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Shaw v. Ithaca BOR: Ithaca Board's Experience Requirement for Participation in MLS Does Not Violate New York's 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 Shaw v. Ithaca Board of REALTORS®, the New York Supreme Court addressed the requirement of the Ithaca Board of REALTORS® (Board) that participation in the MLS be afforded only to those with a minimum of three years experience as a salesman or broker. The court held that the requirement was reasonable and justified, and that it did not constitute a violation of state antitrust law.

Shaw was a licensed real estate broker in Ithaca, NY. The Board operated an MLS in Ithaca. Class A members of the Board were entitled to MLS access. To become a Class A member, an applicant must (1) be a licensed real estate broker; (2) engage primarily in the business of real estate; (3) have an established place of business; (4) take a specified course and pass an examination thereon; and (5) have three years experience as a licensed salesman or broker. Shaw was able to meet the first four elements for Class A membership. However, because she had only two years and three months experience, her application for Class A membership was denied. Shaw sued contending that rules restricting Class A membership to those with three years experience constituted an unlawful restraint of trade.

The New York Supreme Court stated that the purpose of restraint of trade and unfair competition laws was to protect the public and not primarily to protect the individual plaintiff. The court found no evidence to indicate that the MLS resulted in any restraint of competition or unfairness or in any way adversely affected the public. The court held that this failure of proof compelled judgment for the Board.

The New York Supreme Court addressed several factors used in making its decision. First, there was no evidence to indicate the extent to which the Board, through its MLS, controlled the local real estate business. Second, there was no showing of the effect on Shaw or on other brokers similarly situated of their short term exclusion from access to the MLS. Third, there was no evidence of any economic loss to Shaw by virtue of the waiting period. Fourth, there was no evidence of any discrimination affecting Shaw's right to membership and no showing that the membership requirements do not bear a reasonable relationship to the benefits obtained through Class A membership in the Board.

Regarding the "experience" requirement, the New York Supreme Court stated that newly licensed brokers need experience to handle the real estate business and to contribute to the MLS inventory. The court found that until brokers gained stability and experience, they tended to be mere users of the MLS and not contributors, taking the benefit of the properties procured for sale by other brokers, while bringing in no listings of their own. The court stated that a period of active engagement in the brokerage business was designed to partly overcome this advantage. The court held that this requirement met the reasonableness test.

The New York Supreme Court also stated that the Board had no membership admission rules that tended to exclude anyone, and that all applicants were treated alike. The court further stated that all requirements for membership are defined with certainty and there was no evidence to indicate that any real estate broker who met the objective standards would not be admitted to membership.

Shaw v. Ithaca Board of REALTORS®, (N.Y. Sup. Ct., Tompkins County 1974). [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.]