Coldwell Banker Mid-America Group agreed this month to dismiss a series of allegations against local rival Iowa Realty, including breach of contract, monopolization, attempt to monopolize, and false advertising, according to court documents. The charges related to a lawsuit that Mid-America Group had filed in March 2004.
Thomas O. Kuhns, a lawyer for Kirkland & Ellis LLP who represented Mid-America Group, said today he had no comment about the settlement agreement, which was approved Aug. 17 in U.S. District Court in Iowa. Iowa Realty is a part of Home Services of America, a Berkshire Hathaway affiliate.
Dan Cornelison, senior vice president and general counsel for Iowa Realty, said today that Iowa Realty is “obviously pleased” with the settlement. “This is the third major antitrust ruling that we’ve had in our benefit,” he said. “We’re always glad to focus on how we serve customers instead of trying to spend money with our attorneys.”
The settlement approved this month resolves outstanding issues related to litigation between the two companies.
In its complaint filed last year, Coldwell Banker Mid-America Group had accused Iowa Realty and sister company First Realty of adopting “an illicit strategy of exclusionary acts and practices…aimed at undermining competition and harming both homeowners and home buyers” in the area of Des Moines, Iowa. The lawsuit sought to enjoin the company from alleged attempts to monopolize or abuse its market power.
The lawsuit had charged that a new exclusive type of property listing proposed by the Iowa Realty Group, called the “Passport Listing Program,” would lead to the withdrawal of some listings from a local multiple listing service and would exclude other brokers from having access to those property listings. Under this program, the buyer and seller of a property would both be represented by agents from Iowa Realty.
While the practice of company-exclusive property listings is legal in many markets across the country, the Coldwell Banker company charged that the Iowa Realty exclusive listings program in this case would limit competition because the company is such a major player in the local real estate market. Coldwell has about 260 agents in the Des Moines area, while Iowa Realty has about 65 office and 1,000 agents.
“The Passport Listing Program will not only undercut competition, it will harm Des Moines home buyers and sellers,” the lawsuit alleged, and Coldwell Banker Mid-America sought to block the removal of listings from the local MLS and a shared MLS database management system called MLXchange.
In May, the U.S. Court of Appeals in Iowa ruled that Iowa Realty and First Realty are free to pursue the Passport Listing Program. A district court had earlier granted a temporary injunction that blocked Iowa Realty from launching the new program.
Cornelius said today that Iowa Realty has rolled out the Passport program, “which we believe is an innovative approach to the market. We have just recently launched it and are enjoying good success with it.”
Also, the U.S. Court of Appeals agreed with a district court’s ruling that Iowa Realty may have breached its contract with Coldwell Banker in its plans to restrict access to exclusive listings information using the MLXchange system, though the appellate court disagreed that Iowa Realty was acting in bad faith, and found that any potential breach could be easily resolved.
Carolyn Helmlinger, president of Coldwell Banker Mid-America Group, told Inman News in May that the appellate court’s ruling “is a great victory,” and that Coldwell Banker was at least able to delay Iowa Realty’s implementation of the exclusive listings program.
Her comments to the media, though, which appeared in a May 20 Inman News report, reportedly led Iowa Realty’s president, R. Michael Knapp, to seek to nullify a settlement agreement that was in the works between Coldwell Banker Mid-America Group and Iowa Realty. The settlement agreement related to still-outstanding allegations stemming from the March 2004 complaint, including the charges of breach of contract, monopolization and attempted monopolization and false advertising.
U.S. District Court Judge Ross A. Walters, a chief U.S. magistrate judge for the Central Division of Iowa’s Southern District Court, wrote in an Aug. 1 legal report that Knapp learned about Helmlinger’s statements to Inman News on May 23, after he had signed a settlement agreement but before the dismissal was formally filed with the court.
“Mr. Knapp considered the quotations attributed to Helmlinger to be contrary to the public statement restriction in the settlement agreement and to have impaired the value of the restriction to Iowa Realty,” Walters wrote in his court report. “The court can appreciate that learning of the Helmlinger interview after just putting pen to the settlement agreement was irritating to Iowa Realty,” he also wrote, though he did not find a solid legal basis to rescind the settlement agreement.
In an unrelated legal feud, the Iowa Supreme Court in September 2004 upheld a lower court decision to dismiss a civil lawsuit against Iowa Realty that included allegations of state antitrust law violations. That lawsuit was brought by Next Generation Realty, an Iowa discount real estate company.
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