Petition — Holter v. Moore

83-355 =

No. 83-

io

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

DWIGHT J. HOLTER AND SANDRA A. HOLTER,

individually and on behalf of others similarly situated,

>. Petitioners,

MOORE AND COMPANY, WILLIAM M. MOORE,

individually, and TIMOTHY M. MILLER,

individually, and on behalf of a class composed of all other

sales associates of Moore and Company acting as real

estate agents for sellers of residential properties,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

HUGH A. BURNS

(Counsel of Record)

PHILLIP S. FIGA

333 Steele Park

50 South Steele Street

Denver, Colorado 80209

Telephone: (303) 399-4636

Attorneys for Petitioners

August 29, 1983

QUESTIONS PRESENTED FOR REVIEW

i Whether for purposes of Section 1

of the Sherman Act, 15 U.S.C. § 1, a real

estate sales company is incapable of conm-

bining or conspiring in restraint of trade

with independent contractor sales associ-

ates as a matter of law.

ra Whether real estate sales com-

panies can, under the Sherman Act, by con-

tractual arrangement control the percent-

age and amount of commissions received by

its independent contractor sales agents for

participating in sales of residential real

estate.

: Whether there exists and is

applicable here an exception to the anti-

trust intracorporate conspiracy doctrine

for agents of a corporation who have an

independent personal stake in an antitrust

conspiracy involving them and their cor-

poration.

TABLE OF CONTENTS

Questions Presented fpr Review ......

ewe MEMOCLCEOS ci cccvcvcescovce

EEO OLOW cescocbioccccessveseses

DPCP EE pape eececcivocesesevecece

a rere

Statement of the Case .....cccccccces

rrr Or COO CORE oc cc cccccece

2. Jurisdiction of the

SS

3. Undisputed Facts for

Purposes of Summary

PC TG EON “crccccceccceseccs

Reasons for Granting the Writ .......

1. Inconsistencies as to the

Antitrust Conspiracy Standards.

2. The Lack of Price Competition

in the Real Estate Industry

3. Direct Benefit Exception ......

Teen es owe 6'o.6 8 Seve

“oe to

wo Ww Nd

Appendix:

App. A: Colorado District Court order and

opinion granting respondents’ motion

for summary judgment and dismissing

petitioners’ amended complaint,

January 15, 1981.

App. B: Tenth Circuit opinion, April 4, 1983.

Table of Authorities to Appendix A ..... vii

Table of Authorities to Appendix B..... ix

- iii -

TABLE OF AUTHORITIES

Cases Page

Albrecht v. Herald Co., 390 U.S. 145

ED'S Sica ors'el eed oak cae week aaa & a he 12

America's Best Cinema Corp. v. Fort

Wayne Newspapers, Inc., 347 F.Supp.

Dae Gees ROGs OIE) 200 6082 udecee 22

Card v. National Life Insurance Co.,

603 F.2d 828 (10th Cir. 1979) .... 14

Copperweld Corp. v. Independent Tire

Corp., 691 F.2d 310 (7th Cir. 1982),

cert. granted, O:S. res |

Tet. fr 3893 (1983) (No. 82-1260) 12

Greenville Publishing Co., Inc. v.

Daily Reflector, Inc., 496 F.2d

Peee oer Cae CIE s. ESTE} sc ccavesee 22

H & B Equipment Co. v. International

Harvester Co., 577 F.2d 239, 244

CRON Mes ADO) onc thee eas asionvows 14,21

Harold Friedman, Inc. v. Kroger Co.,

oes F.2e 1066 (3d Cir. 1978) ..... 14

Kiefer-Stewart Co. v. Joseph E.

Seagram & Sons, Inc., 340 U.S.

Biase Rae REPRE KS caper eeeatan sie 14,15

Morton Bldgs. of Nebraska, Inc. v.

Morton Bldgs., Inc., 531 F.2d 910,

an Gee SD Res GEO dW wce's-ae 86 Gees 21,22

Murray v. Toyota Motors Distributors,

inc., 664 F.2d 1377 (9th Cir.),

cert. denied, 457 U.S. 1106 (1982) 13

- iv -

Page

Nelson Radio & Supply Co. v. Motor-

ola, Inc. 200 F.2d 911, 914 (5th

Cir. 1952), cert. denied, 345 U.S.

RE ede the CW cka whee pe bweee 22

North American Soccer League v.

National Football League, 670 F.2d

1249 (2d. Cir. 1982), cert. denied,

U.S. > 103: S.GE. S99, 74

te ee ee ED (cn nc uae sancusés 13

Perma Life Mufflers, Inc. v. Inter-

National Parts Corp., 392 U.S. 134,

I ek ln bore 14

Poller v. Columbia Broadcasting Sys-

tem, Inc., 368 U.S. 464 (1962) ... 12

Schwimmer v. Sony Corp. of America,

677 F.2d 946 (2d Cir.) cert. denied,

a < Re Gees Seay 78 dre

Ce ee cee ee ee 13

Tamaron Distributing Corp. v. Weiner,

418 F.2d 137 (7th Cir. 1969) ..... 13

Tose v. First Pennsylvania Bank, N.A.,

648 F.2d 879 (3d Cir.) cert. denied,

RG yh |S Re oe aE 13

United States v. Yellow Cab Co., 332

ati gk @ Op ses a rane ee 15

Statutes and Rules

YS A ee a ee a eee 2,4,13,14

De ene 2 SEORCL) oc tcaecencesaces 1

Be eites BF LPAI CR) we cccioneveseest 5

Texts and Miscellaneous

Page

"FTC is Investigating Realty Over-

charges'', Washington Post, February

i Se Eo a ele db duwie ad 6 be 68 @ 16

"Antitrust law: An Emerging Problem

for Florida Realtors", 24 U. Fla.

es SEOs SOS CIPS) vececeee ce 17

"Erxelben, "In Search of Price and

Service Competition in Residential

Real Estate Brokerage: Breaking the

Cartel", 56 Wash. L. Rev. 179 (1981) 19

ABA Section of Antitrust Law, Anti-

trust Developments 1955-19685 at

a Cn cweae e660 638 ou 0's eee 22

1 J. von Kalinowski, Antitrust Laws

“i 2 ie

TABLE OF AUTHORITIES

Cases

American Oil v. McMullin, 508 F.2d

ESOS CREM: CLE. Ree ee oe bc ck ctcwk ee

Card v. National Life Insurance, 603

FF. 20 B26 CAGEn. Cat. STS) cecviccerce

H & B Equipment Co., Inc. v. Inter-

national Harvester, 577 F.2d 239

CS Ges, RETR baa kvensaeccceeseneé

Jos. Seagram & Sons v. Hawaiian Oke

and Liquors, 416 F.2d 71 (9th Cir.

1969) cert. denied, 396 U.S. 1062

Kiefer-Stewart Co. v. Jos. wach

& Sons, Inc., 340 U.S. 211 (1951)

Poller v. Columbia Broadcasting

System, Inc., 368 U.S. 464 (1972)

Simpson v. Union Oil Co., 377 U.S.

See). ctandiet.60 etek ca canenae &

U.S. v. Yellow Cab, 332 U.S. 218

PRUNE Ske Ue cee cares 8 betes Dede wees

Statutes and Rules

1S UW.BLE. § Lb sve vevsvcccessccccucseces

C.R.S. § 12-61-109(2) (1973) ..ccccee.

C.R.S. § 12261-2103 (1973) ..ncccccees

- vii -

Texts and Miscellaneous

Colorado Real Estate Commission

RUA OW sews 80-063 44k wae eh eee ee es

9 Real Estate Review 103 (Fall 1979),

y Some Brokerage Firms are

DOMONEE SG hECV Cl ¥eb eco es eee es

Stand. Fed. Tax Rep. (CCH) % 4939

CEOSG) cwcacekeciocccrecctsecns bene

- viii -

TABLE OF AUTHORITIES

Cases Page

Albrecht v. Herald Co., 390 U.S. 145

ee glee So aiks 6 ae a ek be a ee a 51

American Oil Co. v. McMullin, 508 F.2d

boee, Loviesa C10th Cic. 1975) «eo 57

Blankenship v. Herzfeld, 661 F.2d 840,

B46 (10th Cir. 1981) ..nccccccedscecs 50,52

Card v. National Life Insurance Co., :

603 F.2d 828, 834 (10th Cir. (1979) 51

Faith Realty & Development Co. v.

Industrial Comm'n, 170 Colo. 215,

See see Zee, £20 CISOD) ccccvscces 58

Fuchs Sugars & Syrups, Inc. v. Amstar

Corp., 602 F.2d 1025, 1031 N. 5 (2d

Cir.), cert. denied, 444 U.S. 917

CREE RE USddebasboesevevdccesevvescue 53

Greenville Publishing Co. v. Daily

Reflector, Inc., 496 F.2d 391, 399

Pee. SECO) cusp aveneaarvdecseecs 59

H & B Equipment Co. v. International

Harvester Co., 577 F.2d 239, 244

DCSE AOPO) sob cksovvvesecceses 50,59

Harold Friedman, Inc. v. Kroger Co.,

581 F.2d 1068 (3d Cir. 1978) ...... 51

Ogilvie v. Fotomat Corp., 641 F.2d

pes, veeeS0. (6th Cir. 1981) ...ce0s 51

Parker v. Brown, 317 U.S. 341 (1943) 54

- ix -

Poller v. Columbia Broadcasting

System, Inc., 368 U.S. 464,

Oe BEY 5 tS): Se ee

Schwimmer v. Sony Corp. of America,

677 F.2d 946, 953 (2d Cir. 1982)

Tose v. First Pa. Bank, 548 F.2d 879,

893-94 (3d Cir.), cert. denied, 454

iis “Wee. CAROL) cece nee ae 60004 60:6%

Statutes and Rules

15 U.S.C. § 1 (1976) wcccccccccccvcce

C.R.S. § 11-61-104(1) (1978) ........

C.R.S. § 11-61-109(4) (Supp. 1982)

C.R.S. § 12-5112 (1978) wccccccccees

C.R.S. § 12-8-120(2)(1978) ..........

C.R.S. § 12-61-102 (Supp. 1982) .....

C.R.S. § 12-61-103(5) (Supp. 1982)

C.R.S. § 12-61-113(1)(0)(1978) ......

C.R:S. § 12-61-2117 (1978) ......0005.

Page

51

50

50

49

55

55

57

57

55

55

56

55

Texts and Miscellaneous Page

9 C. Wright & A. Miller, Federal

Practice and Procedure

CEU Re Sons aaa KON eh a heee Eee Ue oa 52

"Conspiring Entities" under Section l

of the Sherman Act, 95 Harv. L. Rev.

RE” eo > 5 Ma Pe ee re 53

4 Colo. Admin. Code § 725-1E-9 (1983) 55

“« #3 =

OPINIONS BELOW

The opinion of the Court of Appeals

has been reported at 702 F.2d 854 (10th Cir.

1983) and at 1983-1 Trade Reg. Rep. (CCH) 4

65,286, and is set forth in Appendix B,

infra. The opinion of the District Court

has not been reported, but is set out in

Appendix A, infra.

JURISDICTION

2 Date of Judgment Sought to be

Reviewed: March 21, 1983.

2. Date of Order Denying Petition

for Rehearing and Suggestion for Rehearing

En Banc: June 10, 1983.

3. Statutory Provision Conferring

Jurisdiction: The jurisdiction of this

Court is invoked under 28 U.S.C. § 1254(1).

STATUTE INVOLVED

The statute involved, the Sherman

Antitrust Act, 15 U.S.C. § 1, provides in

pertinent part:

Every contract, combina-

tion in the form of trust or

otherwise, or conspiracy, in re-

straint of trade or commerce,

among several States, or with

foreign nations, is declared to

be illegal.

STATEMENT OF THE CASE

1. Nature of the Case

The named petitioners sold their

single-family residence in Fort Collins,

Colorado in 1978 using the services of the

named respondents, and paid them a real

estate commission equal to 7% of the pur-

chase price (App. A, pp. 25-26). Respon-

dent Moore and Company is a licensed

corporate real estate broker and Respondent

Timothy M. Miller is a licensed real estate

salesman who participated in the sale as an

independent contractor to Moore and Company

(App. A, pp. 25-26, 35, 8). Respondent

William M. Moore is the real estate broker

of Moore and Company under whose broker's

license Moore and Company operates (App. A,

pp. 25-26).

The action brought by the petitioners

alleges that Moore and Company combined and

conspired with independent contractor

sales associates affiliated with that com-

pany to fix the commissions charged sellers

of residential real estate at the rate of 7%

of the gross sales price of such properties

(App. A, p. 26). This price-fixing

arrangement is alleged to be a per se vio-

lation of Section 1 of the Sherman Act, 15

U.S.C. § 1. The action was brought as a

plaintiffs' and defendants' class action

(App. A, p. 26).

The trial court granted defendants'

Motion for Summary Judgment pursuant to

Rule 56 of the Federal Rules of Civil Pro-

cedure and dismissed the case prior to

certification of either the plaintiff or

defendant class. The Honorable Richard P.

Matsch ruled that while sales associates of

Moore and Company were independent con-

tractors and had a personal stake in the

business which Petitioners alleged consti-

tuted price-fixing of real estate commis-

sions, the sales associates did not have an

‘independent' personal stake so as to dis-

tinguish them from Moore and Company (App.

A). Thus, sales associates of Moore and

Company were held as a matter of law to be

incapable of combining or conspiring with

that corporate defendant. The Tenth Cir-

cuit Court of Appeals affirmed Judge

Matsch's decision (App. B), and Petition-

ers' Petition for Rehearing and Suggestion

for Rehearing In Banc was denied by that

appellate court.

2 Jurisdiction of the

Trial Court

The trial court had jurisdiction below

pursuant to 28 U.S.C. § 1337(a).

3. Undisputed Facts for Purposes

of Summary Judgment Motion

Moore and Company is a general real

estate brokerage firm specializing in

residential, commercial, industrial and

investment sales (App. A, p. 35). Approx-

imately 80% of its business relates to

residential sales (App. A, p.35). Like

other real estate firms in Colorado and

nationwide, Moore and Company brings

together buyers and sellers of residential

real estate and charges a fee, or commis-

sion, for its services (App. A, p. 35). For

Moore and Company, the fee as a matter of

policy and agreement with its agents is 7%

of the gross sales price on existing resi-

dential property (App. A, p. 35).

Moore and Company markets residential

property through agents known as sales

associates (App. A, p. 37). The sales

efforts are actually undertaken by the

sales associates, while Moore and Company

provides assistance in the form of office

Space, secretarial staff, real estate

closing staff, telephones, real estate

forms and other ancillary services and

materials (App. A, pp. 37). Sales asso-

ciates of Moore and Company, like those of

other real estate firms, are separately

licensed real estate salesmen or brokers

(App. A. pp. 39-40). They must take and

pass state-administered examinations in

order to receive their licenses in Colorado

(App. A, pp. 39-40). In addition, they must

meet certain prescribed classroom instruc-

tion requirements (App. A, p. 40).

Moore and Company sales associates are

independent contractors and not employees

(App. A, p. 40). They are paid solely on the

basis of commissions they generate (App. A,

p. 40). They do not have federal, state or

local income taxes withheld by Moore and

Company from their commission checks (App.

A, p. 40). Moore and Company does not

withhold Social Security (FICA) taxes from

paychecks of sales associates and does not

guarantee or provide them with the federal

minimum wage, vacation pay, sick pay, re-

tirement benefits, or medical, life or dis-

ability insurance (App. A, pp. 40).

When a Moore and Company sales associ-

ate participates in a residential real

estate sale, he or she receives a portion of

the total commission, which is normally

paid by the seller (App. A, p. 40). If the

sales associate handles the transaction

without the participation of another sales

associate, the sales associate splits the

commission with Moore and Company (App. A,

p. 41). If another Moore and Company sales

associate is involved, the commission is

divided among the sales associates and

Moore and Company (App. A, p. 41). If

another brokerage firm is involved, the

other broker gets a share (App. A, p. 41).

The commission split as between Moore and

Company and one of its independent con-

tractor sales associates in any particular

transaction depends upon various factors,

including the sales associate's experience

and production levels, whether he or she is

the listing agent or the one finding the

buyer, and, if another broker is the list-

ing broker, the total commission to be

split by the various real estate agents and

brokers involved (App. A, pp. 41-42). In

the case of a Moore and Company sales asso-

ciate obtaining the listing, the total

commission to be divided is 7% of the gross

sales price (App. A, p. 42). Moore and

Company usually distributes commissions

to sales associates within a day or two

after a real estate transaction closes

(App. A, p. 42).

As independent contractor sales asso-

ciates, members of the putative defendant

class are responsible for their own busi-

ness expenses while affiliated with Moore

and Company (App. A, p. 42). The sales

associate pays for his or her own auto-

mobile expenses, meal and entertainment

expenses, car telephone, real estate

license fees, membership dues to the vari-

ous realtor organizations, insurance, and

advertising costs beyond 6% of the sales

associate's income (App. A, p. 42). The

sales associates sometimes hire their own

a

employees or independent contractors (who

are not affiliated with Moore and Company)

to handle secretarial matters for them

(App. A, pp. 42-43). It is common among

Moore and Company sales associates to main-

tain an office in their personal

residences, and they deduct a portion of

their home expenses as business expense

(App. A, p. 43). A first-year sales asso-

ciate can expect his business-related

expenses to total 20% of his or her commis-

sion income (App. A, p. 43).

Moore and Company observes the re-

quirements of the Internal Revenue Code for

obtaining the benefits of maintaining its

sales force as independent contractors

(App. A, p. 43). Moore and Company sacri-

fices the ability to control and direct the

activities of its independent contractor

sales staff, which control it would other-

wise have over employees (App. A, pp. 44-

45). Respondent Moore and Company files

— ve

tax reports with the Internal Revenue Ser-

vice indicating that the commission

income earned by sales associates was

earned by independent contractors, not by

employees (App. A, p. 43). The financial

statements of Moore and Company do not

treat income of sales associates as income

of Moore and Company, resulting in an

annual tax savings to Moore and Company of

approximately $600,000 (Ex. A, pp. 43-44).

REASONS FOR GRANTING THE WRIT

l. Inconsistencies as to the

Antitrust Conspiracy Standards

This case involves an issue to which

the circuits have applied widely divergent

legal standards. The issue of whether a

plurality of actors exists for there to be

a conspiracy in restraint of trade viola-

tion of Section 1 of the Sherman Act is in

a state of confusion among trial and appel-

late courts below. This Court has recog-

» BB le

nized in granting certiorari review in

Copperweld Corp. v. Independent Tube Corp.,

691 F.2d 310 (7th Cir. 1982), cert.

granted, U.S. __, 51 U.S.L.W. 3893

(1983) (No. 82-1260) that the legal stand-

ards for determining whether related

entities are capable of conspiring in

violation of the Sherman Act require clari-

fication. The instant case would be a

worthy and useful companion to Copperweld

and would clarify the law applicable in

this regard to the real estate industry.

Appellate decisions which conflict

with the opinion of the Court below in-

clude:

Albrecht v. Herald Co., 390 U.S. 145

(1968) (mewspaper distributor who was

an independent contractor and news-

paper circulation company held to be

an antitrust co-conspirators with the

newspaper).

Poller ov. Columbia Broadcasting

system, iInc., 368 U.S. 464 (1967)

(management consultant/agent for CBS

held capable of conspiracy with his

principal, the network).

North American Soccer League v.

National Football League, ETC F.2d

1249 (2d Cir. 1982), cert. denied,

U.S. ; 103 S.Ct.

639 (1983) (teams of professional

football league held to be separate

economic entities for antitrust pur-

poses).

Murray v. Toyota Motors Distributors,

Inc., 664 F.2d 13// (9th Cir.), cert.

denied, 457 U.S. 1106 (1982) (combi-

nation and conspiracy requirement of

Section 1 of the Sherman Act is to be

decided by the trier of fact, rather

than as a matter of law).

Tamaron Distributing Corp. v. Weiner,

Z16 F.2d 13) (?/th Cir. 1969) (manu-

facturer's representative suffi-

ciently distinct from manufacturer/

principal so as to engage in an anti-

trust conspiracy).

Cases cited by the Court below that

reached contrary conclusions, i.e., that

parties were too interrelated so as to meet

the plurality requirement betas“ egiucesicn 1 of

the Sherman Act, 15 U.S.C. § 1, include:

Schwimmer v. Sony Corp. of America,

6/7 e 2d 946 (2d Cir.) cert. denied,

3 - 303 $: Ct. 382; 156. ee

~~ 79-398 (1982).

Tose v. First Pennsylvania Bank, N.A.,

548 F.2d 879 (3d Cir.), cert. denied,

454 U.S. 393 (1981).

s3 =

Card v. National Life Insurance Co.,

; t at. ;

H & B Equipment Co. v. International

Harvester Co., 577 F.20 239 (doth cir.

19/8).

Harold Friedman, Inc. v. Kroger Co.,

561 F.2d 1068 (3d Cir. 1978).

The ruling below also appears to be

squarely in contradiction to this Court's

earlier pronouncements that efforts by

parties to create separate entities for

corporate and tax purposes creates the

necessary separateness to establish the

plurality of actors requirement for main-

taining a conspiracy in violation of

Section 1 of the Sherman Act, 15 U.S.C. § 1.

See Perma Life Mufflers, Inc. v. Inter-

national Parts Corp., 392 U.S. 134, 141-42

(1968) ("[SJince Respondents Midas and

International availed themselves of the

privilege of doing business through sep-

arate corporations, the fact of common

ownership could not save them from any of

their obligations that the law imposes on

separate entities.''); Kiefer-Stewart Co.

v. Joseph E. Seagram & Sons, Inc., 340 U.S.

. tho

211, 215 (1951) ("[C]ommon ownership and

control does not liberate corporations from

the impact of the antitrust laws."); United

States v. Yellow Cab Co., 332 U.S. 218

(1947) (affiliated corporations under com-

mon control are capable of conspiring with

one another in violation of the Sherman

Act). Here Moore and Company and its sales

associates clearly created separate

entities (a corporation distinguishing it-

self from independent contractor sole

proprietorships) so that they could enjoy

the benefits of separateness afforded by

tax and corporate law. Correspondingly,

they should also bear the responsibilities

that federal law imposes on separate

entities.

2. The Lack of Price Competition

in the Real Estate Industry

The issue of whether real estate

organizations can, under the Sherman Act,

control the percentage and amount of com-

So

missions received by its independent

contractor/sales agents for participating

in sales of residential real estate is an

important question of federal law which has

not been, but should be, settled by this

Court. The real estate industry of this

nation is well organized and politically

powerful. Over the years it has through

various methods developed a system whereby

it almost uniformly charges 6% to 7% of the

sales price of existing residential prop-

erties for sales in which its agents

participate. As was stated by the head of

the Federal Trade Commission:

You know, of course, that in most

Prokerage tele sea: tite ae

uniform throughout an area--6%

or 7i--with little or no compet-

itive pricing.

Michael Pertschuk, Chairman, Federal Trade

Commission, quoted in "FTC is Investigating

Realty Overcharges"’, Washington Post, Feb-

ruary 24, 1979 at E-3. As inflation has

bloated the prices of residential housing

. 165

in recent years, real estate commissions

have grown proportionately, although with-

out commensurate increases in the quantity

or quality of services performed. Real

estate commission arrangements are rarely

negotiated between members of that industry

and home owners who purchase new residences

only a few times in the course of a life-

time. "Lack of knowledge of the law and

sporadic nature of the individual's imper-

sonal interest in real estate transactions

have combined to minimize an effective

popular demand for antitrust enforcement

[in the real estate industry]."’ Note,

"Antitrust law: An Emerging Problem for

Florida Realtors", 24 U. Fla. L. Rev. 266,

283 (1972). The Federal Trade Commission

is preparing a detailed report, due in

October 1983, on the anticompetitive

aspects of the real estate industry.

To maximize its enjoyment of this com-

mission income, the real estate industry

ay ae

often creates separate legal entities

through which to do business. Corporate

real estate brokers, like Respondent Moore

and Company, maintain their sales agents as

independent contractors rather than as en-

ployees. This way, the corporations do not

include those portions of the commissions

received by the agents as corporate income

for which state and federal income tax must

be paid. This separateness also permits

the corporations to avoid withholding wages

and social security taxes (FICA) from pay-

checks of the sales agents. While the

propriety of permitting such practices to

continue from a tax policy and equity

standpoint is questionable, from an anti-

trust perspective, this purposeful crea-

tion of separate legal entities through

which to do business makes the parties to

such arrangements capable of combining and

conspiring for Sherman Act purposes.

« 18 -

A holding reversing the Tenth Cir-

cuit's affirmance of the District Court's

granting the Motion for Summary Judgment

would inject competitive incentives into a

hitherto moribund industry in terms of con-

sumer price alternatives. See Erxleben,

"In Search of Price and Service Competition

in Residential Real Estate Brokerage:

Breaking the Cartel", 56 Wash. L. Rev. 179

(1981). One possible result of reversal

would be that a corporate real estate

broker such as Respondent Moore and Company

could no longer have absolute control over

the full amount of the real estate commis-

sion charged homeowners, but rather could

only set what its share of the commission

would be. The sales agent could control his

or her commission component, thus

encouraging price competition as among real

estate agents and companies regarding the

overall commission offered consumers. In

other words, a possible result of reversal

a

is that Moore and Company could only

require its sales associates to charge a

minimum commission to be received entirely

by Moore and Company. Moore and Company,

however, could not force or conspire with

sales associates to charge a fixed amount

for additional commissions to be earned by

the sales associates themselves. Clearly

under this possible scenario, real estate

commissions might fall or services in-

crease. The homeowning consumer public

would undoubtedly benefit.

Reversal of the trial court would not

outlaw all collaborative activity among

real estate companies and independent con-

tractor agents. Instead, only price-fixing

of the sort alleged in the Complaint would

be barred. Moore and Company could con-

tinue using sales associates, either as

independent contractors or employees, but

could not dictate or conspire with them

with respect to their share of the total

« 98 «

commission. * Thus, reversal of the trial

court would possibly enhance competition in

the real estate industry, reduce atLoresty

in real estate commission practices and

work no substantial hardship on Moore and

Company's (or other reaitors') future

operations.

36 Direct Benefit Exception

There has been a growing body of anti-

trust law which recognizes that corporate

officers, employees and agents are capable

of conspiring with their corporation in

violation of the Sherman Act where they

were actuated by motives personal to them-

selves or received a direct benefit from an

arrangement violative of the Sherman Act.

In such instances, the plurality require-

ment of Section 1 of the Sherman Act has

been held to be met. See H & B Equipment Co.

v. International Harvester Co., 577 F.2d

239, 244 (Sth Cir. 1977); Morton Bldgs. of

Nebraska, Inc. v. Morton Bldgs., Inc., 531

— 2

F.2d 910, 917 (8th Cir. 1976); Greenville

Publishing Co., Inc. v. Daily Reflector,

Inc., 496 F.2d 391, 399 (4th Cir. 1974);

America's Best Cinima Corp. v. Fort Wayne

Newspapers, Inc., 347 F. Supp. 328 (N.D.

Ind. 1972); Nelson Radio & Supply Co. v.

Motorola, Inc., 200 F.2d 911, 914 (5th Cir.

1952), cert. denied, 345 U.S. 925 (1953);

ABA Section of Antitrust Law, Antitrust

Developments 1955-1968 at 19 n.84 (1968); 1

J. von Kalinowski, Antitrust Laws and Trade

Regulation § 6.01[2] at 6-19 to 6-20

(1980). The contours of this emerging

antitrust doctrine have not been clarified

by the courts below or by this Court.

The Tenth Circuit below indicated that

the personal stake doctrine does not apply

to the instant case because, as that court

noted, it pertains to situations where the

personal stake of the corporate officer,

employee or agent has a vested interest in

an entity other than the corporation. How-

= 29

ever, the named plaintiffs in the instant

case did identify an interest held by the

Moore and Company indeperdent contractor

sales agents. Their income is derived

solely from real estate commissions. They

are not on salary, and they benefit person-

ally and directly from a 7% commission

structure out of which they receive a pre-

ordained percentage from sales of resi-

dential properties in which they partici-

pate in conjunction with Moore and Company.

Thus, their commission income out of which

Moore and Company withholds no taxes or

FICA, is directly affected by the 7% com-

mission structure. Given this "independent

personal stake" in the 7% commission

combination, sales associates and their

commission-splitting partner, Moore and

Company, should not be deemed exempt from

antitrust scrutiny, certainly not at the

summary judgment level. There is no prec-

edent for the Tenth Circuit's conclusion

ee

that the "independent personal stake" can

only be indirect such as when a corporate

officer owns a competing corporation.

Direct benefits accruing to an agent by

engaging in a price-fixing arrangement with

his or her principal, as well as indirect

benefits, should be sufficient to permit a

plaintiff to withstand summary dismissal

based upon a claimed intra-corporate con-

Spiracy.

CONCLUSION

For the foregoing reasons, the Peti-

tion for A Writ of Certiorari should be

granted with respect to each of the three

questions on which it is sought.

Dated August 29 , 1963.

Respectfully submitted,

BURNS & FIGA, P.C.

Phillip S. Figa

333 Steele Park :

50 South Steele Street

Denver, Colorado 80209

Telephone: (303) 399-4636

Attorneys for Petitioners

a ce

APPENDIX A

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 79-M-1600

DWIGHT J. HOLTER and ;

SANDRA A. HOLTER, individually,

and on behalf of others similarly

situated,

Plaintiffs,

vs.

MOORE AND COMPANY, WILLIAM M.

MOORE, individually, and

TIMOTHY M. MILLER, individually,

and on behalf of a class composed

of all other sales associates of

Moore and Company acting as real

estate agents for sellers of

residential properties,

Defendants.

MEMORANDUM OPINION AND ORDER

Dwight J. Holter and Sandra A. Holter

sold their home in Fort Collins, Colorado

on August 31, 1978, using the services of

Timothy M. Miller, a real estate agent

associated with Moore and Company, a cor-

poration which maintains real estate

offices in a number of Colorado cities.

William M. Moore is a licensed real estate

broker and an officer of Moore and Company,

which is an employing broker authorized to

Pa. pe

act under the broker's license held by

William M. Moore. The plaintiffs paid a 7%

commission to Moore and Company on that

sale and it is that commission which is the

basis for this action.

The plaintiffs brought the action on

behalf of all persons who sold residential

properties within Colorado within four

years prior to the filing of this suit and

who used the services of real estate agents

associated with Moore and Company for which

a 7% commission was charged and paid. The

plaintiffs also have sought to form a

defendant class consisting of all sales

associates of Moore and Company who acted

as real estate agents for sellers of resi-

dential properties in Colorado within the

same four-year period. After a hearing on

the defendants’ initial motion to dismiss

under F.R.C.P. 12, the plaintiffs amended

their complaint to claim relief solely on

allegations of a conspiracy to fix commis-

sions in violation of Section 1 of the

Sherman Act (15 U.S.C. § 1).

The parties then agreed to conduct

discovery limited to the relationship

between Moore and Company and its sales

associates as evidenced by documents and

business practices during the relevant

time. The premise of that agreement was

that considerable time and expense could be

saved by developing a discovery record ade-

quate to permit resolution of the legal

question of whether that relationship was

sufficiently controlled by the defendant

corporation to preclude any actionable

conspiracy among the named defendants and

the defendant class. That legal issue was

properly raised by the defendants’ motion

for summary judgment which was heard on

November 24, 1980. At that hearing, it was

also agreed that the court should decide

the motion upon the assumption that the

putative classes of plaintiffs and defend-

Ee i he

ants would be formed as requested by the

plaintiffs.

While there are some differences

between the plaintiffs' and defendants’

briefs in their respective recitals of the

facts revealed during discovery, those

differences are not deemed material. For

pusposes of deciding the legal question

presented, the statements of fact contained

in pages 6 through 10 of the plaintiffs’

brief are accepted as true, incorporated

herein by this reference, and attached as

an appendix to this memorandum opinion.

Additionally, the affidavit of Keith T.

Koske, dated June 2, 1980, submitted by the

defendants, has not been challenged by the

plaintiffs and it is therefore accepted as

true. Upon this basis it is appropriate to

find and conclude that there is no genuine

issue as to any material fact and the case

is, therefore, subject to disposition on

the defendants' motion for summary judgment

» s&s

under Rule 56 of the Federal Rules of Civil

Procedure.

The accepted statements of fact

reflect that the business practices of

Moore and Company give associates a measure

of both independence and obligation. As

licensed real estate agents, authorized to

act under Moore's brokerage authority,

these salespersons are obligated to provide

services according to Moore's guidelines,

to offer the listing agreements at per-

centages set by the company and to sign

contracts solely as agents for Moore and

Company. In fact, Colorado law requires

that all transactions by Moore salespersons

shall be done in the name of the licensed

broker, Moore and Company, as principal.

C.R.S. § 12-61-109(2) (1973) and Rule E-6

of the Colorado Real Estate Commission.

On the other hand, the Moore asso-

ciates do have a certain amount of

independence, and some aspects of their

.

status with the company are more character-

istic of an independent contractor than an

employee. They are compensated only by

commissions, and since Moore considers them

to be independent contractors for tax pur-

poses and does not withhold anything from

the commission checks, they are responsible

for full payment of their own income taxes,

retirement plans and medical insurance.

Moore does pay for and provide furnished

office space, secretarial services, tele-

phone service, documentary forms, and

experienced clerical assistance in closing

transactions. The associates pay some of

their own expenses, including travel and

entertainment expenses and occasionally

must pay for supplemental secretarial and

clerical services.

The plaintiffs contend that there are

sufficient indicia of independence to sup-

port a charge of an unlawful conspiracy

under Section 1 of the Sherman act, in

« 40%

derogation of the general rule that a

corporation cannot conspire with its offi-

cers or agents to violate that statute. See

H & B Equipment Co., Inc. v. International

Harvester, 577 F.2d 239 (5th Cir. 1978) and

Jos. Seagram & Sons v. Hawaiian Oke and

Liquors, 416 F.2d 71 (9th Cir. 1969), cert.

denied, 396 U.S. 1062.

In support of their argument, the

plaintiffs cite cases in which corporations

were held to have conspired with their

subsidiaries or affiliates, and cases in

which coercive activity to effectuate re-

tail price maintenance has been found to

constitute a vertical conspiracy. U.S. v.

Yellow Cab, 332 U.S. 218 (1947), Kiefer-

Stewart Co. v. Jos. Seagram & Sons, Inc.,

340 U.S. 211 (1951), Simpson v. Union Oil

Co., 377 U.S. 13 (1964). Additionally,

they urge adoption of a test suggested in

the opinion from the Fifth Circuit in H&B

Equipment Co., supra, where no conspiracy

a ae

was found but the court noted that one might

exist of an agent had an "independent per-

sonal stake in achieving the object of the

conspiracy." 577 F.2d at 244. The

plaintiffs urge that the Moore associates

have the required "independent personal

stake" in the 7% commissions, and thus can

be held to have conspired with Moore and

Company to maintain that percentage.

I am not persuaded by that argument.

Antitrust liability is governed by con-

siderations of economic policy, not by

labelling. Agents are not independent for

purposes of Section 1 simply because they

are paid by commissions or have no income

taxes withheld. American Oil v. McMullin,

508 F.2d 1345 (10th Cir. 1975). Payment on

commissions may give the associates a

"personal" stake in the business to a

greater extent than a salaried employee,

but it does not create an “independent”

personal stake.

« Se

In Card v. National Life Insurance,

603 F.2d 828 (10th Cir. 1979), Judge Doyle

applied the McCarran-Ferguson Act exemp-

tion from antitrust liability for an

insurance business, and observed that the

general agents who were members of an

agents' association could not conspire with

the company which was their principal in an

agency relationship which gave much more

independence than is the case here. While

the case is not controlling precedent,

Judge Doyle's comments and the concurring

opinion of Judge McKay are a clear indica-

tion of the view of conspiracy which

prevails in the Tenth Circuit Court of

Appeals. That view is shared by the Ninth

Circuit Court of Appeals in Jos. Seagram &

Sons v. Hawaiian Oke and Liquors, supra.

Care should be taken in considering a

motion for summary judgment in an antitrust

case and the motion must be denied if there

is any suggestion that the plaintiff could

<a

establish liability. Poller v. Columbia

Broadcasting System, Inc., 368 U.S. 464

(1972). However, where there has been a

full opportunity to develop the facts rele-

vant to a pivotal question of law, summary

judgment may be granted. That is true in

this case. The plaintiffs cannot establish

the conspiracy necessary to support their

claim under Section 1 of the Sherman Act.

It is, therefore,

ORDERED, that the defendants’ motion

for summary judgment is granted, the

amended complaint is dismissed, and judg-

ment shall enter for the defendants with

costs to be taxed on the filing of a bill of

costs within ten days.

Dated:

BY THE COURT:

Richard P. Matsch, Judge

United States District

ae

c

=

..

Our

D. Moore and Company and Its Rela-

tionship with Sales Associates.

The facts which are especially perti-

nent to the Motion for Summary Judgment,

taken in a light most favorable to the

plaintiffs, are as follows:

Defendant Moore and Company is a

general real estate brokerage firm spe-

cializing in residential, commercial,

industrial and investment sales. Approxi-

mately 80 percent of its business relates

to residential sales (Exhibit A). Like

other real estate firms in the State and

around the country, Moore and Company

brings together buyers and sellers of resi-

dential real estate and charges a fee for

its services. See generally Case, ‘Why

Some Brokerage Firms are Successful", 9

Real Estate Review 103 (Fall 1979). For

Moore and Company, the fee is invariably 77

of the gross sales price on existing (as

Opposed to new) residential property

(Exhibits B, C and D). Some other real

Appendix to

Judge Matsch's Opinion

=. oe

estate companies charge different commis-

sion rates or are willing to negotiate

commission fees (Exhibits E and F).

Moore and Company is the second

largest real estate broker in Colorado

(Exhibit G). It is the largest broker in

the state that markets homes through sales

associates who are independent contractors

(id.). The goal of Moore and Company is to

Capture 25% of the market in the State

(Exhibit H). It has already achieved this

goal in Loveland, Breckinridge and Dillon,

aud is presently the leading realtor in

terms of volume in Ft. Collins, although it

has not yet acquired a 25% market penetra-

tion there (id.). In 1977, Moore and

Company and its sales associates earned

$14,012,212 in commissions, of which sales

associates received $7,370,546 (Exhibit

I). Im 1978, those figures increased to

$15,052,562 and $8,314,889, respectively

(id.).

Moore and Company markets residential

properties through sales associates. The

selling efforts are actually undertaken by

the sales associates, while Moore and Com-

pany provides assistance in the form of

office space, secretarial staff, real

estate closing staff, telephones, real

estate forms, and other ancillary services

and materials. The following interrogation

of William M. Moore at his deposition

reveals the mechanics of a typical resi-

dential real estate transaction involving

Moore and Company and its sales associates:

Q Focusing your atten-

tion on residential sales, would

you please describe the mechan-

ics of a residential real estate

transaction, with particular

attention to the role of the

broker and the role of the sales

associate, as these transactions

are handled by Moore and Company.

Do you understand that?

4 Yes, I believe I do.

Well, the sales associate

obtains a listing, exclusive

right to sell listing generally,

and a copy of that listing agree-

ment is kept in the files of the

o BP

branch office. And then the

sales associate proceeds to

market that property through ad-

vertising, through SS OP

through a prospect list, sphere

of influence, et cetera, and the

majority of the time an offer to

purchase will be generated on

that particular property through

another sales associate, either

inside the office or another

company -- a salesman with

another company.

Our seles associate,

who is the listing agent, let's

say, in this particular case,

presents the contract to his

client, the seller, and often-

times the other agent who has

been working with the purchaser

attends that meeting -- some-

times not. And as and when a

receipt and option contract is

executed and completed by all

parties, copies go to all

principals and to all sales

associates and companies in-

volved.

From that moment, the

sales associate is responsible

to follow tha transaction to the

consummation. That may be a new

FHA or VA or conventional type

loan, wherein he assists the

purchaser in making a loan ap-

plication at a lending institu-

tion. He assists getting any

documentation that the lender

might need, such as a veteran's

certificate in the case of a VA

loan. Oftentimes he helps in

— —

obtaining documents such as

verification of employment and

things that lenders need.

Then the sales associ-

ate is encouraged and requested

to attend the consummation or the

settlement of the closing, and

completes the transaction by

picking up the lock box, picking

up the sign, the "Sold" sign,

maybe a little bit after it is

consummated.

Q What does Moore and

Company do as the broker?

A Well, Moore and Com-

pany provides inmost offices the

closing procedure, with a

closing girl that is obtaining

realty documents, possibly with

the help of the associates if

there is any running around to do

to pick them up.

And Moore and Company

provides the settlement sheet,

acts as the clearing house,

collects all moneys, pays out all

moneys to the title companies,

water bills, Public Service

bills, sellers’ proceeds, payoff

statement from the existing or

previous lender.

Deposition of William M. Moore (Vol. 1),

taken July 29, 1980, at 33-34.

Sales associates are licensed real

estate salesmen or brokers. They must take

~~ 2

and pass state-administered examinations

in order for them to receive their

licenses. C.R.S. 1973, § 12-61-103. In

addition, they must meet certain prescribed

classroom instruction requirements. Id.

Moore and Company sales associates are

independent contractors and not employees

of Moore and Company (Exhibit J). There are

about 300 of them conducting business out

of 21 branch offices (id.). They are paid

—solely on the basis of commissions they

generate (Exhibit K). They do not have”

federal, state or local income taxes with-

held by Moore and Company from their

commission checks (Exhibit L). Moore and

Company does not withhold social security

taxes from pay checks of sales associates,

and does not guarantee or provide them with

the federal minimum wage, vacation pay,

sick pay, retirement benefits, or medical,

life or disability insurance (Exhibits L,

M, N).

ee

When a Moore sales associate partici-

pates in a residential real estate sale, he

or she receives a portion of the total

commission, which is normally paid by the

seller. If the sales associate handles the

transaction without the participation of

another sales associate, the sales asso-

ciate splits the Commission with Moore and

Company. If another Moore sales associate

is involved, the commission is divided

among the sales associates and Moore and

Company. If another broker is involved,

the other broker gets a share. See gen-

erally, Exhibits 0 and P. In brief, the

amount of commission received by a Moore

sales associate depends upon various

factors including the sales associate's

experience and production levels, whether

he or she is the listing agent or the one

finding the buyer, and, if another broker

is the listing broker, the total commission

to be split by the various real estate

> his

agents and brokers involved. (In the case

of a Moore sales associate obtaining the

listing, the total commission to be divided

is 7% of the gross sales price.) Moore and

Company usually distributes commissions to

sales associates within a day or two after

a teal estate transaction closes (Exhibit

Q).

As independent contractor sales asso-

ciates, members of the putative defendant

class are responsible for their own busi-

ness expenses while affiliated with Moore

and Company. The sales associate pays for

his or her own automobile expenses, meal

and entertainment expenses, car telephone,

teal estate license fees, membership dues

to the various realtor organizations, in-

Surance and advertising costs beyond 6% of

the sales associate's income (Exhibit R).

In fact, sales associates sometimes hire

their own employees or independent con-

tractors (who are not affiliated with Moore

Yt

and Company) to handle secretarial matters

for them (Exhibits R, S andT). It is common

among Moore sales associates to maintain an

office in their personal residences, and

they presumably deduct a portion of their

home expenses as a business expense

(Exhibit U). A first-year sales associate

can expect his business-related expenses to

total 20% of his or her commission income

(Exhibit V).

Moore and Company tries to observe the

requirements of the Internal Revenue Code

and the Internal Revenue Service ("IRS")

for obtaining the benefits of maintaining

its sales force as independent contractors.

See generally, Stand. Fed. Tax Rep. (CCH) 4

4939 (1980). Moore and Company files tax

reports with the IRS indicating that the

commission income earned by sales. associ-

ates was earned by independent contractors,

not by employees (Exhibit W). The

financial statements of Moore and Company

« £8:

do not treat income of sales associates as

income of Moore and Company (Exhibits X and

Y), and the company implements policies

which seek to minimize the possibility that

the IRS will treat sales associates as

employees for income tax and social secur-

ity purposes (Exhibits Z, AA and BB). Moore

and Company saves itself approximately

$600,000 annually by treating its sales

associates as independent contractors

(Exhibit BB).

In order to secure the tax, social

security and other benefits of maintaining

its sales associates as independent con-

tractors, Moore and Company must sacrifice

its ability to control and direct the

activities of its sales staff. As the

Controller and Secretary-Treasurer of

Moore and Company states:

If the tax consequences

were the same, I would prefer

that they [Moore sales associ-

ates] were employees. You always

have the problem of maintaining

» £6 &

this independent contractor

status, and because of the way we

operate, that is very divvicult.

And we could more closely

direct their activities, you

know, more -- you know, "You will

be to work at eight." I mean, you

know, "You will ....." -- those

kinds of things. We could more

closely direct their activities,

and that is my -- so I would

really prefer that they were en-

ployees from that standpoint,

from an operations standpoint.

Deposition of Robert Williams, taken

September 3, 1980, at 36.

Requirements imposed on sales asso-

ciates are minimal. Aside from following

common-sense grooming and _ business

clothing standards, sales associates are

expected to attend occasional meetings of

the sales force and meet production goals.

Such requirements, however, are couched in

terms of nonobligatory expectations, and

for a high producing sales associate all is

forgiven. Sales associates have no fixed

office hours and no routine schedule

(Exhibits CC and DD). In the words of one

ae

former Moore and Company sales associate,

with the exception of Wednesday sales staff

meetings that occupied perhaps the entire

morning, sales associates could come and go

as they pleased (Exhibit CC). Paraphrasing

the President of Moore and Company, sales

associates are not required to do anything;

it is simply in the mutual best interests of

Moore and Company and its sales associates

that Moore guidelines are observed (Exhibit

DD).

» 66%

APPENDIY B

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

DWIGHT J. HOLTER and SANDRA

A. HOLTER, individually and on

behalf of others similarly

situated,

Appellants,

vs. No. 81-1088

MOORE AND COMPANY, WILLIAM M.

MOORE, individually, and

TIMOTHY M. MILLER, individually,

and on behalf of a class

composed of all other sales

associates of Moore and Company

acting as real estate agents

for sellers of residential

properties,

ee a a a a a ee

Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

(D. C. No. 79-M-1600)

Phillip S. Figa (with Hugh A. Burns on the

brief) of Burns & Figa, P.C., Denver, Colo-

rado, for Appellants.

—

James M. Lyons (with James R. Everson on the

brief) of Rothgerber, Appel & Powers,

Denver, Colorado, for Appellees.

Before HOLLOWAY, McKAY and LOGAN, Circuit

Judges.

McKAY, Circuit Judge.

= 48 «

Appellants sold their house through

defendant Moore and Company (a Colorado

real estate broker) and one of its licensed

sales agents. Moore charged them its

standard seven percent commission for the

sale. They then brought this antitrust

suit against Moore, its president, and all

of Moore's sales agents on behalf of them-

selves and a class of plaintiffs similarly

situated. They alleged that the seven

percent commission Moore charges for sales

of residential housing and the acquiescence

in that rate by Moore's sales agents is

resale price maintenance between Moore and

the agents as well as horizontal price

fixing among the agents. The trial court

granted the defendants’ motion for summary

judgment. It held as a matter of law that

Moore and the agents constitute a single

economic entity incapable of conspiring

under section 1 of the Sherman Act, 15

U.S.C. § 1 (1976).

ae

Section 1 of the Sherman Act can be

violated only by concerted action by a

plurality of actors. Blankenship v.

Herzfeld, 661 F.2d 840, 846 (10th Cir.

1981). Since a corporation has no way of

acting except through officers and employ-

ees, the officers and employees are part of

the same economic unit as the corporation

for antitrust purposes. Thus, officers and

employees of a corporation are generally

incapable of conspiring with the corpora-

tion or with each other.2/ Schwimmer v.

Sony Corp. of America, 677 F.2d 946, 953 (2d

Cir. 1982); Tose v. First Pa. Bank, 648 F.2d

879, 893-94 (3d Cir.), cert. denied, 454

U.S. 893 (1981); H & B Equipment Co. v.

International Harvester Co., 577 F.2d 239,

244 (5th Cir. 1978). In addition, anti-

trust defendants with separate legal labels

-- e.g., Corporation-agent -- are not

1. But see post n.8.

=. ee

always capable of conspiring; they must be

separate economic entities in substance as

well. See Card v. National Life Insurance

Co., 603 F.2d 828, 834 (10th Cir. 1979)

(general insurance agents incapable of

conspiring with insurance company). Thus,

even though Moore's sales agents are taxed

as independent contractors, that fact is

not dispositive of this case. While a

corporation acting through its officers and

employees can conspire under section 1 with

some outside contractors, we face here an

antecedent question: whether the licensed

real estate agents employed by the broker

are employees or outside agents for pur-

poses of the Sherman act.4/

2. If we determined that the agents were

sufficiently independent of Moore to be "outside"

contractors, there would still be a difficult question to

resolve since the cases reflect uncertainty as to when

outside agents are capable of conspiring with their

principle for purposes of § 1 of the Sherman Act.

Compare Albrecht v. Herald Co., 390 U.S. 145 (1968)

with Harold Friedman, Inc. v. Kroger Co., 581 F.2d

1068 (3d Cir. 1978). We need not reach the problems

raised by the outside contractor cases since we find

that Moore's sales agents are not "outside con-

tractors.”

“<r. ) ae

Whether the relationship of the

parties is employer-employee or principal-

outside agent is normally a question of

fact. See Blankenship v. Herzfeld, 661

F.2d at 846. However, the sufficiency of

the evidence to create an issue of fact for

the jury is solely a question of law. See

Ogilvie v. Fotomat Corp., 641 F.2d 581,

589-90 (8th Cir. 1981); 9 C. Wright & A.

Miller, Federal Practice and Procedure §

2524 (1971). Keeping in mind that summary

judgment should be granted sparingly in

antitrust cases, Poller v. Columbia Broad-

casting System, Inc., 368 U.S. 464, 473

(1962), we must determine whether there was

sufficient evidence in the record to create

an issue of fact for the jury on whether the

defendants were separate vertical and

horizontal economic units rather than a

firm and its employees.

Although existing cases dealing with

the "single enterprise" doctrine have been

ae ee

criticized as lacking in certainty,2/ we

think that the immense diversity of methods

of organization and types of products makes

some uncertainty unavoidable, relegating

us to general guidelines and case-by-case

resolutions. Some courts have attempted to

set forth generalized tests for determining

when formally distinct entities are in fact

separate economic entities for antitrust

purposes. See, e.g., Fuchs Sugars &

Syrups, Inc. v. Amstar Corp., 602 F.2d

1025, 1031 N.5 (2d Cir.), cert. denied, 444

U.S. 917 (1979). While we recognize that

some of these criteria are at least in part

question-begging, they nonetheless help to

focus the inquiry, which centers on the

independence of the allegedly conspiring

actors.

3. See Note, "Conspiring Entities” under

Section 1 of the Sherman Act, 95 Harv. L. Rev. 661

(1982). Even the critics, however, confess an inability

to devise a clear test of their own. Id. at 680.

a

The starting point in this case is the

law of Colorado under which the parties

operate.4/ Of course, state labels

describing the relationship between the

parties do not govern our application of a

federal standard to determine whether the

parties are separate economic entities. In

this case, however, we look to state law as

it actually limits the independence of the

sales agents from Moore.2/ The sales per-

sonnel in this case are called "agents."

4. By considering the state law under which

the parties operate, we are simply examining the

undisputed facts to determine whether the agents are

Moore's “employees” under the doctrine that hoids an

employee incapable of conspiring with his corporate

employer uncer § 1 of the Sherman Act. We are not

invoking the immunity doctrine of Parker v. Brown,

317 U.S. 341 (1943).

5. By rendering & corporation capable of

acting only through its employees, a state's cor-

poration law renders the corporation and the em-

ployees incapable of acting independently of each

other hence incapable of conspiring under § 1. Simi-

larly, state law can render an agent capable of acting

only under the supervision of a single employer,

precluding the agent from acting independently of, or

conspiring with, the employer. In either case, a

federal standard of separateness governs.

may.” We

However, a sales agent must have a license

to sell real estate, Colo. Rev. Stat. § 12-

61-102 (Supp. 1982), and he can obtain one

only if he has an agreement to be hired by

a broker, see id. § 12-61-103(5). He may

not work for any other broker.£/ The agents

may perform real estate services only in

the broker's name, 4 Colo. Admin. Code §

725-1E-6 (1983), and all compensation for

services must be paid to the broker -- not

to the agent, see Colo. Rev. Stat. § 12-61-

117 (1978). Finally, a "real estate broker

shall not contract with the licensees in

his employ so as to lose his authority to

supervise [them],'' 4 Colo. Admin. Code §

725-1E-9 (1983), and a broker can lose his

license for "failing to exercise reasonable

supervision over the activities of his

6. Colorado law precludes a sales agent

from working for more than one broker by (a) limiting

each agent to one license, Colo. Rev. Stat. § 11-61-

109(4) (Supp. 1982), and (b) requiring an agent's license

. a in the custody of his broker, id. § 11-61-104(1)

1978).

-— -

licensed employees," Colo. Rev. Stat. § 12-

61-113(1)(0) (1978).

In addition to this legally required

supervision, Moore supplies offices, sec-

retaties, and real estate listings, and

pays some expenses for the licensed agents.

The appellants rely on the following indi-

cia of economic separateness: (a) the

agents are paid a commission, (b) Moore

withholds no income or FICA taxes, or

retirement benefit payments from the com-

missions, (c) each agent must be licensed

by the state, (d) agents control their own

hours, and (e) the agents pay some of their

own expenses.

Our judgment is that the Colorado

statutory scheme restricts the independ-

ence of the agents so much that they must be

considered “employees” under section 1 of

the Sherman Act. The Colorado provisions

simply do not allow the agents to take any

independent course of action that would be

-_— --

competitive with Moore. The nature of the

relationship that Moore and the agents are

legally required to maintain is so over-

whelmingly one of the superior and sub-

ordinate that the indicia relied on by the

appellants are inconsequential. Payment by

commission and the agents’ concomitant

incurrence of some costs are not disposi-

tive factors in determining whether there

is one or many entities. See American Oil

Co. v.McMullin, 508 F.2d 1345, 1351-52

(10th Cir. 1975). The requirement that the

agents have licenses is consistent with

their status as employees; it is no dif-

ferent from the case of beauticians

employed by a single beauty parlor, Colo.

Rev. Stat. § 12-8-120(2) (1978), or asso-

ciates employed by a law firm, id. § 12-5-

112. The agents’ control over their hours,

although a discretion not enjoyed by all

employees, does not evidence sufficient

independence to counteract the require-

Me.

ments that the agents work only for Moore,

offer all of their services in Moore's

name, be compensated only by Moore, and

contract with Moore only in a way that

enables Moore to have enough control to

perform its duty to supervise them. Sim-

ilarly, the agents' "independent con-

tractor" label for tax purposes does not

negate the substantial control that Moore

is legally obligated to exercise over the

agents’ performance of their employment.

Thus, when the components of the relation-

ship are examined individually and

collectively, we agree with the Colorado

Supreme Court that the Colorado real estate

laws require Moore and its agents to main-

tain "an employer-employee relationship

because it [not only] clothes the broker

. with the right to control his salesmen

but it also charges him with a duty to do

so. Faith Realty & Development Co. v.

Industrial Comm'n, 170 Colo. 215, 460 P.2d

228, 230 (1969).

hw

We conclude that the agents should be

considered employees of Moore for antitrust

purposes. _/

It follows that the agents

cannot conspire with Moore or each other

absent invocation of the "independent

personal stake" doctrine, which is inap-

plicable to this case. &/

AFFIRMED.

7. This holding forecloses the appellants’

argument that the appellees are capable of conspiring

as joint venturers. Of course, it does not effect the

applicability of § 1 of the Sherman Act to concerted

action by more than one broker or agents of different

brokers.

8. Some courts have held that an officer of

a corporation can conspire with the corporation if the

officer will personally benefit from conspiring with the

corporation to restrain trade. E.g., H & B Equip. Co.

v. International Harvester, 577 F.2d , th Cir.

1978); Greenville Publishi Co. v. Daily Reflector,

Inc., 496 F.2d 391, 336 (4th Cir. 1974). This

"independent personal stake" doctrine applies only

when the officer has an outside economic interest,

such as ownership of a competing corporation, through

which he will benefit from the restraint. The

appeliants have not identified any such outside interest

held by the agents. Thus, the doctrine does not apply

to the facts of this case.

Se &