Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc.

18 F. Supp. 3d 662, 2013 WL 6898173, 2013 U.S. Dist. LEXIS 181098
District Court, D. Maryland·Decided December 30, 2013·No. Civil Action No. 12-cv-00954-AW·Published·Cited by 3 cases

Opinion

MEMORANDUM OPINION

ALEXANDER WILLIAMS, JR., District Judge.

Pending before the Court are Counterclaim-Defendants Metropolitan Regional Information Systems, Inc. (“MRIS”) and National Association of Realtors (“NAR”)’s Motions to Dismiss the Second Amended Counterclaims of American Home Realty Network, Inc. (“AHRN”). The procedural background of this case has been covered in extensive detail in the Court’s prior Memorandum Opinions, which are incorporated by reference herein. See Doc. Nos. 34, 64, 159, 184, and 186. On June 10, 2013, the Court granted-in-part and denied-in-part MRIS’s Motion to Dismiss or Summarily Adjudicate AHRN’s First Amended Counterclaims and granted-in-part and denied-in-part NAR’s Motion to Dismiss AHRN’s First Amended Counterclaims. Doc. Nos. 159-160. The Court dismissed Counts I, V, VI, and VII of the First Amended Counterclaims with prejudice. The Court also dismissed Counts II, III, and IV — which alleged unfair competition under Maryland law and California law as well as violations of § 1 of the Sherman Act — without prejudice, and granted AHRN leave to file second amended counterclaims. Because the Court decided MRIS’s Motion under Rule 12(b)(6), not Rule 56, it denied as moot AHRN’s [665]*665Motion to Strike the Charron Declaration and request for discovery.

AHRN timely filed its Second Amended Counterclaims on June 24, 2013. Doc. No. 167. MRIS and NAR moved to dismiss these claims with prejudice pursuant to Rule 12(b)(6). Doc. Nos. 181, 193. These Motions are now fully briefed and ripe for the Court’s consideration. Based upon its careful review of the Second Amended Counterclaims and motion papers, the Court has determined that it must reconsider a determination from its June 10 Opinion and Order. Although the Court previously held that AHRN had, failed to state a claim for fraud on the Copyright Office, it now recognizes that to grant MRIS’s Motion to Dismiss, it would be required to rely on evidence outside the pleadings — specifically, the declaration of MRIS CEO David Charron that MRIS uses its own proprietary software, not CoreLogic, to arrange content on the MRIS Database. See Doc. No. 88-1 ¶ 14. As such, MRIS’s Motion must be treated as one for summary judgment under Rule 56. See Fed.R.Civ.P. 12(d). Accordingly, the Court will reserve ruling on MRIS’s Motion with respect to Count II (Maryland unfair competition) and Count IV (Sherman Act § 1) and will grant AHRN' an opportunity, if it wishes, to conduct limited discovery on this issue. However, the Court will grant MRIS’s Motion to Dismiss Count III (California unfair competition), as the Second Amended Counterclaims fail to cure the deficiencies identified in the Court’s June 10 Opinion.

As for AHRN’s claims against NAR, the Court has determined that the Second Amended Counterclaims are sufficient to survive NAR’s Motion to Dismiss Counts II and IV. However, AHRN has failed to state a claim against NAR under California law, and Count III will be dismissed with prejudice.

I. FACTUAL ALLEGATIONS IN SECOND AMENDED COUNTERCLAIMS

As before, the crux of AHRN’s claims is that MRIS, NAR, and unnamed Does engaged in a series of concerted, anti-competitive conduct, including the industry-wide adoption of a sham copyright registration and enforcement program and refusals to deal with AHRN. Many of the factual allegations from the Second Amended Counterclaims restate the allegations from the First Amended Counterclaims. These allegations were thoroughly documented in the Court’s June 10, 2013 Opinion and will not be repeated here. However, the Court will briefly outline the new, relevant allegations from the Second Amended Counterclaims.

A. “Work for hire” representations in copyright registrations and related allegations

AHRN alleges that MRIS, NAR, and other MLSs, pursuant to their fraudulent Copyright Program, misrepresented in their applications to the United States Copyright Office that their copyrighted content constituted “works for hire.” Id. ¶ 36. AHRN cites statements from the 2005 and 2006 versions of the Guidance Paper which urged MLSs to claim that the copyrighted works (i.e., photographs and text) in their electronic databases were works for hire by MLS employees. Id. ¶¶ 76-77. NAR allegedly conspired in the scheme when it urged MLSs to adopt the practice of making false . work for hire statements to the Copyright Office in their compilation copyright applications. Id. ¶¶ 70, 78-79. Numerous MLSs followed suit throughout 2006 and 2007 by making such statements. Id. ¶ 79.

AHRN alleges that the work for hire statements are false because MLS employ[666]*666ees do not take the photographs of residential real estate properties listed in their databases and the MLSs do not specially commission photographers to take such photographs. Id. ¶ 80. AHRN further alleges that the work for hire statements are false because the employees of MRIS and other MLSs do not author the text describing the real estate listed in the databases, nor do they specially commission others to author the text. Id. ¶ 81. Such representations allegedly concealed the fact that MRIS and other MLSs do not maintain records of the photographer, date of creation, and copyright assignment records and/or proof of ownership for the photographic images in the databases. Id. ¶¶ 36, 82-84. AHRN further maintains that the agent who uploads the listing photographs and text does not own the copyrights to those works, and that any recordkeeping on the part of MRIS and other MLSs with respect to the content in their databases is ineffective to transfer purported copyright in that content without a written assignment signed by the owner of the listed property. Id. ¶ 84. AHRN also alleges that MRIS does not own the text in the MRIS Database pursuant to Section 4.5 of its Subscriber License and Access Agreement. Id. ¶¶87, 119.

B. NAR’s “direct competition” with AHRN

In March 2013, NAR entered the real estate agent evaluation and ranking market in “direct competition” with AHRN through pilot projects with Realtor associations in Illinois, Minnesota, California, Colorado, and Georgia. Id. ¶ 154. According to AHRN, the pilot projects are “further evidence of predation by the NAR-led conspiracy to drive AHRN out of the agent evaluation and ranking market.” Id. NAR offers its rating service free of charge in return for an e-mail address of the customer. Id. ¶ 155. AHRN alleges that such service is evidence of “below cost, predatory pricing to drive AHRN out of the market.” Id. AHRN also alleges that the rating service was announced by NAR General Counsel Laurene Janik, the same individual who spearheaded the sending of cease-and-desist letters to AHRN and who led the charge in urging members to repudiate already-entered referral agreements with AHRN or to refrain from entering such agreements with AHRN. Id. ¶ 156. AHRN asserts that such a product rollout is “not the traditional role of general counsel.” Id.

AHRN further claims that NAR’s ratings service is “a ruse for NAR and its members to suppress legitimate evaluation and ranking of agents for the benefit of consumers.” Id. ¶ 157.

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Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc., 18 F. Supp. 3d 662, 2013 WL 6898173, 2013 U.S. Dist. LEXIS 181098 (D. Md. 2013).

18 F. Supp. 3d 662 (Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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