Echoes of Freeman and antitrust in the proposed NSDCAR and SDAR merger
Open letter to NSDCAR members:
George Santayana famously said that "Those who cannot remember the past are condemned to repeat it."
In the matter of proposing a merger of the San Diego Association of REALTORS with the North San Diego County Association of REALTORS, to create, in the words of San Diego Daily Transcript reporter Jen Lebron Kuhney, "one of the largest REALTOR organizations in the country", the relevant past is remembered, by some, simply as: "Freeman.”
“Freeman” refers to a series of lawsuits filed between 1997 and 2003 against (collectively) the San Diego Association of REALTORS (“SDAR”), the North San Diego County Association of REALTORS (“NSDCAR”), the then other three local Associations of REALTORS, the California Association of REALTORS, and many other individuals and firms.
Let’s take a moment to remember Freeman before casting our merger vote.
The Procedural Past:
Before 1992 there were three separate Multiple Listing Services (MLS’s) in San Diego County. Sandicor, the current MLS, was formed in 1991 to own and operate a single, countywide MLS to list all properties for sale throughout San Diego County. When there were five local Associations in San Diego County, all five were shareholders of Sandicor.
The first Freeman lawsuit was filed April 16, 1997 in San Diego County Superior Court alleging, among other things, that Sandicor, the five Associations, and others, violated California’s antitrust law by charging excessive fees for access to MLS data. This lawsuit was dismissed before trial, “on the pleadings”, when the trial court sustained the defendants’ demurrers to the complaint. This dismissal was upheld on appeal in December 1999, and again in April 2000 when the California Supreme Court declined to review the case.
While all of this was going on, the Freeman plaintiffs filed another suit, this time in Federal Court, against NSDCAR, the other four local Associations, the California Association of REALTORS, the National Association of REALTORS, and many others, alleging that the same actions complained of in their state-court action as having violated state antitrust law, also violated federal antitrust law. The Federal district court, in July 2001, entered summary judgment in the defendants’ favor.
So far, so good, for defendants: two lawsuits resulting in one dismissal and one summary judgment.
Thereafter, however, the Freeman plaintiffs appealed the Federal district court’s summary judgment to the U.S. Court of Appeals for the Ninth Circuit where, on March 10, 2003, the plaintiffs obtained a decision favorable to their cause. Within one month of the Ninth Circuit’s favorable (to the plaintiffs) decision, the Freeman plaintiffs filed yet another lawsuit based upon the same set of facts, again in Federal Court. This - their third - lawsuit was filed as a class action and named as parties most, if not all, of the attorneys who represented parties in the previous Federal district court lawsuit, and the Association Executives of the five local associations, and the California Association of REALTORS. (Many of the parties named in the third Freeman lawsuit were being sued for the second or third time.)
This third Freeman lawsuit sought damages in the approximate amount of $24 million dollars, and treble (punitive) damages of approximately $72 million dollars.
Continue Reading...
