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Reifert, Jay v. South Central WI MLS, 05-3601 (2006)

Court: Court of Appeals for the Seventh Circuit Number: 05-3601 Visitors: 7
Judges: Per Curiam
Filed: Jun. 12, 2006
Latest Update: Mar. 02, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 05-3601 JAY REIFERT, Plaintiff-Appellant, v. SOUTH CENTRAL WISCONSIN MLS CORPORATION, REALTORS ASSOCIATION OF SOUTH CENTRAL WISCONSIN, INC., ROBERT L. COURTER, SUSAN MATTHEWS, DAVID STARK, ROBERT WEBER, THOMAS BUNBURY, MAURICE W. HILL, PETER SVEUM, MARSHALL ZWYGART, and DAVID MCGRATH, Defendants-Appellees. _ Appeal from the United States District Court for the Western District of Wisconsin. Case No. 04-C-0969-S—John C. Shabaz, J
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                           In the
 United States Court of Appeals
               For the Seventh Circuit
                        ____________

No. 05-3601
JAY REIFERT,
                                          Plaintiff-Appellant,
                              v.

SOUTH CENTRAL WISCONSIN MLS CORPORATION,
REALTORS ASSOCIATION OF SOUTH CENTRAL
WISCONSIN, INC., ROBERT L. COURTER, SUSAN
MATTHEWS, DAVID STARK, ROBERT WEBER,
THOMAS BUNBURY, MAURICE W. HILL, PETER SVEUM,
MARSHALL ZWYGART, and DAVID MCGRATH,
                                       Defendants-Appellees.
                        ____________
          Appeal from the United States District Court
              for the Western District of Wisconsin.
         Case No. 04-C-0969-S—John C. Shabaz, Judge.
                        ____________
   ARGUED FEBRUARY 17, 2006—DECIDED JUNE 12, 2006
                   ____________


  Before FLAUM, Chief Judge, and KANNE and WOOD,
Circuit Judges.
  FLAUM, Chief Judge. Plaintiff-Appellant Jay Reifert
claims that the defendants violated the Sherman Act by
tying access to a real estate multi-listing service (“MLS”) to
membership in a Realtors Association. The district
court granted summary judgment for all defendants in
this case, finding no competition in the tied market and
therefore, no antitrust violation.
2                                                 No. 05-3601

  For the following reasons, we now affirm the judgment of
the district court.


                      I. Background
  Realtors Association of South Central Wisconsin, Inc.
(“RASCW”) is a real estate trade association. Its members
are real estate agents and appraisers in and around
Madison, Wisconsin. RASCW offers a variety of products
and services to its members, including lobbying, social
functions, courses, referral programs, contract forms,
conventions, publications, and legal information.
  RASCW is associated with the Wisconsin Realtors
Association and the National Association of Realtors
(“NAR”). When a person pays membership dues to an
association affiliated with NAR, that person becomes a
member of NAR. Normally, Realtors Association1 member-
ships are packaged as a group including local, state, and
NAR memberships.
   RASCW owns 100% of the stock in the South Central
Wisconsin MLS Corp. (“SCWMLS”). The MLS or multiple
listing service is a computerized database of homes and
properties listed for sale by SCWMLS participants in south-
central Wisconsin. Access to this multiple listing service is a
necessity for real estate agents and appraisers in this area.
Virtually all active residential real estate agents in the
region subscribe to SCWMLS. Users are charged a quar-
terly fee to gain access to the full database and must be a
member of a Realtors Association affiliated with NAR. The
Realtors Association membership requirement has existed


1
  “Realtors Associations” are organizations affiliated with the
National Association of Realtors and have agreed to abide by the
NAR Code of Ethics. RASCW is an example of a local Realtors
Association.
No. 05-3601                                                 3

for more than fifty years. Generally, any licensed real estate
professional who agrees to abide by the NAR Code of Ethics
and pays the applicable fees is admitted.
  Article 16 of NAR’s Code of Ethics contains a “non-solicita-
tion” rule. This article and the related standards of practice
prohibit members from inducing sellers to breach listing
contracts, advising sellers of superior services or prices
during the time they are under contract with another
Realtor, and using “information received through a Multiple
Listing Service . . . to target clients of other Realtors®.”
  A member-elected board of directors sets dues for
RASCW. Fees for SCWMLS are also set by members elected
to a board of directors. Both organizations set their fees
solely to cover operational costs, with no profit-making
intent. Annual dues to join the NAR, Wisconsin Association
of Realtors, and RASCW are approximately $449 a year.
  The plaintiff, Jay Reifert, brings three claims against
SCWMLS, RASCW, and the directors of SCWMLS. First, he
alleges that SCWMLS unlawfully ties its services to
RASCW. Second, Reifert alleges that by conditioning access
to MLS service on membership in RASCW, an unlawful
group boycott has occurred. Finally, Reifert alleges that
Article 16 of the NAR Code of Ethics violates the Section I
of the Sherman Act, 15 U.S.C. § 1, by prohibiting competi-
tion.
  Reifert, is a residential real estate broker, exclusively
representing buyers of real estate in south central Wiscon-
sin. Reifert has been a member of RASCW (or its predeces-
sor) and a participant in SCWMLS (or its predecessor) since
1988. Reifert belongs to the National Association of Exclu-
sive Buyer’s Agents (“NAEBA”) and has no desire to
maintain membership in RASCW or the state and national
Association of Realtors. Reifert objects to the fees he is
forced to pay for unwanted services and the Code of Ethics
he must follow to maintain his membership in RASCW and
NAR.
4                                                No. 05-3601

  Reifert claims that during the four years at issue in this
action, he has paid dues in excess of $2000 for an unwanted
RASCW membership to maintain his SCWMLS access.
During the relevant four-year period, there have been
approximately 2,079 annual and 5,600 total SCWMLS
participants.
   To support an antitrust action, a plaintiff must demon-
strate that the defendant’s actions have restrained competi-
tion. Section I of the Sherman Act states, “Every contract,
combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce among the several States
. . . is declared to be illegal.” 15 U.S.C. § 1. The Supreme
Court has long recognized that Congress intended to outlaw
only “unreasonable restraints,” not all contracts in restraint
of trade. See State Oil Co. v. Khan, 
522 U.S. 3
, 10 (1997)
(citations omitted). The Clayton Act allows for private suits
by individuals injured by violations of antitrust laws. See 15
U.S.C. §§ 15, 26.
  On August 25, 2005, the district court granted summary
judgment to the defendants and denied summary judg-
ment to the plaintiff. A tying arrangement violates federal
antitrust statutes if it has a substantial effect on interstate
commerce. The district court found that “there is insuffi-
cient evidence for a fact finder to find that a tie between the
defendant’s multiple listing service and Realtor member-
ship has had an effect on interstate commerce as that
element has been defined by the Supreme Court.”
  As to Reifert’s group boycott claim, the district court
again found that the plaintiff had failed to prove any anti-
competitive effects resulting from the tying of Realtors
Association memberships to MLS services. Accordingly, the
district court granted summary judgment to the defendants.
No. 05-3601                                                5

                      II. Discussion
  We review a district court’s grant of summary judgment
de novo, taking all facts in the light most favorable to the
non-moving party. See, e.g., McCoy v. Harrison, 
341 F.3d 600
, 604 (7th Cir. 2003) (citations omitted). An award of
summary judgment is proper when “there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” FED. R. CIV. P.
56(c); Celotex Corp. v. Catrett, 
477 U.S. 317
, 322-23 (1986).


A. Tying Claim
  Reifert claims that the defendants have engaged in an
unlawful tying arrangement by limiting SCWMLS access to
members of a Relators Association. Thus, the alleged “tying
product” is SCWMLS and the alleged “tied product” is
membership in a Realtors Association.
  In determining whether a violation of Section I of the
Sherman Act, 15 U.S.C. § 1, has occurred as a result of a tie
between two products or services, this Court requires the
plaintiff to prove four elements. See Carl Sandburg Vill.
Condo. Ass’n No. 1 v. First Condo. Dev. Co., 
758 F.2d 203
,
208 (7th Cir. 1985) (citing imposition of the “economic
interest requirement . . . by courts in the Second, Third,
Fourth, Fifth, Sixth, Ninth, and Eleventh Circuits”).
    In order to establish the per se illegality of a tying
    arrangement, a plaintiff must show that: (1) the tying
    arrangement is between two distinct products or
    services, (2) the defendant has sufficient economic
    power in the tying market to appreciably restrain free
    competition in the market for the tied product, and (3)
    a not insubstantial amount of interstate commerce is
    affected. [ N. Pac. Ry. Co. v. United States, 
356 U.S. 1
,
    5-6 (1958)]; Moore v. Matthews & Co., 
550 F.2d 1207
,
    1212 (9th Cir. 1977). In addition, this circuit has held
6                                                      No. 05-3601

    that an illegal tying arrangement will not be found
    where the alleged tying company has absolutely no
    economic interest in the sales of the tied seller, whose
    products are favored by the tie-in. Ohio-Sealy Mattress
    Mfg. Co. v. Sealy, Inc., 
585 F.2d 821
, 835 (7th Cir.
    1978), cert. denied, 
440 U.S. 930
(1979); Warner Mgmt.
    Consultants, Inc. v. Data Gen. Corp., 
545 F. Supp. 956
,
    967 (N.D.Ill. 1982).
Id. at 207-08.
  Following this precedent, the district court correctly
required Reifert to prove the following four elements of a
tying violation: (1) a tie exists between two separate
products; (2) the tying seller (SCWMLS) has sufficient
economic power in the tying product market to restrain free
competition in the tied product market (Realtors Associa-
tion memberships); (3) the tie affects a not-insubstantial
amount of interstate commerce in the tied product (Realtors
Association memberships); and (4) the tying seller
(SCWMLS) has some economic interest in the sales of the
tied product (Realtors Association memberships). 
Id. at 207.2

2
  We agree with our concurring colleague that a cautious
approach is always appropriate when anticipating future Supreme
Court actions. In 1985, our Circuit began to incorporate the rule
of reason in our tying analysis. At that time, we stated that,
“According to the Supreme Court, a plaintiff ’s failure to state a
per se illegal antitrust claim does not necessarily prove fatal to his
case if he can state a claim under the rule of reason.” Carl
Sandburg Vill. Condo. Ass’n No. 1, 
758 F.2d 203
, 210 (7th Cir.
1985) (citing Fortner Enter., Inc. v. United States Steel Corp., 
394 U.S. 495
, 499-500 (1969); Warner Mgmt. Consultants, Inc. v. Data
Gen. Corp., 
545 F. Supp. 956
, 966 (N.D. Ill. 1982)); see also
Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 
466 U.S. 2
, 35 (1984)
(O’Connor, J., concurring) (“The time has therefore come to
                                                       (continued...)
No. 05-3601                                                         7

   There is no question that Reifert has satisfied the require-
ments for the first two elements. First, access to the multi-
listing service cannot be obtained without purchasing the
tied product, a Realtors Association membership. Second,
SCWMLS has sufficient market power to restrain free
competition in the tied product market.
  SCWMLS is a unique product. Nearly every available
home in the relevant geographic area is listed on the
service. The near-perfect market information created by
SCWMLS is the result of a requirement that members place
all listings in the MLS within five days. The MLS allows
individuals with access to search and filter properties based
upon detailed criteria including compensation offered to
buyers’ agents, detailed property information, neighborhood
information, prior sales history, offers made on the prop-
erty, days on the market, and the sale price of comparable
homes. The features and information available through
SCWMLS are not available through any other service. In
addition, the MLS service targets a different audience—real
estate agents and appraisers—than free listing services or
newspapers. In short, it is impossible to perform the tasks
of a real estate agent or appraiser in the relevant geo-


2
   (...continued)
abandon the ‘per se’ label and refocus the inquiry on the adverse
economic effects, and the potential economic benefits, that the
tie may have.”). In a related area, the Supreme Court recently
adopted Justice O’Connor’s reasoning in Jefferson Parish Hosp.
Dist. No. 2 and held that tying arrangements involving patents
should be evaluated based upon their market power “rather than
under the per se rule.” Ill. Tool Works, Inc. v. Indep. Ink, Inc., 
126 S. Ct. 1281
(2006). Although the per se analysis of the Jefferson
Parish Hosp. Dist. No. 2 majority has not been expressly over-
ruled, in the intervening twenty-one years since Carl Sandburg
Vill. Condo. Ass’n No. 1, the Supreme Court has not found
occasion to disagree with this Circuit’s approach.
8                                               No. 05-3601

graphic area without using SCWMLS. Thus, it possesses
sufficient market power to restrain competition.
  The third element of the Sandburg test states that a tying
arrangement violates antitrust law only if “a substantial
volume of commerce is foreclosed” because of the tie.
Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 
466 U.S. 2
, 16
(1984). This element can be broken into two sub-questions:
(1) Is there at least one competitor in the tied product
market other than the favored seller; and (2) Is the quantity
of interstate commerce affected not-insubstantial?
  The district court found no competition in the allegedly
tied market for Realtors Association memberships. Where
there is no competition in the tied market, there can be no
antitrust violation. Forcing a buyer to purchase a product
he otherwise would not have purchased is insufficient to
establish the foreclosure of competition. 
Id. (“[W]hen a
purchaser is ‘forced’ to buy a product he would not have
otherwise bought even from another seller in the tied
product market, there can be no adverse impact on competi-
tion because no portion of the market which would other-
wise have been available to other sellers has been fore-
closed.”).
  Despite Reifert’s desire to avoid purchasing a Realtors
Association membership, without evidence of competitors in
the market for services offered by the Realtors Association,
there can be no foreclosure of competition. See Ohio-Sealy
Mattress Mfg. Co. v. Sealy, Inc., 
585 F.2d 821
, 835 (7th Cir.
1978); 9 PHILLIP E. AREEDA & HERBERT HOVENKAMP,
ANTITRUST LAW ¶ 1723a (2d ed. 2004) (“When there are no
rival sellers of the tied product to be foreclosed, then the
alleged tie-in might affect a substantial volume of commerce
in the tied product and yet not foreclose anyone.”). The
district court correctly found that despite the “laundry list
of entities” submitted by the plaintiff, there were no
competitors in the tied product market.
No. 05-3601                                                 9

  Products and services are in the same market when they
are good substitutes for one another. “The outer boundaries
of a product market are determined by the reasonable
interchangeability of use or the cross-elasticity of demand
between the product itself and substitutes for it.” Brown
Shoe Co. v. United States, 
370 U.S. 294
, 325 (1962).
  This Court requires that a plaintiff prove that products
are good substitutes using economic evidence; a conclusory
assumption of competition where products or services
appear to be similar is insufficient. See Menasha Corp. v.
News Am. Mktg. In-Store, Inc., 
354 F.3d 661
, 664 (7th Cir.
2004). Actual data and a reasonable analysis are necessary
to demonstrate that a product or service is a good substitute
for another. “Economics, like the other social sciences, has
its share of counterintuitive findings, so observing things
that to the untutored eye seem to be substitutes need not
mean that they are good substitutes.” 
Id. Other federal
courts have held that conditioning access to
a multi-listing service on membership in a Realtors Associa-
tion is not indicative of an unlawful tying arrangement. See
Wells Real Estate, Inc. v. Greater Lowell Bd. of Realtors, 
850 F.2d 803
(1st Cir. 1988); O’Riordan v. Long Island Bd. of
Realtors, Inc., 
707 F. Supp. 111
(E.D.N.Y. 1988); Buyer’s
Corner Realty, Inc. v. No. Ky. Ass’n of Realtors, 
410 F. Supp. 2d
574 (E.D. Ky. 2006). One federal court has held that a
tied real estate association group faced competition and
therefore created an unlawful tie; as explained below,
however, we find that case distinguishable. See Thompson
v. Metro. Multi-List, Inc., 
934 F.2d 1566
(11th Cir. 1991).
  Reifert argues that by comparing participation in Realtors
Associations in areas where MLS services are “open” to
individuals who have not joined a Realtors Association with
so called “closed” areas that require membership in a
Realtors Association, he can demonstrate that agents have
been forced to purchase Realtors Association memberships.
This comparison is unreliable, however, because it fails to
10                                              No. 05-3601

speak to the central question of whether a competitor exists
in this particular “closed” market and does not account for
other possible explanations for the observed differences.
Forcing individuals in Reifert’s position to purchase a
product they do not want is not a violation of antitrust law.
See Jefferson Parish Hosp. Dist. No. 
2, 466 U.S. at 16
.
  Even without an economic analysis, it is apparent that
RASCW lacks competition. Each of the twelve organizations
cited by Reifert fails to qualify as a competitor to the
national or local Realtors Association:
1.   Appraisal Institute (AI)- covers only appraisers
2.   Asian Real Estate Agent Association (AREAA)—serves
     a distinct ethnic community
3.   Chinese American Real Estate Professionals Associa-
     tion (CAREPA)—serves a distinct ethnic community
4.   Chinese Real Estate Association of America
     (CREAA)—serves a distinct ethnic community
5.   Colorado Association of Exclusive Buyer Agents
     (CAEBA)—covers only exclusive buyer agents
6.   Massachusetts Association of Buyer              Agents
     (MABA)—covers only exclusive buyer agents
7.   National Association of Exclusive Buyer Agents
     (NAEBA)—covers only exclusive buyer agents
8.   National Association of Independent Fee Appraisers
     (NAIFA)—covers only appraisers
9.   National Association of Hispanic Real Estate Profes-
     sionals (NAHREP)—serves a distinct ethnic community
10. National Association of Independent Real Estate
    Brokers (NAIREB)—serves only independent brokers
11. National Association of Real Estate Appraisers
    (NAREA)—covers only appraisers
No. 05-3601                                                11

12. National Association of Real Estate Brokers
    (NAREB)—primarily devoted to the needs of minority
    brokers
  The district court relied heavily upon the First Circuit’s
decision in Wells Real Estate. We believe that decision
effectively captured the central flaw in Reifert’s argument.
    [The plaintiff] has failed to demonstrate the slightest
    market for membership in real estate boards that might
    have been affected by the defendants’ alleged tying
    arrangement. There is no evidence that any other
    broker would have “purchased” membership in any
    other board but for the power exerted by the lure of the
    defendants’ MLS. There is no evidence that a substan-
    tial volume of “commerce” in board membership was
    foreclosed by the tie-in. The tying claim must fail
    absent any proof of anti-competitive effects in the
    market for the tied product.
Wells Real Estate, 
Inc., 850 F.2d at 815
(footnotes omitted).
  While the organizations the plaintiff named may provide
important services, they simply do not compete with
RASCW or any other Realtors Association. These niche
associations lack cross-price elasticity with the national and
local Realtors Associations, and have dissimilar purposes.
These organizations are unlikely substitutes for a Realtors
Association in Wisconsin.
  Instead of providing the district court with the required
economic analysis, Reifert employs a 30-year old decision
from this Court, Beatrice Foods Co. v. FTC, 
540 F.2d 303
,
308 (7th Cir. 1976), to frame his discussion of competition.
Beatrice Foods Co. relied upon the Supreme Court’s deci-
sion in Brown Shoe 
Co., 370 U.S. at 325
, and set forth
several “practical indicia” to determine a market’s bound-
aries. “These indicia are (1) the industry or public recogni-
tion of the submarket as a separate economic entity, (2) the
12                                               No. 05-3601

product’s peculiar characteristics and uses, (3) unique
production facilities, (4) distinct customers, (5) distinct
prices, (6) sensitivity to price changes, and (7) specialized
vendors.” Beatrice Foods 
Co., 540 F.2d at 308
. While the
“practical indicia” named in Brown Shoe and Beatrice Foods
Co. are important considerations in defining a market, they
were never intended to exclude economic analysis alto-
gether. Both opinions recognized the importance of eco-
nomic analysis, including cross-price elasticity of demand.
See Brown 
Shoe, 370 U.S. at 325
(“The outer boundaries of
a product market are determined by the reasonable
interchangeability of use or the cross-elasticity of demand
between the product itself and substitutes for it.”); see also
Beatrice Foods 
Co., 540 F.2d at 308
.
  This Court has emphasized the use of economic analysis
in the law. To demonstrate competition in an antitrust case,
the plaintiff must provide an economic analysis of the
relevant market. See, e.g., Menasha, 
354 F.3d 661
(requiring
economic evidence to prove the existence of a distinct
market). Lacking any economic evidence, Reifert has failed
to show that the tying arrangement has foreclosed any
portion of the market for real estate services.
  The facts of the instant case stand in contrast to the
situation analyzed by the Eleventh Circuit in Thompson.
The defendants in Thompson operated an MLS system and
tied MLS access to membership in a Realtors Association.
The Plaintiff, Empire Real Estate Board, was “founded in
1939 as an African American professional association
because, at that time, the Realtors [Association] excluded
African Americans from membership.” 
Thompson, 934 F.2d at 1570
. The plaintiffs proved that as a result of the tie and
the prohibitive cost of joining two groups, 400 brokers either
did not join or quit the Empire Real Estate Board. Thomp-
son held that where a competitor offering similar services
loses four hundred members because of a tie between an
association of real estate agents and an MLS service, there
No. 05-3601                                                 13

has been a substantial effect on interstate commerce. 
Id. at 1578.
In our case, however, the plaintiff has not presented
an organization equivalent to Empire Real Estate Board.
Thompson presented a valid competitor; neither Wells nor
the instant case does. Thus, Thompson demonstrated a
substantial effect on interstate commerce, while Reifert has
not.
  Having found no competitors, there are many issues
raised in the parties’ briefs that we need not reach. We need
not decide whether the quantity of interstate commerce
affected is “not-insubstantial,” nor must we address
whether SCWMLS has a sufficient economic interest in
the sales of the tied product to satisfy the fourth element of
an unlawful tying arrangement.


B. Group Boycott Claim
  Reifert also asks this Court to consider the district court’s
grant of summary judgment to the defendants on his group
boycott claim. A group boycott traditionally occurs when a
particular group or individual is prohibited from joining an
organization. “Where there are no exclusionary conditions
attached to Realtor board membership, and there is no
contention that the cost is prohibitively high, it is difficult
to see any affront to competition.” Pomanowski v.
Monmouth County Bd. of Realtors, 
446 A.2d 83
, 92 (N.J.
1982). In the instant case, no licensed real estate agent was
denied access to SCWMLS because of an anti-competitive
measure.
  To prove a group boycott, a plaintiff must establish that
the membership requirement has had an adverse impact
upon competition in the market for the tied product. As
stated above, Reifert has failed to demonstrate the exis-
tence of a competitive market for Realtors Association
memberships. Thus, there is no need to balance the pro-
competitive effects of the Realtors Association membership
14                                               No. 05-3601

requirement against its anti-competitive effects. See Buyer’s
Corner Realty, Inc., 
410 F. Supp. 2d
at 583-84 (citing
O’Riordan, 707 F. Supp. at 116
).


C. Anti-Competitive Effects of the Code of Ethics
  Reifert claims that Article 16 of the Code of Ethics of the
National Association of Realtors is anti-competitive and
violates Section I of the Sherman Act, 15 U.S.C. § 1. Article
16 prohibits members of the National Association of
Realtors from interfering with the exclusive agreements
other members have established with clients.
  Reifert’s allegations concerning the anti-competitive
effects of Article 16, however, are overly broad. As the
National Association of Realtors, Code of Ethics Standard
of Practice 16-2 states, “Article 16 does not preclude
Realtors® from making general announcements to prospects
describing their services[.]” Rather, the Article’s purpose is
to prevent the targeted solicitation of individuals who have
exclusively listed their property with another agent and to
prevent agents from improperly using multiple listing
services as a data bank of potential customers.
  We must review a challenge to Article 16 under the rule
of reason to determine whether the agreement contributes
to competition and productivity. See Nat’l Soc’y of Prof’l
Eng’rs v. United States, 
435 U.S. 679
, 695 (1978). Under the
rule of reason, Reifert had the burden to demonstrate that
Article 16’s net effect was anti-competitive. See Bi-Rite Oil
Co. v. Ind. Farm Bureau Co-op. Ass’n, Inc., 
908 F.2d 200
,
203 (7th Cir. 1990).
  The balance between pro- and anti-competitive effects
weighs heavily in favor of Article 16. Even in “open” MLS
areas such as Massachusetts and Alaska, where individuals
who have not joined a Realtors Association may access an
MLS service, users must agree not to solicit the exclusive
No. 05-3601                                                 15

listings of other MLS users during the term of the listing.
If agents were reluctant to post their listings, for fear that
other agents would steal their clients, the market would
become less transparent and less efficient. Article 16 aids
competition and fulfills the purposes of the Sherman Act by
providing a more transparent marketplace.


                      III. Conclusion
  For the foregoing reasons, the judgment of the district
court is AFFIRMED.




  WOOD, Circuit Judge, concurring in the judgment.
Although I agree without reservation with the majority’s
conclusion that the district court correctly granted summary
judgment for the defendants in this case, I am concerned
that some aspects of its opinion are in tension with the
governing Supreme Court doctrine on tying arrangements.
For the reasons I explain briefly here, I would take a more
cautious approach, and leave further developments in tying
law to the high court.
  In Northern Pacific Ry. Co. v. United States, 
356 U.S. 1
(1958), the Supreme Court defined a tying arrangement
as “an agreement by a party to sell one product but only
on the condition that the buyer also purchases a different
(or tied) product, or at least agrees that he will not purchase
that product from any other supplier.” 
Id. at 5-6.
As the
Court later made clear in Jefferson Parish Hospital Dist.
No. 2 v. Hyde, 
466 U.S. 2
(1984), however, “every refusal to
16                                                No. 05-3601

sell two products separately can not be said to restrain
competition.” 
Id. at 11.
The trick is to distinguish between
tying arrangements that are invalid and those that are
innocuous, from a competitive standpoint. In Jefferson
Parish, the Court explained the difference as follows:
       Our cases have concluded that the essential charac-
     teristic of an invalid tying arrangement lies in the
     seller’s exploitation of its control over the tying product
     to force the buyer into the purchase of a tied product
     that the buyer either did not want at all, or might have
     preferred to purchase elsewhere on different terms.
     When such “forcing” is present, competition on the
     merits in the market for the tied item is restrained and
     the Sherman Act is violated.
Id. at 12.
Going on, over the objection of Justice O’Connor
(who concurred in the judgment because of this point), the
majority had this to say about the analytical approach
toward tying arrangements:
       Per se condemnation—condemnation without inquiry
     into actual market conditions—is only appropriate if
     the existence of forcing is probable. Thus, application of
     the per se rule focuses on the probability of
     anticompetitive consequences.
Id. at 15-16.
The Court went on to describe the circum-
stances under which that probability would exist: first,
there must be a substantial potential for impact on competi-
tion, which would be shown if a substantial volume of
commerce is foreclosed by the arrangement; second,
anticompetitive forcing must be likely, which is the case
when it is probable that the seller has market power. 
Id. at 16-17.
If the seller does not have “either the degree or the
kind of market power that enables him to force customers
to purchase a second, unwanted product in order to obtain
the tying product,” then the per se rule cannot be used and
No. 05-3601                                                17

the arrangement must be assessed under a full rule of
reason. 
Id. at 18.
  Despite Justice O’Connor’s forceful opinion concurring
in the judgment, in which she argued that the time had
come to jettison the per se rule in tying cases, see 
id. at 35,
and despite the opportunity it had as recently as March
2006 to take that step, see Illinois Tool Works Inc. v.
Independent Ink, Inc., 
126 S. Ct. 1281
(2006), the Court has
refused to do so. Illinois Tool Works held only that the fact
that a tying product is patented does not support a pre-
sumption that the seller has market power over that
product. 
See 126 S. Ct. at 1291
. It concluded that “tying
arrangements involving patented products should be
evaluated under the standards applied in cases like Fortner
II and Jefferson Parish rather than under the per se rule
applied in Morton Salt and Loew’s,” both cases involving
intellectual property (patents in Morton Salt, copyrights in
Loew’s). In my view, Illinois Tool Works thus stands only for
the proposition that a plaintiff must prove that a holder of
intellectual property has “either the degree or the kind of
market power that enables him to force customers” to
purchase the tied product. If a plaintiff can do so, then the
framework established by Jefferson Parish continues to
apply.
  In the case before us, we must decide whether Reifert has
produced enough evidence to survive summary judgment
with respect to the allegation that the defendant Realtors
Associations have tied the multi-listing service (MLS, the
tying product) to membership in the Realtors Association of
South Central Wisconsin, Inc. (RASCW, the tied product).
The district court concluded that Reifert had not come
forward with the requisite evidence. I agree. The D.C.
Circuit offered a useful summary of the elements of a tying
case in United States v. Microsoft Corp., 
253 F.3d 34
(D.C.
Cir. 2001):
18                                                No. 05-3601

       There are four elements to a per se tying violation: (1)
     the tying and tied goods are two separate products; (2)
     the defendant has market power in the tying product
     market; (3) the defendant affords consumers no choice
     but to purchase the tied product from it; and (4) the
     tying arrangement forecloses a substantial volume of
     commerce.
Id. at 85.
Here, I am willing to say that Reifert has brought
forth enough evidence to permit a trier of fact to rule in his
favor on the first three of those elements. His proof fails,
however, on the fourth.
  The key point is not the measurement of how much
commerce in the tied product market was affected. It is the
fact that Reifert offered no evidence to show that there was
any foreclosure in the tied product market. As far as we can
tell from this record, no one refrained from joining any
other organization because of the cost of membership in the
Realtor Associations (RASCW and the others) before us.
This is what distinguishes our case from the Eleventh
Circuit’s opinion in Thompson v. Metro. Multi-List, Inc., 
934 F.2d 1566
(11th Cir. 1991). In that case, the court explicitly
rested its decision on foreclosure, to which it referred as the
“coercion element,” explaining that “plaintiffs need to show
that [defendant] Metro not only has [ ] market power but
also has wielded this market power to force brokers to alter
their choice of professional associations.” 
Id. at 1577.
It
then reported that the evidence in the record showed “that
400 of Empire’s prospective and current members did not
join Empire or quit Empire because of the prohibitive cost.”
Id. at 1578.
This is precisely the type of showing that
Reifert failed to make.
  Analytically, the majority may well be right that the rule
of reason approach it sees in Carl Sandburg Vill. Condo.
Ass’n No. 1 v. First Condo. Dev. Co., 
758 F.2d 203
(7th Cir.
1985), would be a more sensible way to approach all tying
No. 05-3601                                                19

cases. But it is not for this court to anticipate the Supreme
Court’s overruling of its earlier decisions, even if the
passage of time and the impact of later cases that create
doctrinal tensions are evident to all. Just as we did in Khan
v. State Oil Co., 
93 F.3d 1358
(7th Cir. 1996), overruled by
State Oil Co. v. Khan, 
522 U.S. 3
(1997), we should limit
ourselves to pointing out the problems we see and then
attempting to apply the law as it stands as best we can. In
the present case, unlike State Oil, faithful application of the
existing law leads to the same outcome as the more ambi-
tious approach the majority has chosen. For that reason, I
am happy to concur in the outcome that the majority
reaches, but I must respectfully decline to join its opinion.

A true Copy:
       Teste:

                         ________________________________
                         Clerk of the United States Court of
                           Appeals for the Seventh Circuit




                    USCA-02-C-0072—6-12-06

Source:  CourtListener

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