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Hackman v. Dickerson Realtors

January 23, 2009

GREGORY HACKMAN D/B/A GREGORY HACKMAN REALTORS, AND GREGORY HACKMAN REALTORS, INC., AN ILLINOIS CORPORATION PLAINTIFFS,
v.
DICKERSON REALTORS, INC., AN ILLINOIS CORPORATION D/B/A DICKERSON-NEIMAN REALTORS, WHITEHEAD, INC., AN ILLINOIS CORPORATION D/B/A WHITEHEAD REALTORS, R. CROSBY, INCORPORATED, AN ILLINOIS CORPORATION D/B/A PRUDENTIAL CROSBY REALTORS, MCKISKI- LEWIS, INC., AN ILLINOIS CORPORATION D/B/A TOM MCKISKI REALTORS, LORI REAVIS, RAY YOUNG, MICHAEL DUNN, JESSICA LICARY, DIANE PARVIN, FRANK WEHRSTEIN, FRANK SHELEY, MARY WESTIN, LARRY PETRY, ROCKFORD AREA ASSOCIATION OF REALTORS, TERRIE HALL, AND ILLINOIS ASSOCIATION OF REALTORS, DEFENDANTS.



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

MEMORANDUM OPINION AND ORDER

Plaintiffs Gregory Hackman d/b/a Gregory Hackman Realtors and Gregory Hackman Realtors, Inc. (collectively, "Hackman"), have filed a second amended complaint seeking to cure the pleading deficiencies I found in previous versions of the complaint. See Hackman v. Dickerson Realtors, Inc., 520 F.Supp.2d 954 (N.D. Ill. 2007) ("Hackman I") and Hackman v. Dickerson Realtors, Inc., 557 F. Supp.2d 938 (N.D. Ill. 2008) ("Hackman II"). Several defendants have filed motions to dismiss the newest version of the complaint. I resolve these motions as discussed below.

I.

This opinion assumes general familiarity with the facts set forth in my earlier opinions. Plaintiffs are real estate concerns doing business in the Rockford, Illinois area. Defendants are other local real estate agents and agencies and two professional associations: the Rockford Area Association of Realtors ("RAAR") and the Illinois Association of Realtors ("IAR"). Plaintiffs allege an anticompetitive scheme by defendants to drive plaintiffs out of the local real estate market in retaliation for plaintiffs' offering their clients a lower commission rate than the "going" rate offered by the agent and agency defendants.*fn1

Like the previous two complaints, the second amended complaint sets forth six counts: Counts I and II allege, respectively, federal and state antitrust violations against numerous defendants. Count III seeks a temporary injunction against RAAR and IAR to stop an ethics hearing against Hackman. Count IV seeks a permanent injunction against RAAR and IAR concerning the same ethics proceedings, as well as a declaration that RAAR and IAR violated their internal procedures in handling these proceedings. Count V alleges defamation by several defendants and is not at issue in the pending motions. Count VI alleges tortious interference with business expectancy and contract.

Now before me are the following motions: defendant Hall's motion to dismiss Counts I, II, and VI; a joint motion by defendants RAAR and IAR to dismiss Counts I-IV and VI*fn2 ; defendant Sheley's motion to dismiss Counts I, II, and VI; defendant Young's motion to dismiss Counts I and II; and defendant Westin's motion to dismiss Counts I, II, and VI.

The standards by which I must judge the sufficiency of the second amended complaint against the challenges raised by these motions is by now familiar: First, I must accept all well-pleaded facts as true. Thompson v. Illinois Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). Second, I must view the allegations in the light most favorable to plaintiffs. Gomez v. Illinois State Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir. 1987). Dismissal of a claim is proper only if plaintiffs have not, at minimum, made enough factual allegations to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965 (2007) (citations omitted). Nevertheless, "a well-pleaded complaint may proceed even if it appears 'that a recovery is very remote and unlikely.'" Id., quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683 (1974)).

II. Hall's Motion and RAAR/IAR's Joint Motion

Terrie Hall was President of RAAR at times relevant to this action, and the parties do not dispute that she acted as an agent of RAAR with respect to all conduct attributed to her in the second amended complaint. Accordingly, my discussion below of Counts I, II, and VI, which are asserted against Hall and RAAR, applies to both motions to the extent they seek dismissal of those counts.

A. Count I

Count I asserts violation of the Sherman Act, 15 U.S.C. §§ 1 & 2. As I held in Hackman I, "'A successful claim under Section 1 of the Sherman Act requires proof of three elements: (1) a contract, combination, or conspiracy; (2) a resultant unreasonable restraint of trade in the relevant market; and (3) an accompanying injury.'" Hackman I, at 963, quoting Denny's Marina, Inc. v. Renfro Prods., Inc., 8 F.3d 1217, 1220 (7th Cir. 1993)). Hall and RAAR contend that the plaintiffs fail to allege the first of these elements, since the second amended complaint does not assert enough factual material to suggest plausibly that Hall knowingly participated in any illegal agreement. I disagree.

In Twombly, the Supreme Court held that to state a claim under § 1 of the Sherman Act, a complaint must set forth "enough factual matter (taken as true) to suggest that an agreement was made."

Twombly, 127 S.Ct. at 1966. In Hackman II, I dismissed plaintiffs' claim under § 1 of the Sherman Act because the allegations in the first amended complaint: fail to allege facts from which it could be inferred that RAAR reached an anticompetitive agreement with the other defendants. That is, I do not find, based on the allegations, that any agent acting on behalf or RAAR is alleged to have 'had a conscious commitment to a common scheme designed to achieve an unlawful objective' as required under Monsanto v. Spray-Rite Service Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984).

Hackman II, at 946. The second amended complaint, however, has overcome this defect. In particular, plaintiffs' allegations in ¶¶ 43 and 45 of their newest complaint assert that Hall had knowledge of the boycott pursued by the agency defendants, and that she engaged conduct that reasonably can be interpreted as furthering the alleged anticompetitive agreement. In ¶ 43, plaintiffs allege that Hall was present for, and participated in, a late-2004 conversation at a broker's meeting hosted by RAAR, in which the agency defendants allegedly agreed not to do business with Hackman because of his lower commission rate.*fn3 In ¶ 45, plaintiffs refer to a November 18, 2005 conversation between Hall and a Vice President of IAR, in which Hall and the IAR Vice President allegedly conspired to influence negatively the outcome of actions pending against plaintiffs.*fn4

These allegations belie Hall's argument that the second amended complaint does not allege sufficient facts from which to infer that Hall was aware of, or agreed to, an illegal agreement. Hall's characterization of these allegations as "conclusory" and "contradictory" are unpersuasive. The allegations identify specific conversations that took place on specific (or reasonably specific) dates between Hall and one or more co-defendants. They also allege the general substance of these conversations, which, if presumed true, plausibly supports an inference of Hall's agreement with an anticompetitive scheme.

The fundamental defect of plaintiffs' earlier allegations against Hall and RAAR was that they did not allege, or even suggest, that Hall was aware of the agency boycott, so her conduct could not reasonably be construed as being in furtherance of that boycott. See Hackman II, at 946. The present complaint overcomes this defect, and it casts the remaining allegations against Hall in a new light.

Hall's argument that plaintiffs' allegations "do not plausibly exclude the possibility of independent action" is unavailing because turns the applicable standard on its head. Plaintiffs are not required, at the pleading stage, to exclude every plausible interpretation of the facts that does not support their theory of liability. On the contrary, they need only assert "plausible grounds to infer" that an illegal agreement was made to state a claim based on § 1 of the Sherman Act. Twombly, at 1965. The second amended complaint achieves this. Plaintiffs have now sufficiently pleaded that Hall "had a conscious commitment to a common scheme" to coerce plaintiffs, using anticompetitive tactics, into raising their commission rates.

Plaintiffs' claim under § 2 of the Sherman Act is another story. Section 2 of the Sherman Act provides that it is unlawful to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize" interstate trade.

15 U.S.C.A. § 2. In Hackman II, I observed that "nowhere do plaintiffs allege that Dickerson (or any other defendant) exercised, attempted to exercise, or conspired to exercise monopoly power. The interpretation that the amended complaint asserts a Sherman Section 2 claim is based on a particularly generous reading of plaintiffs' allegations." Hackman II, at 947, n. 8. Nevertheless, I analyzed plaintiffs' claim against Hall and RAAR as alleging their participation in a conspiracy to monopolize, and I will do so again here.

To prove that Hall and RAAR conspired to monopolize, plaintiffs must show: "1) the existence of a combination or conspiracy, 2) overt acts in furtherance of the conspiracy, 3) an effect upon a substantial amount of interstate commerce and 4) the existence of specific intent to monopolize." Hackman I, at 964 (quoting Great Escape, Inc. v. Union City Body Co., Inc., 791 F.2d 532, 540-41 (7th Cir. 1986)). In Hackman II, I dismissed plaintiffs' Sherman § 2 claim against Hall and RAAR because the first amended complaint did not allege "sufficient facts from which to infer that...Hall, or RAAR had an 'intent and purpose' to exercise monopoly power."*fn5 Hackman ...


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