Dupre v. Columbia BOR: South Carolina Board's Membership Requirements in Violation of Antitrust Laws
Note: This case is not published in an official reporter and may not be cited as authority. Consult with counsel before relying on this case.
In Dupre v. Columbia Board of REALTORS®, a South Carolina district court addressed a limitation on membership in a local Board of REALTORS® (and thereby the affiliated MLS) based on a requirement that members' offices comply with zoning laws. The court held that the limitation constituted a group boycott and per se violation of the Sherman Antitrust Act.
Dupre was a licensed broker in Columbia, S.C. Several times from 1970 to 1980, Dupre applied for membership in the Columbia Board of REALTORS® (Board). He was denied each time because he maintained an office in his home which was allegedly in violation of a restrictive deed on his property. One of the Board's membership requirements was that members maintain offices which did not violate any zoning laws. The Board admitted that Dupre satisfied all other membership requirements. The Board was the owner of the only local MLS, access to which was based on Board membership. Dupre sued the Board and MLS alleging that members of both conspired to restrain trade and that their actions were a group boycott.
The district court found that membership in and access to the MLS were valuable aids to real estate brokers. They stated that where, as here, the MLS covers substantial amounts of the market, exclusion of a broker restricts his ability to effectively compete. The court found that denial of membership to the Board and access to the MLS was without lawful reason. It found that the denial was based on a tacit agreement by the defendants, and that their conduct in excluding Dupre constituted a group boycott.
The district court then addressed whether per se or Rule of Reason analysis should apply regarding the boycott. The court stated that inquiry is made under Rule of Reason unless the challenged conduct constitutes "agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use." The district court stated that the U.S. Supreme Court has consistently held that certain concerted refusals to deal with or "group boycotts" are so likely to restrict competition without any offsetting efficiency gains that they should be condemned as per se violations of the Sherman Act.
The district court inquired whether the defendants' conduct in refusing Board membership/MLS access fell within the category that is conclusively presumed unreasonable. The court found the zoning requirement unreasonable for several reasons. First, there was no violation of a zoning law, as a violation of a restrictive deed is not a violation of a zoning law. Second, the rationale that the requirement promoted an image of competence and ethics for REALTORS® was not reasonably necessary to the accomplishment of any pro-competitive benefit of the Board. Further, the court stated that State regulations sufficiently ensured competence and ethics of licensed brokers. Thus, the court held that the defendants' actions constituted a group boycott which was per se illegal under the Sherman Act.
Dupre v. Columbia Board of REALTORS®, Civil Action 78-670-0 (D.S.C. 1987). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]