jury Procedures, 827 F. 2d 868, 873 (2d Cir. 1987). Where, as here, the United States, as plaintiff, unilaterally proposes a modification to a consent judgment and the modification does not further restrict the defendants' rights or actions, the Court should apply the same standard as when the United States and defendants both consent to a modification. When the government unilaterally seeks to modify a decree, the court evaluates the modifications in light of both how the additional burdens imposed by the proposed modifications affect the defendant's due process rights and the public interest. Cf. Duran v. Elrod, 760 F. 2d 756, 759 (7th Cir. 1985). However, where both the government and the defendant consent to modifications, the court focuses solely on the public interest aspects of the calculus. See, e.g., United States v. W. Elec. Co., 993 F. 2d 1572, 1576 (D.C. Cir. 1993); United States v. W. Elec. Co., 900 F. 2d 283, 305 (D.C. Cir. 1990); United States v. Loew's, Inc., 783 F. Supp. 211, 213 (S.D.N.Y. 1992); United States v. Columbia Artists Mgmt., Inc., 662 F. Supp. 865, 869-70 (S.D.N.Y. 1987) (citing United States v. Swift & Co., 1975-1 Trade Cas. (CCH) ¶ 60.201, at 65.702-03 (N.D. III 1975)). Here, the proposed modifications do not further impinge the defendant's rights, so the court need only evaluate the proposed modifications in light of the public interest. Thus, the issue before the Court is whether modifications is in the public interest. This is the same standard that a district court applies in reviewing an initial consent judgment in a government antitrust case. The judiciary's role in determining whether the initial entry of a consent decree is in the public interest, absent a showing of abuse of discretion or a failure to discharge its duty on the part of the government, is to “inquire * * * into the purpose, meaning, and efficacy of the decree.” United States v. Microsoft, 56 F. 3d 1448, 1462 (D.C. Cir. 1995).

The purpose of the antitrust laws is to protect competition. See, e.g., United States v. Penn-Olin Chem. Co., 378 U.S. 158, 170 (1964) (antitrust laws reflect “a national policy enunciated by the Congress to preserve and promote a free competitive economy”). The relevant question before the court therefore is whether modification of the Judgment would serve the public interest in “free and unfettered competition as the rule of trade.” N. Pac. Ry Co. v. United States, 356 U.S. 1, 4 (1958) see also United States v. W. Elec. Co., 900 F. 2d at 308; United States v. Am Cyanamid, 719 F.2d 558, 565 (2d Cir. 1983), cert denied, 405 U.S. 1101 (1984); United States v. Columbia Artists Mgmt., 66 F. Sup. 865, 870 (S.D.N.Y. 1987). Here, the Court should modify the decree as requested because it will remove a legal roadblock to brokers who want to advertise lower commissions to the benefit of home buyers and sellers.

Although the proposed modification is designed to allow RAMP more freedom in choosing what it can publish in its magazine, RAMP has declined to join the United States in its motion to modify the Final Judgment and has failed to offer an explanation to the United States as to why the public interest is served by the restriction.

III. The Proposed Modification Satisfies the Public Interest Standard

The purpose behind the consent decree's prohibition on advertising stemmed from the publication of prices after the defendants had agreed on commission rates among themselves. The primary concern with the conduct that led to the decree was the agreement on prices, not the publication of unilaterally determined prices. Modifying the consent decree as the United States' proposes will permit RAMP to allow price advertising but will still enjoin RAMP from “adopting” or “suggesting” fees for real estate services.

Further, “[r]estriction on [truthful] advertising are a form of output restriction in the production of Start Printed Page 39794information useful to consumers.” [1] Modifying the consent decree as the United States proposes will satisfy the public interest standard because price competition will be enhanced by allowing consumers access to more information about different prices charged by individual real estate agents. Further, the public will benefit from access to information about differing rate structures and fees charged by different agents and such information will reduce search costs by consumers seeking real estate services.

IV. Public Comment Period

The United States does not believe that this modification is subject to the Antitrust Procedures and Penalties Act (“Tunney Act”), 15 U.S.C. 16(b)-(h). However, in this case, the United States intends to follow the comment procedures outlined in the attached Explanation of Procedures.

It is the policy of the United States that an appropriate effort be taken to notify potentially interested persons of the pendency of the motion. In this case, the United States will publish a notice announcing the motion to modify in the Federal Register and the Pittsburgh Post Gazette, summarizing the motion and the proposed modified final judgment, describing the procedures for obtaining copies of the relevant papers and inviting the submission of comments within 30 days of publication. Within a reasonable time after the comment period, the United States will file any comments it receives and its responses with the Court. The United States requests that the Court not rule upon the motion until the United States has filed any comments and its responses or has notified the Court that no comments were received. The procedure is designed to notify all potentially interested persons that a motion to modify the Final Judgment is pending and provide them adequate opportunity to comment thereon.

V. Conclusion

For the foregoing reasons, the United States requests that the Court enter the proposed Order Modifying Judgment to enjoin, the defendants from:

(C) Adopting or suggesting any rate or amount of commissions or other fees for the sale, lease management of real estate; provided, however, that surveys and studies may be conducted, published and distributed where not forbidden by Paragraph D of this Section IV of the Modified Final Judgment.

and to amend paragraph IX, which begins, “[n]othing in this Final Judgment shall be deemed to prohibit,” to add the following language:

(C) The publication of advertisements that include the commission rates of individual brokers, provided that the Defendants shall not adopt or suggest rates as proscribed by Section IV(C).

and to amend the preamble paragraphs to state:

Plaintiff, United States of America, having filed its Complaint herein on June 21, 1972, and Plaintiff and Defendants by their respective attorneys, having consented to the making and entry of the original Final Judgment, without admission by any party in respect to any issue and without this Final Judgment constituting evidence or an admission by any party hereto with respect to any such issue;

NOW, THEREFORE, before any testimony has been taken herein, without trial or adjudication of any issue of fact or law herein, and upon the consent of the parties to the original Final Judgment, and upon the United States' sole motion to modify the Final Judgment, it is hereby ORDERED, ADJUDGED and DECREED as follows:

Dated this 28th day of June, 2005.

  Respectfully Submitted,

For Plaintiff United States of America

Leslie Peritz,

PA Bar No. 87539, Litigation II Section, Antitrust Division, U.S. Department of Justice, 1401 H Street, NW., Ste. 3000, Washington, DC 20530, 202-514-9602.

Erika L. Meyers,

Joan Hogan,

Litigation III Section, Antitrust Division, U.S. Department of Justice, 325 7th St., NW., Ste. 300, Washington, DC 20530, 202-514-8374.

United States District Court for the Western District of Pennsylvania

United States of America, Plaintiff, v. Greater Pittsburgh Board of Realtors, East Suburban Multilist Real Estate Brokers, Inc., South Hills Multilist, Inc., North Suburban Multilist, and Greater Pittsburgh Multilist Council, Defendants.

Civil No. 72-499

Filed

Entered:

Modified Final Judgment

Plaintiff, United States of America, having filed its Complaint herein on June 21, 1972, and Plaintiff and Defendants by their respective attorneys, having consented to the making and entry of the original Final Judgment, without admission by any party in respect to any issue and without this Final Judgment constituting evidence or an admission by any party hereto with respect to any such issue;

Now, therefore, before any testimony has been taken herein, without trial or adjudication of any issue of fact or law herein, and upon the consent of the parties to the original Final Judgment, and upon the United States' sole motion to modify the Final Judgment, it is hereby

Ordered, adjudged and decreed as follows:

I

For the purposes of this case, this Court has jurisdiction over the subject matter of this action and of the parties hereto. For purposes of this case, the Complaint states claims upon which relief may be granted against the Defendants under Section I of the Act of Congress of July 2, 1890, as amended (15 U.S.C. 1), commonly known as the Sherman Act.

II

As used in this Final Judgment:

(A) “Multiple Listing Service” shall mean any plan or program operated by a Defendant for the circulation of real property listings among members of such Defendant; and

(B) “Person” shall mean any individual, partnership, firm, association, corporation, real estate agency, member of the Defendants or other business or legal entity.

III

The provisions of this Final Judgment applicable to each of the Defendants shall also apply to each of their respective subsidiaries, successors and assigns; to each of their directors, officers, agents and employees, when acting in such respective capacities; and, in addition, to all persons in active concert or participation with any of them who receive actual notice of this Final Judgment by personal service or otherwise.

IV

Each of the Defendants, whether acting unilaterally or in concert or agreement with any other person, is enjoined and restrained from:

(A) Fixing, establishing or maintaining any rate or amount of commissions or other fees for the sale, lease or management of real estate;

(B) Urging, recommending or suggesting that any of its members or any other person adhere to any rate or amount of commissions or other fees for the sale, lease or management of real estate;

(C) Adopting or suggesting any rate or amount of commissions or other fees for the sale, lease or management of real estate; provided, however, that surveys Start Printed Page 39795and studies may be conducted, published and distributed where not forbidden by Paragraph D of this Section IV of this Final Judgment;

(D) Conducting, publishing or distributing, for a period of ten (10) years from the date of entry of this Final Judgment, any survey or study relating to rates or amounts of commissions or other fees for the sale, lease or management of real estate or ranges thereof; and thereafter where the purpose or effect of any such survey or study would be to fix, establish, stabilize or maintain any rate or amount or ranges of commissions or other fees for the sale, lease or management of real estate;

(E) Adopting, adhering to, maintaining, enforcing or claiming any rights under any by-law, rule, regulation, plan or program which restricts or limits the right of any of its members or any other real estate dealer in accordance with his own business judgment to agree with his client on any commissions or fees for the sale, lease or management of real estate;

(F) Taking any punitive action against any of its members where such action is based upon the member's failure or refusal to adhere to any rate or amount of commissions or fees for the sale, lease or management of real estate;

(G) Interfering with or limiting its members from maintaining part-time salesmen in their employ, or interfering with the terms of the relationship between its members and their salesmen where to do so would be contrary to or inconsistent with any provision of this Final Judgment;

(H) Fixing, maintaining, suggesting or enforcing any division or split between a selling broker and listing broker of commissions or other fees for the sale, lease or management of real estate;

(I) Refusing to receive, process or distribute a listing of any real estate by any member in a Multiple Listing Service because of the rate or amount of commissions or other fees for the sale, lease or management of real estate thereon; and

(J)(1) Boycotting, agreeing to boycott, or threatening to boycott any person; and/or (2) refusing to do business with any person where such refusal would be contrary to or inconsistent with any provision of this Final Judgment.

V

Each Defendant is ordered to eliminate from all rules, by-laws, regulations, contracts and other forms, any schedule of rates or amounts of commissions or other fees for the sale, lease or management of real estate and any provision requiring or suggesting a fixed division of such fees between a listing broker and a selling broker. Each Defendant is also ordered to insert in all rules, by-laws, regulations, contract and other forms a statement, prominently situated in all capital letters, that rates of commissions or other fees for the sale, lease or management of real estate shall be negotiable between a broker and his client.

VI

(A) Defendant Greater Pittsburgh Board of Realtors shall, upon application made, admit to membership any person duly licensed by the appropriate governmental authority to sell real estate in Pennsylvania as a real estate salesman or as a real estate broker and each of the other Defendants shall, upon application made, admit to membership any person duly licensed by the appropriate governmental authority to sell real estate in Pennsylvania as a real estate broker; provided, however, that the Defendants may adopt and maintain reasonable and nondiscriminatory written requirements for membership, not otherwise inconsistent with the provisions of this Final Judgment;

(B) Each of the Defendants is ordered and directed within ninety (90) days from the date of entry of this Final Judgment to amend its by-laws, rules and regulations by eliminating therefrom any provision which is contrary to or inconsistent with any provision of this Final Judgment; and

(C) Upon amendment of its by-laws, rules and regulations as aforesaid, each Defendant is thereafter enjoined and restrained from adopting, adhering to, enforcing or claiming any right under any by-law, rule or regulation which is contrary to or inconsistent with any of the provisions of this Final Judgment.

VII

Each of the Defendants is ordered and directed to mail within sixty (60) days after the date of entry of this Final Judgment, a copy of this Final Judgment to each of its members and to the persons listed in Schedule (A) attached to this Final Judgment and within one hundred and twenty (120) days from the aforesaid date of entry to file with Clerk of this Court, an affidavit setting forth the fact and manner of the compliance with this Section VII and Sections V and VI (B) above.

VIII

For a period of ten (10) years from the date of entry of this Final Judgment, each Defendant is ordered to file with the Plaintiff on each anniversary date of such entry, a report setting forth the steps which it has taken during the prior year to advise the Defendants' appropriate officers, directors, agents and employees to its and their obligations under this Final Judgment.

IX

Nothing in this Final Judgment shall be deemed to prohibit:

(A) The publication or circulation by a Multiple Listing Service of information, in connection with bona fide efforts to sell real estate, concerning the commission which a broker has agreed upon with his client, or the percentage division thereof which a listing broker has agreed to pay a selling broker, arrived at in accordance with this Final Judgment; or

(B) The adoption and enforcement by a Multiple Listing Service of rules requiring (i) that neither the commission nor the percentage division thereof, arrived at in accordance with this Final Judgment and specified for a listing not to exceed a reasonable period, may be altered without the consent of both the listing and the selling broker, and (ii) that the recipient of any such commission promptly pay over to the listing or selling broker, as appropriate, the percentage division of the commission as specified or as otherwise agreed upon by the listing and selling broker; or

(C) The publication of advertisements that include the commission rates of individual brokers, provided that the Defendants shall not adopt or suggest rates as proscribed in Section IV(C).

X

For the purpose of determining or securing compliance with this Final Judgment:

Duly authorized representatives of the Department of Justice shall, upon written request of the Attorney General or the Assistant Attorney General in charge of the Antitrust division, and on reasonable notice to a defendant made to its principal office, be permitted, subject to any legally recognized privilege, and subject to the presence of counsel if so desired:

(1) Access during its office hours to all books, ledgers, accounts, correspondence, memoranda, and other records and documents in the possession of or under the control of such defendant relating to any matters contained in this Final Judgment; and

(2) Subject to the reasonable convenience of such defendant, and without restraint or interference from it to interview officers or employees of such defendant regarding any such matters.Start Printed Page 39796

Upon such written request, each defendant shall submit such reports in writing, under oath if so requested, to the Department of Justice with respect to any of the matters contained in this Final Judgment as may from time to time be requested.

No information obtained by the means provided in this Section X shall be divulged by any representative of the Department of Justice to any person, other than a duly authorized representative of the Executive Branch of plaintiff, except in the course of legal proceedings to which the United States of America is a party for the purpose of securing compliance with this Final Judgment or as otherwise required by law.

XI

Jurisdiction is retained by this curt for the purpose of enabling any of the parties to this Final Judgment to apply to this court at any time for such further orders and directions as may be necessary or appropriate for the construction or carrying out of this Final Judgment, for the modification of any of the provisions hereof, for the enforcement of compliance therewith; and for the punishment of violations thereof.

Dated:

United States District Judge

End Preamble

Footnotes

1.  Philip Areeda, Antitrust Law, ¶ 2023b1, 184, Volume XI (2nd Ed.).

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