“In the absence of price- fixing, agreements to terminate distributors, even at the behest of competing distributors who seek to maintain exclusive distribution rights, have repeatedly been sanctioned by the courts.”
How later courts described this case
- “In the absence of price- fixing, agreements to terminate distributors, even at the behest of competing distributors who seek to maintain exclusive distribution rights, have repeatedly been sanctioned by the courts.”
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--- ----------------------------------------------------------- X
COMPASS, INC., et al., :
Plaintiffs, :
: 21 Civ. 2195 (LGS)
-against-
:
REAL ESTATE BOARD OF NEW YORK, INC., : ORDER
et al., :
Defendants. :
--- ---------------------------------------------------------- X
LORNA G. SCHOFIELD, District Judge:
WHEREAS, on March 31, 2022, then District Court Judge Alison J. Nathan issued an
Opinion and Order (the “Opinion”) granting in part and denying in part Defendants’ motion to
dismiss.
WHEREAS, the Opinion dismissed the tortious interference with prospective economic
advantage claim and found that the Complaint sufficiently alleges antitrust violations under the
Sherman Act and the Donnelley Act.
WHEREAS, the case was reassigned to the undersigned from Judge Nathan.
WHEREAS, on April 14, 2022, Defendants timely filed a motion for reconsideration of
the decision to allow the antitrust claims to proceed.
WHEREAS, a motion for reconsideration should be granted “only when the [party
seeking reconsideration] identifies an intervening change of controlling law, the availability of
new evidence, or the need to correct a clear error or prevent manifest injustice.” Cho v.
Blackberry Ltd., 991 F.3d 155, 170 (2d Cir. 2021) (internal citation omitted). The standard “is
strict, and reconsideration will generally be denied unless the moving party can point to
controlling decisions or data that the court overlooked -- matters, in other words, that might
reasonably be expected to alter the conclusion reached by the court.” Id. (internal citation
omitted). A motion for reconsideration is “not a vehicle for relitigating old issues, presenting the
case under new theories, securing a rehearing on the merits, or otherwise taking a second bite at
the apple.” Analytical Surveys, Inc. v. Tonga Partners, 684 F.3d 36, 52 (2d Cir. 2012) (internal
quotation marks omitted); Dill v. JPMorgan Chase Bank, N.A., No. 19 Civ. 10947, 2021 WL
3406192, at *11 (S.D.N.Y. Aug. 4, 2021). The decision to grant or deny a motion for
reconsideration rests within “the sound discretion of the district court.” Aczel v. Labonia, 584
F.3d 52, 61 (2d Cir. 2009) (internal quotation marks omitted); Strougo v. Barclays PLC, 334 F.
Supp. 3d 591, 595 (S.D.N.Y. 2018).
WHEREAS, in a situation like the one here, where a newly assigned judge is being asked
to reconsider the ruling of another judge, the court must be especially wary of attempts to
relitigate the same issues before a new audience. See Murray v. Dutcavich, No. 17 Civ. 9121,
2020 WL 3318212, at *1 (S.D.N.Y. June 18, 2020); Jones v. Goodrich Corp., No. 12 Civ. 1297,
2020 WL 4558967, at *2 (D. Conn. Aug. 7, 2020) (“[R]econsideration is particularly improper
where the moving party attempt[s] to relitigate before a newly assigned judge any arguments
rejected or ruled irrelevant by the prior judge.” (cleaned up)); Waverly Props. LLC v. KMG
Waverly, No. 09 Civ. 3940, 2011 WL 13322667, at *1 (S.D.N.Y. Dec. 19, 2011); Peyser v.
Searle Blatt & Co., Ltd., No. 99 Civ. 10785, 2004 WL 307300, at *1 (S.D.N.Y. Feb. 17, 2004)
(“[T]he [reassigned] judge is well advised to pay particular heed to the doctrine of ‘law of the
case,’ and not to attempt a de novo review of all of the many orders and decisions made over a
lengthy period by diligent and experienced judicial officers who have handled the case
previously.”).
WHEREAS, proceeding under a theory that the Opinion committed clear error,
Defendants re-argue that Plaintiff failed to plead a relevant product market. Defendants maintain
that the Complaint alleges only anticompetitive effects to the “buy-side” market for agents and
that under City of New York v. Group Health, Inc., 649 F.3d 151, 155 (2d Cir. 2011), Plaintiff
Compass’s “preference to hire ‘top agents’ from [Defendants] cannot create a cognizable
market.” Defendants also contend for the second time that the Complaint has not alleged
cognizable injury to Plaintiff. The Opinion considered and rejected these arguments.
Defendants offer no intervening change in law. The Opinion did not overlook any controlling
caselaw. A motion for reconsideration is “not a vehicle for relitigating old issues, presenting the
case under new theories, securing a rehearing on the merits, or otherwise taking a second bite at
the apple.” Tonga Partners, 684 F.3d at 52. The motion for reconsideration is denied as a
rehash of the original motion to dismiss.
WHEREAS, in any event, both arguments fail on the merits. First, the Complaint
sufficiently alleges harm in the relevant market of “New York Residential Brokerage Services,”
i.e., companies that provide brokerage services, like Compass, Corcoran or Douglas Elliman.
These companies compete with each other in two ways -- first, to secure licensed real estate
agents to conduct their brokerage business (the buy-side market) and second, to attract customers
who wish to buy and sell real property (the sell-side market). The market as pleaded is
sufficient.
WHEREAS, Defendants assert that the alleged market cannot be defined by Plaintiff’s
preferences and seize on the Complaint’s allegation that Defendants conspired “to impede
competition between brokerages for the services of top agents and deprive consumers of the
option of retaining their preferred real estate agent” by requiring that the listing stay with the
prior brokerage when an agent changes firms. This argument misconstrues the Complaint and its
use of the term “top agents.” Reading the Complaint in context, it alleges a scheme akin to a
hypothetical scheme to impede competition between law firms for the services of “top lawyers”
by requiring them to leave their clients at their prior law firm when they change firms. The
market is law firms. Under the buy-side theory, the “product” they are competing for is lawyers.
They are hoping to recruit lawyers whom they view as the best or “top” lawyers. Similarly in the
Complaint, the market is brokerage firms. The “product” they compete for is real estate agents.
The alleged market is not defined by Plaintiff’s preferences, as Defendants maintain. The
Complaint does not “allege[] a proposed relevant market that clearly does not encompass all
interchangeable substitute products.” City of New York v. Grp. Health Inc., 649 F.3d 151, 155
(2d Cir. 2011).
WHEREAS, Defendants’ reliance on Balaklaw v. Lovell, 14 F.3d 793 (2d Cir. 1994), is
mistaken. There, the Court identified two relevant markets affected by an exclusive contract
between a hospital and a group of anesthesiologists, namely (1) the market of consumers of
anesthesiology services and (2) the anesthesiologists who compete for jobs. Contrary to
Defendants’ argument, the case does not demonstrate that the relevant market here consists only
of “the buy-side market for [real estate] agent services,” inasmuch as the court in Balaklaw found
two markets affected by the allegedly anticompetitive conduct. Even if the case did stand for
that proposition, that buy-side market for agent services is exactly the market alleged in the
Complaint and properly found to be sufficiently pleaded.
WHEREAS, Defendants’ second argument also fails. Defendants reargue that the
Complaint does not plead the requisite antitrust injury. This argument is incorrect. “[A] three-
part test . . . determine[s] whether the plaintiff has alleged an antitrust injury: (1) the court must
identify the practice complained of and the reasons such a practice is or might be
anticompetitive; (2) the court must identify the actual injury the plaintiff alleges, which requires
us to look to the ways in which the plaintiff claims it is in a worse position as a consequence of
the defendant’s conduct; and (3) the court compares the anticompetitive effect of the specific
practice at issue’ to the actual injury the plaintiff alleges.” IQ Dental Supply, Inc. v. Henry
Schein, Inc., 924 F.3d 57, 63 (2d Cir. 2019) (quoting Gatt Comm., Inc. v. PMC Assocs., LLC,
711 F.3d 68, 76 (2d Cir. 2013)) (cleaned up).
WHEREAS, here, the Complaint alleges that Defendants “impede[d] competition
between brokerages for the services of top agents and deprived consumers of the option of
retaining their preferred real estate agent.” The Complaint alleges that Defendants, who have
market power, caused this harm by conspiring to “pass[], chang[e], and selectively enforce[]”
Article II, Section 7. Other alleged harms to competition include denying brokers like Compass
a “key input” for their business, impeding market entry and adversely affecting consumer choice,
among other things. Once Plaintiff was in the market of brokerage firms “it had a right to do
business in a market undistorted by unlawful anticompetitive conduct.” IQ Dental Supply, Inc.,
924 F.3d at 64; see Brunswick, 429 U.S. at 489 (to show antitrust injury plaintiffs must show
their injury is “of the type the antitrust laws were intended to prevent”). Plaintiff’s alleged injury
is the same as the anticompetitive effect of the challenged conduct -- that is, stifling competition
among brokers by impeding their ability to recruit agents to conduct their brokerage business.
WHEREAS, Defendants’ argument that exclusive distributorship arrangements are
presumptively legal is inapplicable here. The presumption applies to distributorship
arrangements on the theory that substituting one exclusive distributor for another usually does
not harm competition. See E & L Consulting, Ltd. v. Doman Indus. Ltd., 472 F.3d 23, 30 (2d
Cir. 2006) (“[I]t usually does not further harm competition for a monopolist in one market to
leverage its advantage into a monopoly in a downstream market.”); Elecs. Commc’n Corp. v.
Toshiba Am. Consumer Prods., Inc., 129 F.3d 240, 245 (2d Cir. 1997) (“In the absence of price-
fixing, agreements to terminate distributors, even at the behest of competing distributors who
seek to maintain exclusive distribution rights, have repeatedly been sanctioned by the courts.”).
That circumstance does not apply here where the exclusive contract is not a distributorship
contract, but rather between the home seller and the brokerage firm, and the Opinion found that
the Complaint raised “at least four anticompetitive features that go beyond rights of exclusivity.”
Nor has the Second Circuit “held that all exclusive arrangements are reasonable as a matter of
law.” E & L Consulting, Ltd., 472 F.3d at 30.
WHEREAS, that the anticompetitive effect of Defendants’ alleged conduct -- impeding
Plaintiff from recruiting agents to conduct its business -- will ultimately result in a loss of
revenue is not disqualifying. Most harms to a business, including anticompetitive harms, will
ultimately result in a loss of revenue. Defendants’ reliance on Gatt v. PMC Assocs., 711 F.3d 68
(2d Cir. 2013), is misplaced. The Second Circuit’s holding in Gatt does not stand for the
proposition that “lost revenue” is never an antitrust injury. Rather, Gatt held that where the
unlawful antitrust act was big-rigging, the “lost revenue” from the termination of a contract was
not an injury that “flow[ed] from that which makes the big-rigging unlawful.” Id. at 77. Here,
the Complaint sufficiently alleges that the lost revenue flows directly from the alleged
anticompetitive conduct of “coordinated adoption, revision, and selective enforcement of Article
II, Section 7 by REBNY,” and Plaintiff’s resulting inability to recruit agents.1 It is hereby
ORDERED that, for the foregoing reasons, Defendants’ motion for reconsideration is
DENIED.
1 The Court has considered Defendants’ remaining arguments and finds them repetitive of the arguments raised in
the underlying motion to dismiss and in any event unpersuasive.
The Clerk of Court is respectfully directed to close the motion at Dkt. No. 36.
Dated: July 27, 2022
New York, New York )
LORNA G. SCHOFIEL
UNITED STATES DISTRICT JUDGE