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GATEWAY ASSOCIATES, INC., v. ESSEX-COSTELLO

August 28, 1974

GATEWAY ASSOCIATES, INC., A CORP., ET AL., PLAINTIFFS,
v.
ESSEX-COSTELLO, INC., A CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Austin, District Judge.

MEMORANDUM OPINION

This antitrust action is presently before the Court on the following defense motions: (1) to dismiss Counts I and II (Sherman Act Claims) for lack of subject-matter jurisdiction; (2) to dismiss Counts III through V (state antitrust and common law tort claims) for lack of pendent jurisdiction; (3) to strike Counts IV and V as being improperly joined; (4) to join two persons as indispensable parties defendant or else dismiss the action; (5) to dismiss the action as to some defendants for lack of personal jurisdiction; (6) to dismiss Counts I through V for failure to state a claim upon which relief may be granted; and (7) to stay the proceedings pending arbitration.

I.

The alleged facts in this case are as follows:

Plaintiff Gateway Associates, Inc. ("Gateway") is a realty brokerage firm operating in the Crystal Lake area. The individual plaintiffs are real estate brokers who founded Gateway in December of 1973 after leaving the employ of some of the defendant firms.

As a general rule, a real estate firm which seeks buyers for a residence listed with it has a substantially greater chance of making a rapid sale if it has access to a multiple listing service such as that provided by ALS. Thus, ALS membership appears to be both desirable and necessary for the successful operation of a real estate brokerage firm in Crystal Lake. Most homeowners who put their property up for sale know which firms subscribe to a multiple listing service; and usually, they engage one of them as their real estate agent.

Shortly after Gateway began operating in the Crystal Lake area, the defendants allegedly commenced certain anticompetitive activities which form the core of plaintiffs' claims. Briefly, they are as follows: (1) discriminating between Gateway and other non-members of ALS with regard to the percentage of shared real estate commissions; (2) boycotting Gateway house tours and excluding Gateway from their tours; ( denying Gateway ALS membership; (4) refusing to exchange listing sheets with Gateway; (5) attempting to coerce Gateway to charge the uniform commission rates set by ALS by making the percentage of shared commissions higher for those non-members of ALS who adhere to the fixed rate than for those who charge a lower rate; (6) ignoring contract offers submitted by Gateway for its customers; (7) attempting to prevent Gateway from showing ALS listings to prospective buyers who have retained Gateway as their agent; (8) making defamatory remarks with regard to Gateway and its employees, and attempting to induce Gateway customers to break their contracts with Gateway; (9) in general, harassing Gateway employees and engaging in predatory conduct so as to prevent them from engaging in their work.

II.

A. LACK OF SUBJECT-MATTER JURISDICTION — COUNTS I AND II.

Actually, defendants move to dismiss Counts I and II for failure to state a claim because, they contend, plaintiffs inadequately allege the involvement of interstate commerce. However, their argument is directed at the jurisdictional aspects rather than the substantive aspects of interstate commerce in a Sherman Act claim. Accordingly, the motion shall be considered as one pursuant to F.R.Civ.P. 12(b)(1) to dismiss for lack of subject-matter jurisdiction.

Plaintiffs'"trade and commerce" allegations read as follows:

    "15. Because of the transient nature of a
  significant portion of the population of Crystal
  Lake, Illinois, and its surrounding areas, a
  substantial number of persons using the services
  of the defendants in connection with real estate
  purchases and sales are persons moving into the
  Crystal Lake area from places outside the State
  of Illinois, and persons moving from the Crystal
  Lake area to places outside of the State of
  Illinois. At all times mentioned herein,
  defendants attempt to, and do, attract buyers and
  sellers from other states, and, in fact, many
  completed sales of real estate in which
  defendants have participated as

  brokers involve buyers or sellers from outside
  the State of Illinois. In 1973, a not
  insubstantial portion of the nearly $60,000,000
  in sales of real estate accounted for by ALS
  members involved persons who were either moving
  to Crystal Lake from outside the State of
  Illinois, or from Crystal Lake to locations
  outside the State of Illinois.
    "16. As a part of their services, the
  defendants advertise their real estate listings
  and brokerage services nationally in magazines
  and newspapers widely circulated throughout the
  United States, and on billboards located at
  airports and other places of interstate
  transportation in order to solicit out-of-state
  buyers and sellers. Such advertising is intended
  to, and does, affect the aforesaid interstate
  ...

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