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Hackman v. Dickerson Realtors

May 28, 2008


The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge


Plaintiffs Gregory Hackman d/b/a Gregory Hackman Realtors and Gregory Hackman Realtors, Inc. (collectively "Hackman") filed a complaint on November 30, 2006 alleging generally that the defendants engaged in an anticompetitive conspiracy to drive Hackman out of the Rockford, Illinois real estate market. On August 31, 2007, I issued an order addressing motions filed by various defendants. Hackman v. Dickerson Realtors, Inc., 520 F.Supp. 2d 954 (N.D. Ill. 2007). Plaintiffs have since filed an amended complaint in response to that Order and to other developments in the case. Now before me are the following motions: a joint motion by defendants R. Crosby, Inc., d/b/a Prudential Crosby Realtors ("Prudential") and Jessica Licary to dismiss Counts I and II; a joint motion by defendants Rockford Association of Realtors ("RAAR") and Illinois Association of Realtors (IAR) to dismiss Counts I-IV and VI; a motion by defendant Terrie*fn1 Hall to dismiss Counts I, II and VI; motions by defendant Frank Sheley to dismiss Counts I, II, V and VI; and a motion by defendant Mary Westin to dismiss Counts I, II and VI. I resolve these motions as set forth below.*fn2

I. The thrust of Hackman's Amended Complaint is Unchanged from its Original Iteration

The counts are the same as in the original complaint, though additional parties have been added. Counts I and II allege antitrust violations against defendants Dickerson, Wehrstein, Dunn, Westin, Reavis, Sheley, Young, Whitehead, Prudential, Licary, McKiski, Petry, Parvin, RAAR and Hall, under the Sherman Act, 15 U.S.C. §§1 & 2, and the Illinois Antitrust Act, 740 Ill. Comp. Stat. 10/1, et seq., respectively. Count III is materially unchanged from the original complaint and seeks a temporary injunction against RAAR and IAR to stop an ethics hearing against Hackman. Count IV is also substantially unchanged and seeks a declaration of rights and a permanent injunction against RAAR and IAR concerning the same ethics proceedings. Count V alleges defamation against Dickerson, Reavis, Prudential, Licary, Whitehead, and McKiski. Count VI alleges tortious interference with business expectancy against Dickerson, Wehrstein, Dunn, Westin, Reavis, Smith, Young, Sheley, Whitehead, Prudential, Licary, McKiski, Petry, RAAR and Hall.

II. Prudential and Licary's Motion to Dismiss Defendants

Prudential and Licary move to dismiss Counts I and II of the amended complaint. These defendants previously brought a motion to dismiss Counts I, II, V and VI of the original complaint. In my Order of August 31, 2007, I granted their motion in part, dismissing Counts I and II (which were not then asserted against Licary individually).*fn3 I dismissed those counts because the allegations in the original complaint did not plead sufficient factual material to state an antitrust claim against these defendants.

In the amended complaint, plaintiffs reassert Counts I and II, this time against Licary individually, as well as against Prudential and others. Prudential and Licary again seek dismissal. Because I find that plaintiffs have now adequately pled a claim for antitrust violations against these defendants, I deny their motion.

In my August 31, 2007 Order, I found that as to Prudential and Licary that complaint failed to allege, as it must under the pleading standard of Bell Atlantic v. Twombley, 127 S.Ct. 1955, 1965 (2007), "enough factual matter (taken as true) to suggest that an agreement was made." Hackman, at 968 (quoting Bell Atlantic). The amended complaint, however, alleges factual matter pertaining to these defendants that is sufficient to "raise a right to relief above the speculative level." Bell Atlantic, at 1965. For example, the amended complaint alleges that RAAR hosted a meeting at its headquarters in 2004, and that the agency defendants, presumably including Prudential, agreed at that meeting not to do business with plaintiffs. (Am. Compl. ¶ 36)

The amended complaint also refers to a specific statement allegedly made in January 2000 by a representative of one of the defendant agencies. (Am. Compl. ¶ 30) Plaintiffs allege that the representative told a Hackman agent that the defendant agencies, presumably including Prudential, were "participating in a boycott" against Hackman as a result of his commission rate. Although these allegations do not identify Prudential by name, it is reasonable to infer that plaintiffs intended to include Prudential, and I must draw all reasonable inferences in favor of plaintiffs. These allegations are sufficient to establish, at the pleading stage, the existence of an agreement among the agency defendants and participation in that agreement by Prudential.

The sufficiency of Counts I and II against Licary is a closer call. The amended complaint does not allege that Licary was present at the 2004 RAAR meeting or that she had explicitly agreed to the agency boycott. Nevertheless, plaintiffs assert that she was aware of the "vendetta" against Hackman, and they identify a specific act (making a knowingly false statement about Hackman in order to undermine his deal) that she allegedly undertook in furtherance of the agencies' agreement. (Am. Compl. ¶ 43) As discussed further below, I find that in context these allegations are adequate to state a claim against Licary as well.

The amended complaint identifies two concrete settings in which the alleged agency agreement was discussed, and, as to Licary, alleges her knowledge of the conspiracy and an overt act by her that can reasonably be construed as indicating her agreement with it. This is sufficient to give both defendants fair notice of the grounds on which Counts I and II against them rest. Bell Atlantic requires no more. Bell Atlantic, at 164.

Prudential and Licary argue that the defects in the allegations against them have not been cured in the amended complaint and are still insufficient under Bell Atlantic. I disagree. As the Seventh Circuit recently instructed, Bell Atlantic "must not be overread." Limestone Development Corp. v. Village of Lemont, 520 F.3d 797, 803 (2008). Bell Atlantic does not require "heightened fact pleading of specifics." Bell Atlantic at 1974. As the Seventh Circuit recently explained in Limestone Development, the Bell Atlantic decision reflects the concern that allowing big, complex cases to proceed based on "threadbare" claims may force defendants to settle even largely groundless claims because of their "in terrorem" effect. Limestone Development, at 803. That concern does not militate in favor of dismissal here.

The present case, like Bell Atlantic, includes federal antitrust claims. The similarity between the cases ends there. Bell Atlantic was a class action lawsuit of mammoth proportions: plaintiffs represented a putative class of "at least 90 percent of all subscribers to local telephone or high-speed internet access in the continental United States," while defendants were the nation's largest telecommunications companies with thousands of employees generating "reams and gigabytes of business records." Id., at 1967. The potential scope of discovery in that case clearly warranted the Court's close scrutiny of the bare-bones allegations in the complaint.

Here, by contrast, plaintiffs are two local realty concerns, both owned by the same individual sole proprietor, and defendants are a handful of local businesses, professional associations, and their agents. More importantly, the claims at issue have been fleshed out beyond the previously "threadbare" assertions of an agreement. While discovery will certainly result in some burden and expense to Prudential and Licary (as it will to all defendants), that is true in every case. Moreover, considering that both defendants have answered Counts V and VII, on which discovery will presumably proceed and likely overlap with the discovery relevant to Counts I and II, the incremental expense to them of defending against these counts is an insufficient reason to dismiss plaintiffs' properly stated claims.

It is true that plaintiffs' inartful allegation of Licary's agreement with the agencies' conspiracy leaves room to dispute the sufficiency of the antitrust claims against her. Based on the factual context, however, I interpret the assertions that she was aware of the agency "vendetta" against Hackman and that she took specific action in furtherance of it as allegations of more than mere parallel conduct. In context, I understand these statements as allegations of Licary's tacit agreement with the alleged conspiracy, or, in the terms of the applicable standard, as allegations that she "had a conscious commitment to a common scheme." Monsanto v. Spray-Rite Service Corp., 465 U.S. 752, 764 (1984). Accordingly, they are sufficient to state an antitrust claim against her.*fn4

Prudential and Licary's arguments for dismissal are unpersuasive. They do not dispute that the conduct complained of is actionable if it was undertaken by agreement among the defendants. They claim, however, that the new material in the amended complaint is insufficient to establish their agreement because it relates only to the ethics complaint in which they were not involved. This is a disingenuous reading of the amended complaint. Prudential and Licary generally ignore the allegations discussed above, which clearly relate to an agreement by these defendants to "boycott" Hackman, not to the ethics complaint.

For the foregoing reasons, I deny Prudential and Licary's motion to dismiss Counts I and II.

III. RAAR and IAR's Joint Motion to Dismiss

RAAR and IAR move to dismiss Counts I-IV and Count VI of the amended complaint. These defendants previously moved to dismiss Counts I and II under Rule 12(b)(6) and Counts III and IV under Rule 12(b)(1).*fn5 I granted their motion as to Counts I and II based on my finding that plaintiffs had not properly alleged any agreement between these and any other defendants. I further granted their motion as to Counts III and IV based on lack of subject matter jurisdiction.

In the present motion, RAAR and IAR first argue that all counts against them should be dismissed because plaintiffs were not entitled to amend their complaint as to RAAR and IAR. They then reiterate their earlier arguments that plaintiffs have not sufficiently alleged an agreement by RAAR or IAR to state a claim under federal or state antitrust laws, and that I do not have supplemental jurisdiction over plaintiffs' claims for injunctive and declarative relief. Finally, defendants argue that because plaintiffs' allegations in support of their claim for tortious interference with business expectancy are overly vague, conclusory, and lacking in detail, they fail to state a claim.

I disagree with RAAR and IAR that plaintiffs were required to seek leave to file their amended complaint, and I decline to grant their motion on that ground. Instead, I grant the motion as to Counts I-IV because the amended complaint fails to overcome the defects I noted in my Order of August 31, 2007, however. I further grant RAAR and IAR's motion to dismiss Count VI for the reasons discussed below.

A. Counts I-IV

The allegations in the amended complaint that concern RAAR and IAR are not substantially different from those in the original complaint, with a few exceptions that warrant discussion. The most significant new element is the alleged "one-percent letter." Plaintiffs assert that in response to a complaint from defendant Frank Wehrstein about plaintiffs' five percent commission rate, RAAR President Terrie Hall advised Wehrstein to send a letter to Hackman threatening to reduce Hackman's portion of the commission in any transaction between Hackman and Dickerson. (Am. Compl. ¶ 40) According to the amended complaint, Hall counseled Wehrstein to send Hackman a letter "that would reduce Hackman's commission rate" on any Dickerson property to one percent, regardless of the commission split "posted" for that property. In other words, instead of receiving the commission offered generally to buyers' agents (which Hackman states is usually half of the total*fn6 ),

Hackman would receive only one percent on the sale of any Dickerson-listed property.

Plaintiffs also assert that Hall, acting as an agent of RAAR,*fn7 "solicited" false ethics complaints against Hackman, and that RAAR and IAR handled these and other complaints in a way that violated the associations' internal rules. (Am. Compl. ΒΆΒΆ 50-56) Finally, plaintiffs allege that "someone" at RAAR disabled a Hackman agent's computer access in furtherance of defendants' ...

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