Summary Judgment Affirmed by Sixth Circuit in Broker Commission Price-Fixing Litigation

By on November 21, 2014

On November 13, 2014, the Sixth Circuit Court of Appeals upheld the dismissal of price-fixing claims against two home brokerage service firms in Kentucky, McMahon Co. and HomeService of America, Inc.  Hyland, et al. v. HomeServices of America Inc., et al., case number 12-5947.  The plaintiffs, a class of Kentucky brokers, alleged that the defendants conspired to raise the price of broker commission fees in violation of Section 1 of the Sherman Act.  The plaintiffs supported their claims by alleging that public comments made by McMahon Co. regarding not cutting fees in the face of competition from internet brokers showed a unity of purpose amongst the defendants.  They also pointed to the fact that defendant companies typically set their listing commission fee at six percent.  The defendants, on the other hand, argued that the fee was not set through agreement between brokers and that commission fees could be negotiated for specific transactions.  The Western District of Kentucky granted summary judgment for the defendants, and the plaintiffs appealed.

The appellate court affirmed, determining that there was no direct evidence of an agreement and insufficient circumstantial evidence for the plaintiffs’ claims to defeat summary judgment.  Citing the Supreme Court’s precedent in Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) and the Sixth Circuit decision in Re/Max, Int’l, Inc. v. Realty One, Inc., 173 F.3d 995 (6th Cir. 1999), the Sixth Circuit explained that circumstantial evidence cannot support an inference of a conspiracy when the evidence is equally consistent with independent conduct as conspiratorial behavior.  To survive summary judgment, circumstantial evidence must tend to exclude the possibility of independent conduct.  Upon review of the record, the panel agreed with the district court that evidence, such as the fact that the defendants would deviate from the six percent commission rates through negotiations and the fact that there appeared to be no impact on the defendants’ pricing as a result of comments made at public hearings, did not exclude the possibility of independent conduct.  Because the plaintiffs’ circumstantial evidence of conspiracy was equally consistent with permissible behavior on the part of the defendants, the plaintiffs failed to support an inference of conspiracy.





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