Key Elements Of The CONSPIRACY Theory

The theory of CONSPIRACY is the centerpiece of the broker commission cases that have rocked the residential real estate industry. Once a jury determines that the defendants conspired to engage in anti-competitive behavior that violates the Sherman Act, the only thing left for the jury to determine is the issue of damages (which amount can be tripled).

What guides the jury’s decision in the Sitzer/Burnett case regarding liability is the Judge’s Jury Instructions. And, further, what influences the flavor of those jury instructions is Judge Bough’s decision to have the jury evaluate the plaintiff’s claims under a “per se” rule analysis instead of a “rule of reason” analysis.

So, take off your real estate agent hat and put on your average consumer juror hat and listen to these actual instructions from Judge Bough.

How would you decide?

To establish the existence of a conspiracy under Sitzer/Burnett Jury Instruction # 23:

The evidence need not show that its members entered into any formal or written agreement.
The agreement itself may have been entirely unspoken.
A person can become a member without full knowledge of all of the details of the conspiracy, the identity of all of its members, or the parts such members played in the charged conspiracy.
The members of the conspiracy need not necessarily have met together, directly stated what their object or purpose was to one another, or stated the details or the means by which they would accomplish their purpose.
To prove a conspiracy existed, the evidence must show that the alleged members of the conspiracy came to an agreement or understanding among themselves to accomplish a common purpose.
A conspiracy may be formed without all parties coming to an agreement at the same time, such as where competitors, without previous agreement, separately accept invitations to participate in a plan to restrain trade.
Similarly, it is not essential that all persons acted exactly alike, nor is it necessary that they all possessed the same motive for entering the agreement.
It is also not necessary that all of the means or methods claimed by the Class Plaintiffs were agreed upon to carry out the alleged conspiracy, nor that all of the means or methods that were agreed upon were actually used or put into operation, nor that all the persons alleged to be members of the conspiracy were actually members.
It is the agreement or understanding to restrain trade in the way alleged by the Class Plaintiffs that constitutes a conspiracy. Therefore, you may find a conspiracy existed regardless of whether it succeeded or failed.
The Class Plaintiffs may prove the existence of the alleged conspiracy through direct evidence, circumstantial evidence, or both. Direct evidence is explicit and requires no inferences to establish the existence of the alleged conspiracy.
Direct evidence of an agreement may not be available, and therefore a conspiracy also may be shown through circumstantial evidence. You may infer the existence of a conspiracy from the circumstances, including what you find the alleged members actually did and the words they used.
Mere similarity of conduct among various persons, however, or the fact that they may have associated with one another and may have met or assembled together, does not by itself establish the existence of a conspiracy. If they acted similarly but independently of one another, without any agreement among them, then there would not be a conspiracy.
In determining whether an agreement or understanding between two or more persons has been proved, you must view the evidence as a whole and not piecemeal.

As for potential antitrust liability for NAR, Associations/Boards, and MLSs – Jury Instruction #29 is relevant:

Trade associations may also lawfully adopt and enforce rules for members of the industry. Trade associations, however, may not be used by members to commit violations of the Sherman Act. For example, a trade association cannot be used as a vehicle by its members to reach an agreement or understanding between two or more persons to raise, stabilize or maintain prices in the market in which those members compete with each other.
An association is capable of committing violations of the antitrust laws. The actions of a group of competitors taken through an association to which they belong present the same issues as the actions of a group of competitors who have not created a formal organization such as a trade association. A trade association or similar industry group cannot lawfully act to facilitate the raising, stabilizing, or maintaining of prices in the market in which its members compete with one another, to reduce members’ collective output of products or services, or to allocate territories among members that are in horizontal competition with one another.
A trade association or similar industry group cannot lawfully adopt rules that prohibit members from bidding competitively with one another because that severely affects price competition. These actions constitute an agreement with its members in violation of the Sherman Act even if the association has not conspired with a nonmember.
If a trade association exchanges with its members confidential, competitively sensitive information, such as current or future prices, or current or future output information, that is evidence which you may consider, along with all the other evidence, in deciding whether the association is in violation of the Sherman Act.

What’s the message for the boots-on-the ground real estate agent?

Make sure your firm or broker has a clear company office policy that has been reviewed by a real estate attorney competent with antitrust issues. Then, follow those company policy guardrails and avoid unnecessary work arounds.

Some GOOD NEWS

Take a look at the “acting independently section” in jury instruction #23:
“Mere similarity of conduct among various persons, however, or the fact that they may have associated with one another and may have met or assembled together, does not by itself establish the existence of a conspiracy. If they acted similarly but independently of one another, without any agreement among them, then there would not be a conspiracy.

Key Elements Of The CONSPIRACY Theory