A judge has dismissed a Pennsylvania broker’s lawsuit against the National Association of Realtors over its “three-way agreement.” This is the third lawsuit NAR has won regarding the rule’s antitrust status.
Two weeks after winning a “three-way agreement” lawsuit in Texas, the National Association of Realtors (NAR) has clinched a similar victory in Pennsylvania.
Eastern District of Pennsylvania Judge Joseph Leeson dismissed Progressive Realty broker-owner Maurice Muhammad’s claims against NAR, the Pennsylvania Association of Realtors and the Greater Lehigh Valley MLS (GLVMLS) over the national Association’s “three-way agreement.”
The agreement requires agents and brokers to join a local, state and national Realtor association in order to qualify for membership in any of those NAR affiliates. In many states, agents are also required by Realtor-affiliated MLSs to be association members to access the MLS.
Maurice Muhammad
Muhammad, who represented himself in the case, said the agreement violated federal antitrust laws and creates a “monopolistic system” that agents and brokers are forced to participate in. He also claimed that the agreement infringed on federal civil rights, stating that national, state, and local associations provide little value to minority agents and brokers while often overlooking their concerns.
“The forced membership requirement imposed by NAR, PAR, and GLVMLS creates a coercive environment that disproportionately affects minority professionals who lack the financial resources to afford mandatory membership fees,” the complaint said, according to a previous Inman article. “Defendants have used their monopoly over MLS services to prevent the creation of alternative trade organizations, thereby stifling competition and reinforcing their control over the real estate profession.”
“Defendants require real estate professionals to join NAR, PAR, and GLVMLS to conduct business, even though many minority members receive little to no benefit from such membership and face discrimination within these organizations,” the complaint added.
Muhammad sought $5.6 million in damages alongside several policy changes, including the removal of the three-way agreement and additional processes to “ensure equitable treatment of all members.”
In his 50-page opinion dismissing the case, Leeson said Muhammad’s complaints were unsubstantiated, and when given the opportunity to file a second amended complaint, the broker failed to provide evidence.
“Muhammad’s allegations of deceptive conduct are conclusory,” the judge said. “He alleges that ‘Defendants misrepresented their authority, falsely claiming they had the power to revoke Plaintiff’s real estate license,’ but there are no factual allegations explaining how they misrepresented their authority or in what context.”
“Similarly absent from Muhammad’s allegation that “Defendants made false and misleading representations regarding their rules and procedures are any factual allegations describing how these misrepresentations were made and what Defendants said or did. Such conclusory allegations of deceptive conduct are insufficient to state a claim,” he added. “For all the reasons discussed herein for dismissing the claims and because Muhammad has already had multiple opportunities to amend his pleadings to state a claim, but failed, and was specifically warned when given leave to file a second amended complaint that he would not be given further leave to amend, dismissal of all claims is with prejudice.”
An NAR spokesperson said the association is pleased with the court’s decision and stands by the three-way agreement and other NAR rules.
“We are pleased the court has dismissed the case with prejudice. This decision reinforces the National Association of Realtors’ position that its policies foster competition and are not discriminatory,” they said in an emailed statement to Inman. “Like other national membership organizations, NAR’s integrated structure is essential to the value we provide our members, including a unified voice on policy issues, a uniform Code of Ethics, and valuable tools and professional development opportunities that help members get to, and execute, their next transaction.”
Inman has contacted Muhammad and will update the story with his comment.
This is the third “three-way agreement” lawsuit NAR has won in the past month, with judges in each case saying the rule doesn’t fit antitrust standards outlined in the Sherman and Clayton Acts.
NAR has vehemently defended the rule, with CEO Nykia Wright telling members at NAR NXT that the agreement is key to maintaining cohesiveness among national, state and local levels.
“Some of you have heard rumblings of the challenging of the three-way agreement,” she said in November. “Well, we are here to make sure that those rumblings subside because it is our duty to make sure that people understand what happens at the local level, the state level and the national level, and really make sure that people understand that there isn’t a cannibalization of services, but it really is working together … to make things work.”
Email Marian McPherson