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Luz de Amor Eytalis said she filed her antitrust suit against the National Association of Realtors (NAR), Texas Association of Realtors (TAR) and Wichita Falls Association of Realtors (WFAR) because she felt like she didn’t have much of a choice.
“For years, I’ve seen how the rules and practices enforced by NAR, WFAR, and TAR make it harder for small brokers like me to compete,” Eytalis, the broker-owner of Texas-based Strategic Realty, told HousingWire in an email. “When I tried to speak up about it, I faced pushback and retaliation, which only confirmed that the system isn’t designed to support people like me.”
Carla DeYoung, the broker of Tigerland Properties, filed a similar lawsuit in Louisiana against NAR, Louisiana Realtors, ROAM MLS and several other Realtor associations. She said her firm’s decision to sue came after “months of efforts to be released from NAR’s restrictions, which compel agents to engage in practices we believe violate fair housing and anti-competitive laws.”
“The options we faced were to comply with their demands or risk losing access to the local MLS, a critical resource for our business that is essential for delivering timely market data to our clients and facilitating communication between Realtors and Real Estate Agents,” DeYoung wrote in an email.
Stating the allegations
At the center of the Eytalis and DeYoung lawsuits, as well as the Hardy suit in Michigan and the Muhammad and Moore suits in Pennsylvania, is the question of MLS access being tied to Realtor association membership. NAR’s three-way membership agreement requires Realtors to join associations at the local, state and national levels.
In her suit, DeYoung argues that the defendants have engaged in an unlawful tying arrangement that compels membership to Realtor associations in order to gain access to the local MLS.
“Such practices limit competition, harm consumers, and disproportionately affect all real estate professionals within the real estate industry,” the suit states.
The DeYoung plaintiffs also claim that the current membership structure does not provide all real estate licensees with equitable access to the data needed to do their job.
“This exclusion undermines the principle that all real estate professionals are independent contractors and limits opportunities for collaboration and has directly contributed to reputational harm for non-member real estate professionals,” the DeYoung complaint states. “As a result, the market is hindered, leading to fewer options for consumers and negatively affecting overall market dynamics.”
Eytalis makes similar allegations in her suit, claiming that NAR, TAR and WFAR have “engaged in monopolistic practices that unlawfully restrict competition in the real estate market.”
Nearly identical allegations are made by the real estate professional plaintiffs in the Hardy, Moore and Muhammad suits. But the plaintiffs in the Moore and Muhammad cases also allege that the Realtor association defendants and their membership structures are discriminatory.
In his suit, Maurice Muhammad, a broker at Progressive Realty, claims that the defendants — which include NAR, the Pennsylvania Association of Realtors (PAR) and the Greater Lehigh Valley MLS (GLVMLS) — have “engaged in a pattern of discriminatory practices against minority real estate professionals.” These practices have allegedly included “selective enforcement of professional rules, inequitable application of disciplinary measures, and the exclusion of minority professionals from leadership positions.”
Similarly, plaintiff W. Preston Moore, a former president of PAR, claims that “minority members have faced unequal enforcement of ethical standards, while white members engaging in similar conduct are not held accountable.”
History repeats itself
Although it may seem novel that Realtors are suing their trade associations over membership agreements, this is not the first time that real estate licensees have pushed back against NAR and its membership structure.
In the 1970s and ’80s, agents in California and Georgia, as well as the Department of Justice (DOJ), successfully sued local MLSs and associations to open their listing platforms to non-Realtor members.
In Florida, Alabama and Georgia, access to the MLS was opened to non-Realtors by a 1991 ruling in a case known as Thompson v. Metropolitan Multi-List. The suit was originally filed in Georgia in December 1988 by Fletcher L. Thompson against Metro MLS and the DeKalb Board of Realtors.
Thompson did not wish to join the Atlanta Board of Realtors and therefore his application to use Metro MLS was denied since he wasn’t a Realtor. Like the modern-day suits, the Thompson case alleged an illegal tying arrangement between Realtor association membership and MLS access.
A ruling by the Eleventh Circuit Court of Appeals overturned a lower court’s granting of summary judgment to the defendants. That created what are now known as “Thompson brokers,” or brokers who are non-Realtors but have access to the MLS.
Like the two current suits in Pennsylvania, the Thompson suit also had a discrimination angle to it. Although Thompson did not belong to the DeKalb board, he did belong to the Empire Real Estate Board, which was another plaintiff in the suit.
The organization was founded in 1939 as an African American professional association, since Black agents were not allowed to join Realtor associations then, but it was never incorporated as a Realtor association. In the lawsuit, Empire alleged that it was losing members due to Metro’s requirement that its members also belong to a Realtor association.
MLS access to non-Realtors was opened even earlier in California through to a 1976 ruling by the Supreme Court of California in Marin County Board Realtors v. Palsson.
In a unanimous decision, the court found that the board’s bylaws violated the state’s antitrust statute because they restricted membership to individuals primarily engaged in real estate and denied access to the MLS for non-Realtor members, constituting an unreasonable restraint of trade.
Also pre-dating the Thompson suit was a suit known as United States v. Realty Multi-List (RML), which was filed by the DOJ in 1976. RML was originally founded in 1967. To join, brokers initially paid $200 to purchase one share of stock, but stock prices rose over time.
A 1980 ruling by the Fifth Circuit Court of Appeals found that RML’s “present membership criteria on their face create restraints on commerce that are not justified by RML’s competitive needs.”
“RML’s Rules and Regulations limit the ability of nonmembers to share in the benefits it provides. They prohibit members from allowing a nonmember access to the listing book, its prime resource,” the ruling stated.
“Further, while RML’s rules allow members to cooperate with nonmembers on an individual sale of an RML-listed property, they prohibit any member, other than the listing broker, from responding directly to a nonmember’s inquiries regarding a listed property, and the RML office may not disclose any information to nonmembers.”
Compare and contrast
Saul Klein, the CEO of San Diego MLS, became a real estate professional in 1975, a year before the Palsson decision opened up MLS access to non-Realtors in California. While he recalls the initial talk about the suit as somewhat surprising, he doesn’t feel that the ultimate outcome and opening of the MLS had much of an impact.
“Since that decision, you haven’t had to be a Realtor in California in order to access the MLS,” Klein said. “So, that is going on 50 years now where this has been allowed in California, and everyone is talking about it like it is a new thing.”
While Klein is not surprised that more real estate professionals are pushing back against the three-way membership agreement and MLS access, he doesn’t believe the argument that access to the MLS is necessary to do agent’s job holds the same weight as it did decades ago.
“I think people could create a new business model around going to some of these portals to get information, finding out who the listing agent is, calling and getting information,” Klein said. “It certainly could be done.”
Looking ahead
NAR rules do not require Realtor-owned MLSs to mandate Realtor membership for real estate licensees to obtain access to the MLS. Instead, they allow local Realtor associations to decide. In recent months, some Realtor associations have opened up access to their MLS to non-members. This is a trend that Denee Evans, CEO of the Council of Multiple Listing Services, expects to continue.
“Especially looking back at the past year of litigation, I think everyone is thinking about what we have learned as an industry and how do we advance and evolve,” Evans said. “I think MLSs are having more conversations about what their local markets need, and some things that may not have made sense five or 10 years ago now do. What is the future of these marketplaces and how do we best serve them?”
The lawsuits filed by the likes of Eytalis and DeYoung may or may not gain the traction that their predecessors did in the 1970s and ’80s. But it appears that more MLSs and local associations are beginning to ponder this question even without the threat of looming litigation.
