2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 9-26-2008 

# Ju s t N ew H omes Inc v

. B e aze r H omes P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 07-1518

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w . vi ll anova . e du . Re c omme nde d C it at ion
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. Be az e r H ome s " (2008). 2008 D e cisio n s . P ape r 481. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2008/481NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N o. 07- 1518 J UST N EW HO M ES, I NC . ; D. RI CH AR D TO NG E, A p p e llan ts v. B E A Z E R H O M E S ; P U L T E H O M E S ; T O L L B R O T H E R S ; E L L IO T B U IL D IN G G R O U P L T D .; K . H O V N A N IA N C O M P A N IE S ;

K A T Z B U IL D E R S & D E V E L O P E R S , IN C .; M IC H A E L A N T H O N Y H O M E S ; R Y A N H O M E S ; S A L L A P IO H O M E S ; R IC H M O N D A M E R IC A N H O M E S ; C & M H O M E B U IL D E R S , IN C .; W E I C H E R T R E A L T O R S; C O L D W E L L B A N K E R R E A L T Y C O R P. ; R E / M A X 440 REA LTY, I NC . ; LON G & FOSTER REAL ESTATE, I NC . ; ERA W AY NE SLOTTER REA LTY, I NC . ; HB A O F BUCK S & M ON TGO M ERY CO UN TI ES

_________________ A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D . C . C i vi l A ct i on N o. 05- cv- 04198) D i s t r i ctJ udge: H onor abl e J ohn P. Ful l am Subm i t t ed U nderT hi r d C i r cui tL A R 34. 1( a)

Sept ember25, 2008 B efor e: B A R R Y , A M B R O , and J O R D A N , C i r cui tJ udges

( O pi ni on fi l ed Sept ember26, 2008)

OP I NI ON A M B R O , C i r cui tJ udge2

JustN ew H om es, Inc. , a bu y er’ s brokerage firm w i t h an Int ernet -based bu si ness m odel , al ong w i t h i t s Pr es i dentand C E O D . R i char d T onge ( col l ect i vel y , “J us tN ew H o m es” ), b rou g h t th is an ti tru st suitin the U n it ed S tat es D istri ct C o u rtfo r th e E astern D i s tr i ctof Penns y l vani a. I tal l eges thatthe def endanthom e bui l der s r efus ed t o do bus i nes s w i t h i tatt he behe s tof the def endantr eal t or s ( i n par tthr ough t he ac t i vi t i es of a trade associ at i on , w hich i s al so a def end ant) , w ho w i shed to st i fl e com peti t i on from Just N e w H o m e s . T h e D i s t r i c tC o u r tg r a n t e d s u m m a r yj u d g m e n tt o th e d e f e n d a n t s . We a f f i r m. In 1 9 9 9 , J u s t N e w H o m e s la u n c h e d its b ro k e ra g e b u s in e s s w ith tw o m a in a s p e c ts . Fi r s t , i templ oy ed a t eam of r es ear cher s t o as s embl e a da t abas e of ne w - cons t ruct i on pr oper t i es acr os s 14 s t at es and the D i s t r i ctof C ol um bi a. I tcr eat ed a w ebs i t e bas ed on thatdat abas e t o att r actpr os pect i ve buy er s t o become cl i ent s . Second, i tdevel oped a s y s t em for r egi s t er i ng pr os pect i ve buy er s as br oker age c l i ent s . T hi s s y s t em, bas ed on pr i nt abl e coupons t hatcl i ent s w oul d s ubm i tt o t he bui l derors el l er - br oker , w as des i gned t o al l ow J us tN ew H om es t o r epr es enti t s cl i ent s as a buy er - br okerw i t houtbei ng ph y si cal l ypresentatbu y ers ’ i nit i al vis i t s t o p ropert i es. J us tN ew H om es al l eges t hatthe def endant s — 11 bui l der s , 5 r eal t or s , and the H om e B ui l der s A s s oci at i on of B ucks and M ont gom eryC ount i es ( “H B A ”) , a tr ade a ss o c iatio n in c lu d in g b o th b u ild e rs a n d re a lto rs— c o n sp ire d to b o y c o tt i ts s e rv ice s, in vi ol at i on of the Sherm an A ct , 15 U . S. C . § 1 ( “Ever ycontr act , combi nat i on i n t he form of3

trus torotherw i s e, orcons pi r acy , i n r es t r ai ntof tr ade orcomm er ce . . . i s decl ar ed t o be i l l egal . ”) . T he def

endant s ’ al l eged r efus al t o deal w i t h J us tN ew H om es w as eff ect ed th ro u g h a p h y s ic a l p re s e n c e re q u ir e m e n t f o r b u y e r- b ro k e rs — to re c e iv e a c o m m is s io n , a buy er - br okerm us ts how up att he buy er ’ s fi r s tvi s i t . T he def endant s j us t i fythi s pol i cyas a m etho d o f a v o iding co n fli cts o v er sa les co m m issi o n s b yv erify ing the b u y er-b rok er’s iden ti tyin the p rese n ce o f th e b u y er a n d the s ell er-b rok er. Th e Di s t r i c tCo u r th a d j u r i s d i c t i o n o v e rJ u s tNe w Ho me s ’ s u i tu n d e r2 8 U. S . C. § 1337( a) . W e have appel l at e j ur i s di ct i on under28 U . S. C . § 1291. W e r evi ew the D istric t C o u rt’s g ra n t o f su m m a ryju d g m e n t de novo . A T & T Co r p . v . J MC T e l e c o m, LLC , 4 7 0 F .3 d 5 2 5 , 5 3 0 (3 d C ir. 2 0 0 6 ). W e re v iew th e f a c ts in th e lig h t m o st f

a v o ra b le to Ju st N ew H o m es a s the p artyo p p o sing the m o ti o n , an d w e w il l up h o ld su m m ary ju d g m e n t f

o r t h e d e f

e n d a n ts o n ly if

n o g e n u in e is s u e o f

m a te ri a l f

a c t r e m a in s . I

d. I n R os s i v. Standar d R oof i ng, I nc. , 156 F. 3d 452 ( 3d C i r . 1998) , w e expl ai ned that d ire c t ev id e n c e w o u ld b e st o v e rc o m e th e u su a l “d if f icu lt[y ] f o r th e p lain tiff

to demonstr at e thatw hatt he manufactur erors uppl i erdi d w as i ncons i s t entw i t h i ndepende nt act i on orthatt he cl ai m ed cons pi r acym akes economi c s ens e, ” i d. at456. C i r cumst ant i al e v id e n c e c a n s o m e tim e s a llo w a n a n titr u s t p la in tif f to s u rv iv e s u m m a ry ju d g m e n t. I d. at 465–66. B utw hen pr es ent ed w i t h ci r cumst ant i al evi dence al one w e eva l uat e the p lain tiff ’s c laim u n d e r a m o re rig o ro u s s tan d a rd , h e n c e re q u irin g f a c iallyim p lau sib le claim s (su ch as th o se th at m ak e n o ec o n o m ic sen se) to b e a cc o m p an ied b y“‘ m o re p e rs u a s iv e e v id e n c e ’” th a n o th e rw is e re q u ir e d . See i d. at466 ( ci t i ng and quot i ng fr om4

Mats ushita E l ec. Indus. C o. v. Zenith R ad i o C orp . , 4 7 5 U . S . 5 7 4 , 5 8 7 (19 8 6 )). J us tN ew H om es ar gues t hati thas s ucce s s ful l ypr es ent ed di r ectevi dence of a hor i zont al gr oup boy cott . W e di s agr ee. J us tN ew H om es al l eges thatthe phy s i cal pr es ence r equi r ementw as enfor ced thr ough a s t andar d form agr eementi ncl udi ng that req u ir em en t and d istri b u ted b ythe H B A to b u il d ers. Y et th e re co rd sh o w s tha t th e f o rm w as cr eat ed i n 1996, t hr ee y ear s befor e Tonge founded J us tN ew H om es . J us tN ew H o m e s s e lec tiv e lyq u o tes f ro m th e d e p o sitio n o f

S tev e n K a tz, o w n e r o f

d e f e n d a n t K a tz B ui l der s and D evel oper s , I nc. , t o ar gue thatthe def endant s act ed i n conce r tt o cr eat e the form . B utK at z s t at ed that“Y ou di d nothave t o fol l ow [the form ] . . . . T her e w as no p u n is h m e n t if

y o u d id n ’t u s e it.” I n addi t i on, J us tN ew H om es ci t es a l ett erfr om J os eph J . T ar ant i no, J r . , Pr es i dent o f C o n ti n en tal R ea ltyC o . , Inc . (C o n ti n en tal is no t am o n g the d ef en d an ts i n this case . ) T a ra n tin o ’s le tter s tate s th a t th e p h y sic a l p re se n c e re q u ire m e n t “h a s b e e n f o llo w e d b ya ll B r oker s as s oci at ed w i t h t he M ont gom eryC ount yA s s oci at i on of R eal t or s and other as s oci at i ons as w el l . ” B utt he l ett er , dat ed A ugus t2000, goes on t o s t at e thatthe pol i cy w as 15 y ears old, un derm i ning JustN ew H om es’ cl ai m that the p oli cyrefl ect s a c o n c e rte d re f

u sa l to d e a l w ith it. J us tN ew H om es al s o m ent i ons s t at ement s hear d byT onge attw o m eet i ngs , one of the H B A an d o n e o f th e loc al ch ap ter of the N ati o n al A sso ciati o n o f R ea lt o rs. It at tr i but es nei t hers t at ementt o anypar t i cul ari ndi vi dual , how ever , l eavi ng us w i t h no evi dence t hata r epr es ent at i ve of one of the def endant s m ade thos e s t at ement s . T he fa ct5

thatJ us tN ew H om es s enta l ett ert o the H B A obj ect i ng t o w hati tcons i der ed t o be a coll usi ve p oli cy , enfo rced byt he tr ade associat i on , i s not evi den ce of the d efen dan t s’ a c t i v i ty. B e c a u se th e d ire c t ev id e n c e c ited b yJu st N e w H o m e s d o e s n o t su p p o rt its al l egat i ons , w e do nott r eati t s cl ai m undera per se rul e. I ns t ead, w e appl ya rul e of re a s o n . R ossi , 156 F. 3d at461–63. J us tN ew H om es m us tr el yon ci r cumst ant i al evi dence t o pr ove al l fourof the fol l ow i ng el ement s of an a nt i t rus tvi ol at i on ( r atherthan j us tt he fi r s tand the fourt h, as w oul d be the ca s e undera pers e rule):

( 1) t hatt he def

endant s contr act ed, combi ned orcons pi r ed among each other ; ( 2) thatthe combi nat i on orcons pi r acy pr oduced a dver s e, ant i - compet i t i ve ef fec t s w i t hi n t he r el evant pr oductand geogr aphi c mar ket s ; ( 3) thatthe obj ect s of and the c o n d u ct pu rsua n t t o that co n tr ac t or co n sp ir ac yw ere ill e g a l; an d (4 ) th a t th e p lain tiff s w e re in ju re d a s a p ro x im a te r e s u l to f t h a tc o n s p i r a c y. I d. at464–65 ( quot i ng Tunis B r os . C o. , I nc. v. For d Mot orC o. , 763 F. 2d 1482, 1489 ( 3d C ir . 1 9 8 5 ), vacated on othergr ounds , For d Mot orC o. v. Tunis B r os . C o. , I nc. , 47 5 U. S. 1 1 0 5 (19 8 6 )) ( interna l qu o tat ion m ark s o m itted). T he ci r cumst ant i al evi dence thatJ us tN ew H om es has offe r ed ca nnotpr ove the fi r s tthr ee of

t hes e fourel ement s . O n t he mostbas i c l evel , no evi dence exi s t s i n t he r ecor d of cons pi r acyorcol l us i on among t he def endant s . M or eover , J us tN ew H om es i t s el f des cr i bes t he adopt i on and enf or cementof the phy s i cal pr es ence r equi r ementas “g rad u al[].” Ju st N ew H o m es B r. at 9. T h is de scripti o n — an d the f ac ts i n the re co rd fai l i ng t o s how anycol l us i on among or s i m ul t aneous act i ons t aken bythe def endant s — doFort hi s r eas on, t he cl ai m i s defi ci enteven unde ra per se analy si s. 1 6 n o tl e n d a n y s u p p o r tt o a c o n c l u s i o n th a tth e d e f e n d a n t s a c t e d o t h e rth a n i n d e p e n d e n t l y. 1 See R ossi , 156 F. 3d at466–67. Ju st N e w H o m e s a rg u e s th a t th e re a lto r d e f e n d a n ts u se d th e ir m a rk e t p o w e r to p re ss u re th e h o m e -b u ild e r d e f e n d a n ts. B u t th e e v id e n c e o f m a rk e t p o w e r in th is c a se is n o t sp e c if

ic to th e re g io n . T h e e c o n o m ic e x p e rt o f f e re d b yJu st N e w H o m e s m e re ly m ent i oned an i nform al rul e aboutt he mar kets har e thatthe t op 20 defe ndantr eal t or s i n a typ ical realtym ark et i n the U n it ed S tat es m igh t hav e. (B esid es, on ly1 1 rea lt o rs are d e f e n d a n ts in th is c a se .) S u c h w e a k e v id e n c e c a n n o t es tab lish th e se c o n d e lem e n t. F in a lly, w e s e e n o e v id e n c e in th e re c o rd s u p p o rt in g th e th ir d e le m e n t. M e m b e rs h ip in a tr a d e a s s o c ia tio n , w ith o u t m o re , d o e s n o t v io la te th e a n titr u s t la w s . See,
e. g. , A m er i can Str uct ur es , I nc. v. F i del i t

y & D epos i tC o. of

M d. , 545 F. Supp. 1021, 1026 ( E . D . Pa. 1982) . M or eover , t he def endant s have of

fer ed a l egi t i m at e j us t i fi cat i on fort he p h y s ic a l p re s e n c e re q u ir e m e n t, i . e. , the nee d t o avoi d confl i ct s overw hi ch br okerhas earned a s al es comm i s s i on. Fort hes e r eas ons , w e af fi r m the D i s t r i ctC our t ’ s gr antof the def endant s ’ m ot i on f o r su m m a ryju d g m e n t.