Klein v. Henry S. Miller Residential Services, Inc.

94 F.R.D. 651, 35 Fed. R. Serv. 2d 1230, 1982 U.S. Dist. LEXIS 13188
CourtDistrict Court, N.D. Texas
DecidedJune 30, 1982
DocketCiv. A. No. CA-3-78-0829-J
StatusPublished
Cited by7 cases

This text of 94 F.R.D. 651 (Klein v. Henry S. Miller Residential Services, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Klein v. Henry S. Miller Residential Services, Inc., 94 F.R.D. 651, 35 Fed. R. Serv. 2d 1230, 1982 U.S. Dist. LEXIS 13188 (N.D. Tex. 1982).

Opinion

MEMORANDUM OPINION .

MARY LOU ROBINSON, District Judge.

This is a private antitrust action brought under Section 4 of the Sherman Act for alleged violations of Section 1 of .the Sher[653]*653man Act, 15 U.S.C. § 1. The Plaintiffs, Osnat and Mel Klein, are the sellers of a used single-family residential dwelling in Dallas County, Texas. The Defendants are various realtors, boards of realtors, and real estate listing associations in Dallas County, Texas. The cause is before the Court on the Plaintiffs’ Motion for Class Certification.

I. Factual Background

The Plaintiffs were homeowners in Dallas, Texas, in 1978. Early that year the Plaintiffs decided to sell their home and began contacting real estate brokers for assistance. Each broker contacted by the Plaintiffs quoted a brokerage commission of six percent of the sales price of the home, and each broker refused to negotiate the fee. On April 29, 1978, the Plaintiffs signed an exclusive listing agreement with Defendant Henry S. Miller Residential Services, Inc.

Shortly after signing the exclusive listing agreement the Plaintiffs contacted an attorney about the uniform commission quoted by the various brokers. The Plaintiffs were informed that the uniform commission rate was a possible violation of the antitrust laws, and the complaint initiating this action was drafted.

On June 30,1978, the Plaintiffs sold their home through the services of Henry S. Miller Residential Services, Inc. The Plaintiffs paid the Henry S. Miller Residential Services, Inc., a six percent commission on the $52,500 sales price of the home.

On July 6, 1978, the Plaintiffs filed this action for monetary, injunctive, and declaratory relief on behalf of themselves and all others similarly situated.

II. Claims in Contention

The Plaintiffs allege that the Defendants have engaged in concerted action to fix and maintain commission rates for the sale of used residential real estate at artificially high levels. The Plaintiffs further allege that the Defendants have conspired to restrict membership in listing associations, to restrict broker franchisees, and to adopt rules and regulations restricting competition among brokers in Dallas County, Texas.

The Plaintiffs seek certification of this action under Rule 23(b)(3) of the Federal Rules of Civil Procedure or, in the alternative, certification under one or more subdivisions of Rule 23(b)(2). The Plaintiffs define the class they seek to represent in two ways:

(1) all persons who have sold residential real estate in Dallas County, Texas, in whole or in part through the services of Defendants subsequent to July 1, 1974, and who have been injured by the alleged unlawful acts of the Defendants (as alleged in the complaint).

(2) all persons who have sold single-family residential real estate in Dallas County, Texas, in whole or in part through the services of the Defendant brokers and/or broker franchises of the Defendant broker franchisors which residential real estate was listed with Defendant listing associations, and/or multiple listing service of Defendant board of realtors, such sale being subsequent to July 1,1974, and resulting in a fee or commission of six percent charged and paid.

The Defendants deny all allegations of concerted price-fixing and maintain that class action is inappropriate because (1) the Plaintiffs have not satisfied the requirements for certification found in Rule 23(a) of the Federal Rules of Civil Procedure, (2) individual questions predominate over any common questions of fact and law, (3) the proposed class is unmanageable, and (4) the Plaintiffs have not satisfied the notice requirements of Rule 23(c)(2).

III. The Real Estate Industry in Dallas County

In order to determine whether this action is appropriate for class certification the Court must first' analyze the real estate industry with respect to the product, the sellers, and the buyers. A full understanding of the underlying facts is essential to the correct application of the require-[654]*654merits of Rule 23. State of Alabama v. Blue Bird Body Co., Inc., 573 F.2d 309 (5th Cir. 1978).

A. Structure of the Brokerage Industry

The brokerage industry in Dallas County is made up of a highly structured association of Real Estate Boards, Multiple Listing Services, Real Estate Franchisors and Franchisees, as well as individual brokers and agents.

The Defendant Board of Realtors are trade associations with the declared purpose of uniting persons engaged in the real estate business in Dallas County with the Texas Board of Realtors and the National Association of Realtors. The term “Realtor” is the exclusive possession of the National Association of Realtors and its use is regulated by the national association.

Within Dallas County the Dallas Board of Realtors has jurisdiction of the City of Dallas and all outlying areas except the cities of Irving, Grand Prairie, and Garland. Jurisdiction of those cities lies with the Irving, Grand Prairie, and Garland Boards of Realtors. The various boards have the right and duty to control the use of the term “Realtor” in their territory.

The Defendant Multiple Listing Services (MLS) are divisions of the Defendant Boards. The MLS maintains a central registry of all homes being offered for sale by MLS members in the Dallas area. Membership in the MLS and access to the central registry is limited to members of the Defendant Boards. Members of the MLS are obligated to attempt to obtain exclusive listing from sellers of used residential property. The exclusive listing guarantees the listing broker a share of the sales commission even though the actual sale may be consumated by another member of the MSL. The broker or agent who makes the sale shares in the commission. Only exclusive listings are published in the central registry. The failure to turn in an exclusive listing to the MLS can result in a fine or expulsion from the service.

To become a member of the Defendant Boards and thus have access to the MLS an individual must (1) possess a real estate license, (2) furnish written application to the Boards, (3) furnish evidence of a sound credit rating, (4) maintain regular office hours in a commercial location, (5) complete a course of instruction and pass an examination, (6) pay a $250.00 application fee.

Most of the thousands of individuals engaged in the real estate business in Dallas function as independent contractors of real estate firms. Other real estate brokers and agents function as employees for firms such as the Defendant Colwell Bankers. Still others function independently in the profession in either a full or part time capacity. Most of the brokers and agents in Dallas County are members of the various Defendant Boards.

B. The Brokerage Fee and Product Market

Brokerage fees in Dallas County have traditionally been set on a contingent fee basis.

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Bluebook (online)
94 F.R.D. 651, 35 Fed. R. Serv. 2d 1230, 1982 U.S. Dist. LEXIS 13188, Counsel Stack Legal Research, https://law.counselstack.com/opinion/klein-v-henry-s-miller-residential-services-inc-txnd-1982.