Court Opinion

ID: 6260772
Source: CourtListenerOpinion
Date Created: 2022-02-17 22:03:27.862001+00
Date Added: 2024-06-11T08:59:42.216758
License: Public Domain

Concurring Opinion by
Mr. Justice Pomeroy:
I agree with the conclusion reached by the majority: the multilisting practice of appellee which operates to exclude a licensed broker from membership is per se unlawful under our State’s common law as an unreasonable restraint of trade. There is, however, very little State common law on the subject in view of the fact that trade restraints of this nature have been historically of federal concern under the Sherman Act.1 I think it reasonable and desirable, therefore, to determine what the federal law is on the subject and then to consider whether there are valid reasons for eschewing that law in Pennsylvania. In the case before us, the federal law and our rather meager State law coincide, and I am persuaded that the result is sound. Since this approach to the matter is somewhat different from that of the Court, I elaborate upon it in the balance of this concurring opinion.
The Court’s opinion is correct in its observation that the federal courts have in the past held some agreements among participants in an industry which exclude other participants unreasonable per se. See, e.g., Fashion Originators’ Guild v. Federal Trade Commission, 312 U.S. 457, 85 L. Ed. 949 (1941) ; Associated Press v. United States, 326 U.S. 1, 89 L. Ed. 2013 *354(1945); Klor’s, Inc. v. Broadway-Hale Stores, 359 U.S. 207, 3 L. Ed. 2d 741 (1959).2 At the same time, however, there exist a substantial number of decisions which approach on a “rule of reason” analysis agreements among participants which have the effect of creating some associations from which other participants are excluded. See, e.g., Board of Trade of Chicago v. United States, 246 U.S. 231, 62 L. Ed. 683 (1918); Silver v. New York Stock Exchange, 373 U.S. 341, 10 L. Ed. 2d 389 (1963) ; Deesen v. Professional Golfer’s Association of America, 358 F. 2d 165 (9th Cir.), cert. denied, 385 U.S. 846 (1966); American Federation of Tobacco Growers v. Heal, 183 F. 2d 869 (4th Cir. 1950); Molinas v. National Basketball Assoc., 190 F. Supp. 241 (S.D.N.Y. 1961). The problem in a case such as that at bar is to determine which agreements are per se unlawful and which are unlawful only if shown by evidence to work an unreasonable restraint of trade. One commentator has suggested what commends itself to me as a sensible test for resolving the problem: “[E]xclusionary measures should be permitted when [1] essential for efficient operation of an entire industry or [2] when justified by public policy.”3 will discuss this case in terms of these two criteria.
(1) Efficient Operation. Some industries, by their nature, require a banding together of industry participants in order to conduct business. Stock markets (Silver, supra) and commodity exchanges (Chicago Board of Trade, supra) are two examples of industries *355which would be altogether eliminated if an agreement among brokers to create a central market was, without more, unlawful. The same is true of professional sport activities {Deesen, supra—golf; Molinas, supra—basketball). Thus the exclusion by the Professional Golfers’ Association, for example, from tournament competition of a player lacking the necessary competitive skill could hardly be said, without more, to violate a law against trade restraint.
In contrast, real estate, unlike stocks and commodities, can be and is sold in individual, face-to-face transactions without the need for a central exchange. As the Chancellor’s opinion, below states, “[T]he multiple listing service of the Main Line Board of Realtors is not an economic necessity in the buying and selling of real estate.” Indeed, the data cited in the Chief Justice’s dissenting opinion would indicate that some 58% of the dollar value of real estate business in the Main Line area was transacted without the benefit of multilisting. And while the multiple listing arrangement may tend to promote efficient operation in the sale of real property, no reason is apparent why all qualified brokers in a geographic area should not participate. In short, I do not think that it can be said that the practice of multiple listing of properties for sale by less than all licensed brokers of the area is “essential for efficient operation of an entire industry.”4
(2) Public Policy. The commentator cited above, whose test I am here applying, suggests that public policy justifications necessary to prevent application of a per se rule may be found in “governmental expres*356sions of purpose” and in “the need for self-regulation inherent in the industry.” Such justification, however, “must reflect a readily identifiable public interest and not merely the wishes of the trade association, for the courts should not serve as arbiters of the desirability of an association’s goals.”5 The Real Estate Brokers License Act, May 1, 1929, P. L. 1216, as amended, 63 P.S. §431 et seq., contains a compi’ehensive scheme for protecting the public against unscxuipulous practices of licensed and unlicensed brokers. The Act does not contain any “governmental expressions of purpose” to leave to a trade association the task of enforcing either the standards of the Act or higher standards.6 For reasons already given, I do not see in the nature of this industry any inherent need for the practice of excluding brokers who are licensed by the State.7
*357The practice of multilisting is undoubtedly a useful economic tool in this industry. A multilisting broker has two business advantages over brokers who are not in a position to render that service: (1) he can offer his clients access to a larger pool of potential buyers than can appellants, and (2) he himself has access to a larger number of potential sellers. It ignores reality to suggest, as does appellee, that the fact that it has not forbidden its members to cooperate on an individual transaction basis with nonmember brokers can serve to place nonmember brokers on a par with the virtually automated listings available to members.8 Were the appellee an association formed to advocate higher standards in the real estate broker profession and did so by distributing information and participating in public debate, I doubt we would find it an unreasonable restraint of trade. But where, in the name of higher business standards, appellee places it competitors (i.e., its nonmember broker competitors) at a palpable economic disadvantage, I think the justification offered “must reflect a readily identifiable public interest.” See American Medical Association v. United States, 130 F. 2d 233, 248 (D.C. Cir. 1942), aff’d, 317 U.S. 519 (1943).9 This the record before us fails to do.
*358The result which the Court has here reached today is, I believe, one which a federal court would have reached under section 1 of the Sherman Act. Although the United States Department of Justice Antitrust Division, has been talcing associations of real estate brokers to court with increasing frequency, my investigation indicates that to date all such cases have been terminated by the entry of consent decrees which prohibit, inter alia, the fixing of rates of commission10 and the exclusion of licensed brokers.11

 Section 1 of the Sherman Act, July 2, 1890, c. 647, §1, 26 Stat. 209, as amended, 15 U.S.G. §1, reads in part: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States ... is hereby declared to be illegal. . . .”

 But cf. P. Areeda, Antitrust Analysis 315 (1967) : “Beware of the ‘per se’ label. There are eases where one can weigh harms, benefits, and alternatives and conclude almost instantaneously that conduct is unlawful; one decides the particular case so rapidly that he may express his result in ‘per se’ language.”

 Comment, Trade Association Exclusionary Practices: An Affirmative Role for the Rule of Reason, 66 Col. L. Rev. 1486, 1487 (1966) [hereinafter referred to as Columbia Comment].

 If the formation of markets or exchanges is essential to the operation of an industry, then such an association may promulgate reasonable rules limiting membership, defining hours of operation, etc. See Rogers v. Douglas Tobacco Board of Trade, 244 F. 2d 471 (5th Cir. 1957) ; Cowen v. New York Stock Exchange, 371 F. 2d 661 (2d Cir. 3967), aff’g 256 F. Supp. 462 (N.D. N.Y. 1966).

 Columbia Comment, supra note 4, at 1499.

 But see Securities Exchange Act of 1984, June 6, 1934, c. 404, 84 Stat. 881, 15 U.S.O. §§780-3, 78s, where it is not only-provided that brokers adhere to government-established standards of conduct, but is further provided that trade associations (registered exchanges or registered broker-dealer associations) will enforce the standards of the Act as well as other standards.
Compare the unmistakable expression of legislative purpose to permit private parties to maintain trade restraining agreements contained in the “Pair Trade Act”, Act of June 5, 1935, P. h. 266, as amended, 73 P.S. §§7-11.

 Appellees deny that they refused membership to appellant Margaret Hill Collins for the reason that she represented a client before the Pennsylvania Human Relations Commission in prosecuting a complaint of racial discrimination against appellee Board of Realtors. Although appellee terms that complaint “false and scurrilous”, I note that the Commission, although dismissing the complaint, observed that the Commission panel “can understand why the complainant and her representative, Margaret Collins, felt that racial discrimination was practiced against the complainant.”
The remaining justification for denying membership is the appellee’s statement that “the record amply supports that there were other ethical considerations. . . .” We are not told in plain language the nature of these “other ethical considerations”, nor are *357wo directed to any location in the eight-hundred page record of this case where they might be found.

 Austin, Beal Estate Boards and Multiple Listing Systems as Restraints of Trade, N.Y.L.J., March 2-5, 1971: “A nonmember broker, qualified under state laws to practice his trade, is unable to attain the same economic benefits as a rival who happens to be a member of the local real estate board and its multiple listing system. It need hardly be noted that this harm to particular classes of market participants results in public harm—a public harm that is magnified by the important relationship of housing to the national well-being.”

 “[A]ppellants were permitted to organize, to establish standards of professional conduct, to effect agreements for self-discipline and control. There is a very real difference between the use of such disciplines and an effort upon the part of such associations to *358destroy competing professional or business groups or organizations. . . . [A]ppellants bave open to them always the safer and more kindly weapons of legitimate persuasion and reasoned argument.

 A trade association of realtors which fixes commission rates is per se unlawful. United States v. National Real Estate Boards, 339 U.S. 485, 489, 94 L. Ed. 1007 (1950). The rules and regulations of appellee’s multiple listing service provide: “No listings will be accepted for publication at less than 6% commission. . . .”

 See United States v. Greater Pittsburgh Board of Realtors, Civil Action No. 72-499 (W.D. Pa., consent decree filed April 10, 1973) (“[Defendants] shall upon application made admit to membership any person duly licensed. ...”); United States v. Los Angeles Realty Board, 1973 Trade Cases, para. 74,366 (C.D. Cal., consent decree filed Feb. 16, 1973) (enjoining commission rate fixing) ; United States v. Multiple Listing Services, 1973 Trade Cases para. 74,221 (D. Ore., consent decree filed Dec. 5, 1972) (“The consenting defendant is ordered and directed to admit to membership any person duly licensed as a real estate broker under the laws of the State of Oregon. . . .”) ; United States v. Long Island Board of Realtors, Inc., 1973 Trade Cases para. 74,068 (E.D.N.Y., consent decree filed Aug. 1, 1972) (“Accept all licensed brokers”) ; United States v. Memphis Board of Realtors, 1973 Trade Cases para. 74,056 (W.D. Tenn., consent decree filed July 27, 1972) (“admit to membership any person duly licensed as a real estate broker under the laws of the State of Tennessee”).