Opinion ID: 763285
Heading Depth: 3
Heading Rank: 4

Heading: The Court's March 19, 1996 Opinion

Text: 52 On March 19, 1996, the district court granted summary judgment dismissing all of the plaintiffs' remaining claims, and four of Realty One's five remaining counterclaims. 53 The plaintiffs' § 2 monopolization claims were dismissed because the plaintiffs failed to meet their burden of defining the relevant geographic markets in which the defendants were alleged to wield monopoly power; nor had Re/Max met its burden of showing that the defendants had the power to set prices or exclude competition in the geographic markets plaintiffs claimed. First, the court rejected the plaintiffs' claim that each of 161 cities and towns in northeast Ohio was its own geographic market for real-estate agents and for brokerage services. The plaintiffs had introduced no evidence that home buyers or sellers obtain real-estate brokerage services exclusively or even largely from brokers within their own political subdivisions. Similarly, no evidence indicated that brokers did not cross political boundaries to show homes, or that brokerages did not cross such boundaries to recruit agents. 54 Moreover, the district court held, even if the 161 areas were geographic markets, the plaintiffs' expert, Dr. Martin, relied on questionable data in reaching his conclusions that the defendants exercised monopoly power. In calculating market share, the expert looked only at the dollar value of homes sold, rather than the number of homes. He reviewed data from 1993 through 1995 only, although the plaintiffs' suit sought damages back to 1987. And, in his analysis, the expert may have overlooked up to 40% of all homes sold. Thus, the plaintiffs' expert's report did not sufficiently support the § 2 monopolization claims. 55 Second, even if the expert's conclusions were accepted, the plaintiffs had not met their stiff burden to establish monopolization, conspiracy to monopolize, or attempted monopolization. Particularly telling was the relatively low market share that the plaintiffs contended Realty One and Smythe Cramer had in the relevant localities--in no case was it above 51%. Although there is no minimum market share required to make out a § 2 claim, the court thought that failing to meet a 50-60% threshold defeats a claim unless evidence is proffered showing, for instance, that a defendant's market share increased after initiating the anticompetitive activity or that there were true entry barriers to the relevant industry. Similarly, the attempted monopolization claims failed because there was no evidence that there was a dangerous probability that defendants would succeed in achieving monopolization--their market share had not grown since 1987, and new firms could enter the market easily to undercut monopolistic prices or policies. Likewise, the conspiracy-to-monopolize claims failed because the plaintiffs had offered no evidence of the defendants' specific intent to establish a monopoly. 56 The defendants were granted summary judgment on the plaintiffs' § 1 conspiracy claims, because there was insufficient evidence that the defendants mutually agreed to adopt adverse splits, rather than imposing them independently. The court recognized that a claim of conspiracy to fix prices need not include proof that the activity unreasonably restrains trade and that such an agreement if proven would be a per se violation of § 1 of the Sherman Act. However, in ruling against the plaintiffs, the court found that all of their proofs were equally consistent with independent action. 57 Most important to the court's analysis in this regard was its rejection of the findings of the plaintiffs' economic expert, Dr. Martin. Although the witness stated in his written report that unilateral imposition of adverse splits would be economically irrational, the district court held that Dr. Martin implicitly admitted in his deposition that independent adverse splits could have been in Smythe Cramer's (and thus Realty One's) best interest; that is, had Smythe Cramer not imposed the adverse splits, it would have lost agents to Re/Max or been forced to pay higher salaries. Although the court cited this economic benefit to the defendants of imposing the adverse-splits policy, notably, the court did not consider whether the plaintiffs' expert had admitted, implicitly or otherwise, that this benefit exceeded the costs of the policy in terms of lost business. Also, according to the court, the facts that the defendants imposed roughly the same splits at roughly the same times, that they exchanged information regarding their splits against Re/Max, and that they had opportunities to meet, could all be explained innocently. 58 Moreover, the court ruled that the testimony of Leo Lee--to the effect that Realty One's CEO admitted conspiring with Smythe Cramer to impose the adverse splits--was inadmissible. The court found the conversation between Lee and Realty One's CEO to be inadmissible hearsay, and not within the requirements of the coconspirator exclusion of Fed.R.Evid. 801(d)(2)(E), because there was insufficient evidence of a conspiracy and because the statement could not be construed as being in furtherance of the conspiracy even if one existed. The court apparently did not consider whether the statement was admissible against Realty One simply as an admission of a party opponent. Fed.R.Evid. 801(d)(2)(D). 59 The court also dismissed the plaintiffs' state-law claims for reasons that are not relevant here, as the plaintiffs have not appealed this aspect of the district court's judgment. 60 As for Realty One's remaining counterclaims, all were dismissed as unsupported by the evidence, save only the claim that the plaintiffs had engaged in sham litigation in violation of § 1. Although the court found evidence that Re/Max franchises had agreed to set broker-to-broker commission splits for non-Re/Max brokers, the court held that Realty One had not alleged a resulting injury to its business or property and thus had not stated a valid claim on that count. Realty One's tortious interference and unfair-competition claims--that the plaintiffs interfered with contractual relationships between Realty One and its agents and between Realty One and its customers listing homes for sale--were also dismissed. Re/Max could not illegally induce an at-will employee from leaving his position with Realty One, and Realty One had adduced no evidence of any customer contract with which any plaintiff had interfered. Lastly, Realty One's claim that the plaintiffs engaged in unfair competition by stealing lists of Realty One's agents failed, because there was no evidence that Ohio regards a list of brokers as a trade secret. 61 Because the central claims in the case had been dismissed, and because proceeding to trial on the sham-litigation claim would result in undue delay of the appeals from the several judgments as matters of law, the district court entered final judgment under Fed.R.Civ.P. 54(b). This timely appeal followed.