Amicus Curiae Brief — DeKalb Board of Realtors, Inc. v. Thompson

()

No. 91-1108

“y IN THE

<= Supreme Court of the United States

~ OCTOBER TERM, 1991

“ER

bl cleans

DEKALB BOARD OF REALTORS, INC., and

METROPOLITAN MULTI-LIST, INC.,

. Petitioners,

FLETCHER L. THOMPSON and

EMPIRE REAL ESTATE BOARD, INC.,

Respondents.

On Petition for Writ of €ertiorari to tke

United States Court of Appeals

for the Eleventh Circuit

MOTION FOR LEAVE TO FILE A BRIEF AS

AMICI CURIAE AND BRIEF OF THE

AMERICAN SOCIETY OF ASSOCIATION EXECUTIVES,

THE AMERICAN MEDICAL ASSOCIATION,

THE AMERICAN DENTAL ASSOCIATION,

THE NATIONAL ASSOCIATION OF HOME BUILDERS,

THE NATIONAL ASSOCIATION OF SOCIAL WORKERS,

AND THE NATIONAL ASSOCIATION OF

TRUCK STOP OPERATORS, AS AMICI CURIAE

IN SUPPORT OF PETITIONERS

FRANK M. NORTHAM FRANK M. NORTHAM *

AMERICAN SOCIETY OF 1747 Pennsylvania Avenue, N.W.

ASSOCIATION EXECUTIVES Suite 1000

1575 Eye Street, N.W. Washington, D.C. 20006

Washington, D.C. 20005 (202) 785-9500

February 7, 1992 * Counsel of Record

( Additional Counsel Listed on Inside Cover )

WILSON - EPES PRINTING CO Inc. - 789-0096 - WASHINGTON, D.C. 20001

KIRK B. JOHNSON

EDWARD B. HIRSHFELD

MICHAEL L. ILE

AMERICAN MEDICAL ASSOCIATION

515 North State Street

Chicago, Illinois 60610

(312) 464-4600

MARY K. LOGAN

THOMAS H. BOERSCHINGER

AMERICAN DENTAL ASSOCIATION

211 East Chicago Avenue

Chicago, Illinois 60611

(312) 440-2889

GARY KOMAROW

NATIONAL ASSOCIATION OF HOME BUILDERS

1201 15th Street, N.W.

Washington, D.C. 20005

(202) 336-8217

ROBERT COHEN

NATIONAL ASSOCIATION OF SOCIAL WORKERS

750 First Street, N.E., Room 803

Washington, D.C. 20002

(202) 408-8600

G. TIMOTHY LEIGHTON

NATIONAL ASSOCIATION OF TRUCK STOP OPERATORS

1199 North Fairfax Street, Suite +801

Alexandria, Virginia 22314

(703) 549-2100

IN THE

Supreme Cort of the United States

OCTOBER TERM, 1991

No. 91-1108

DEKALB BOARD OF REALTORS, INC., and

METROPOLITAN MULTI-LIST, INC.,

- Petitioners,

FLETCHER L. THOMPSON and

EMPIRE REAL ESTATE BOARD, INC.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

MOTION OF THE

AMERICAN SOCIETY OF ASSOCIATION EXECUTIVES,

THE AMERICAN MEDICAL ASSOCIATION,

THE AMERICAN DENTAL ASSOCIATION,

THE NATIONAL ASSOCIATION OF HOME BUILDERS,

THE NATIONAL ASSOCIATION OF SOCIAL WORKERS,

AND THE NATIONAL ASSOCIATION OF

TRUCK STOP OPERATORS, FOR LEAVE TO

FILE A BRIEF AS AMICI CURIAE

The American Society of Association Executives, the

American Medical Association, the American Dental

Association, the National Association of Home Builders,

the National Association of Social Workers, and the

National Association of Truck Stop Operators, respect-

fully move this Court for permission to file a brief as

amici curiae in support of the petition in this case.

Pursuant to Supreme Court Rule 37.2, amici sought

written consent of all parties to the filing of this brief.

Petitioners have consented but respondents have not. By

letter to counsel for Respondents dated January 31, 1992,

counsel for the American Society of Association Execu-

tives, on behalf of all amici who join in this brief, re-

quested consent from Respondents to the filing of this

amict curiae brief. On February 3, 1992, counsel for

amici spoke to David A. Webster, one of the attorneys for

the Respondents; Mr. Webster stated that, after consid-

eration of amici’s request, the Respondents had decided

to deny the request. Accordingly, amici must file this

motion with the Court.

Amici respectfully submit that there are compelling

reasons for the Court to grant this motion. As the state-

ment of interest in the attached proposed brief explains

in detail, each organization represented in this brief is

the leading national membership organization in its re-

spective professional or business area. Amici provide pro-

grams and services to hundreds of thousands of individ-

ual and business members nationwide. As such, amici are

vitally concerned about the application of the antitrust

laws to associations.

Amici seek leave to file this brief in order to bring ’to

the Court’s attention the importance of the decision below

to associations generally and to provide the Court with

the perspective of national organizations. In this brief,

amici endorse but do not reprise the arguments offered

in the petition for certiorari. Amici also do not repeat

the information and arguments contained in the amicus

brief of the National Association of Realtors (NAR),

which focuses on the unique importance of the case to the

real estate industry. Instead, amici set forth three addi-

tional reasons, beyond what is discussed in the petition

or the NAR brief, for granting the petition.

First, amici explain that the decision below is of na-

tional importance because its impact is not limited to real

|

estate boards and multiple listing services. The Eleventh

Circuit’s decision calls into question the basic issue

whether an association with reasonable and fairly applied

membership criteria must make its most attractive serv-

ices available to persons who choose, for whatever reason,

not to join. This issue is of enormous practical conse-

quence for associations. If the Eleventh Circuit is cor-

rect that associations must make their most valuable

services available to non-members, then membership in

associations will inevitably decline. To the extent that it

does, the ability of associations to serve their members

and the public will be diminished.

Second, amici bring to the Court’s attention the fact

that the decision below conflicts with decisions of other

federal courts in association cases outside the real estate

context. In these decisions, which are not discussed in

either the petition or the NAR brief, courts have held

that an association’s membership criteria are not unlaw-

ful when they are not arbitrary or unreasonably exclu-

sionary. See, e.g., E. A. McQuade Tours, Inc. v. Consoli-

dated Air Tour Manual Comm., 467 F.2d 178, 188 (5th

Cir. 1972), cert. denied, 409 U.S. 1109 (1973); Ralph

C. Wilson Indus., Inc. v. Chronicle Broadcasting Co., 794

F.2d 1359, 1866 (9th Cir. 1986).

Third, amici point out that, regardless of whether the

Eleventh Circuit reached the correct result, amici share

a strong interest in obtaining clear guidance from this

Court on the application of the Sherman Act to member-

ship requirements. National associations have nationally

applicable membership requirements. Accordingly, such

associations need a single, national standard with which

to conform those requirements. Only this Court can pro-

vide the necessary and important guidance.

The brief that amici seek to file thus supplements but

does not duplicate the petition and the other amicus brief

before the Court. Amici believe that their brief will

materially assist the Court in its review of the petition.

aire

Accordingly, amici respectfully request that the Court

grant their motion for leave to file a brief as amici curiae

in support of the petition.

Respectfully submitted,

FRANK M. NORTHAM *

1747 Pennsylvania Avenue, N.W.

Suite 1000

Washington, D.C. 20006

(202) 785-9500

* Counsel of Record

QUESTION PRESENTED

Whether an association violates Section 1 of the

Sherman Act, 15 U.S.C. $1, by requiring individuals

to join the association in order to obtain access to the

association’s services, where membership is available on

reasonable and non-discriminatory terms.

(i)

TABLE OF CONTENTS

(iii)

12

iv

TABLE OF AUTHORITIES

CASES Page

American Fed’n of Tobacco Growers V. Neal, 183

Bae Ce Gy Be ieee rneicermciacicceserscicns 9

Anderson V. United States, 171 U.S. 604 (1898) .... 8

Associated Press v. United States, 326 U.S. 1

| EERE eter le ror oe RC MEO PII 8

Blalock v. Ladies Professional Golf Ass’n, 359 F.

I, RID CIE. GO BGI cccncnicsecctesccccesesncesnenss 9

Boddicker v. Arizona State Dental Ass’n, 680 F.2d

66 (9th Cir.), cert. denied, 459 U.S. 837 (1982) .. 7

Brenner V. World Boxing Council, 675 F.2d 445

(2d Cir.), cert. denied, 459 U.S. 835 (1982) ......... 9

Deesen V. Professional Golfers’ Ass’n, 358 F.2d 165

(9th Cir.), cert. denied, 385 U.S. 846 (1966) .... 9

E. A. McQuade Tours, Inc. Vv. Consolidated Air

Tour Manual Comm., 467 F.2d 178 (5th Cir.

1972), cert. denied, 409 U.S. 1109 (1978) .......... 5, 9, 10

Hatley v. American Quarter Horse Ass’n, 552 F.2d

ee ee Gh EE sithiticnedeceopantiercaisectnnnnics 9

Jack Walters & Sons Corp. v. Morton Bldg., Inc.,

737 F.2d 698 (7th Cir.), cert. denied, 469 U.S.

de aeennonanaeaneias 11

Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466

NE Ce eae ds eeanauenameunonints 10

Kreuzer v. American Academy of Periodontology,

Os &!. Ti oR | | CRN rennnenEE 5

McDonnell v. Michigan Chapter No. 10, 587 F.2d

Hk I en ee a a eer 11

Montague & Co. v. Lowry, 193 U.S. 38 (1904) ........ 8,9

National Ass’n of Women’s & Children’s Apparel

Salesmen, Inc. v. FTC, 479 F.2d 139 (5th Cir.),

cert. denied, 414 U.S. 1004 (1978) .........00000000..... 11

Ralph C. Wilson Indus., Inc. v. Chronicle Broad-

casting Co., 794 F.2d 1359 (9th Cir. 1986) ........ 5, 10

United States v. New Jersey Auto Glass Dealers’

Ass’n, 1960 Trade Cases (CCH) ‘ 69,764

IE MII ds Ss ininxcovansniiasisssniesebeicanecinidbennidontensbiabdshids 9

United States v. Western Winter Sports Represent-

atives Ass’n, 1962 Trade Cases (CCH) % 70,418

ER. SG SEITE shaciaihcssaacaciieciiniganhaneninnelldcuneeliesentonn 1l

Vv

TABLE OF AUTHORITIES—Continued

Wells Real Estate, Inc. v. Greater Lowell Bd. of

Realtors, 850 F.2d 803 (1st Cir.), cert. denied,

488 U.S. 955 (1988)... ccc

Worthen Bank & Trust Co. v. National Bank-

Americard Inc., 485 F.2d 119 (8th Cir. 1973),

cert. denied, 415 U.S. 918 (1974) 0.0.

OTHER AUTHORITIES

Pasahow, Recent Developments in Tying Law, 57

Antitrust L.J. 379 (1988) ....00..

Page

IN THE

Supreme Court of the United States

OCTOBER TERM, 1991

No. 91-1108

DEKALB BOARD OF REALTORS, INC., and

METROPOLITAN MULTI-LIsT, INC.,

. Petitioners,

FLETCHER L. THOMPSON and

EMPIRE REAL ESTATE Boar, INC.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

BRIEF OF THE

AMERICAN SOCIETY OF ASSOCIATION EXECUTIVES,

THE AMERICAN MEDICAL ASSOCIATION,

THE AMERICAN DENTAL ASSOCIATION,

THE NATIONAL ASSOCIATION OF HOME BUILDERS,

THE NATIONAL ASSOCIATION OF SOCIAL WORKERS,

AND THE NATIONAL ASSOCIATION OF

TRUCK STOP OPERATORS, AS AMICI CURIAE

IN SUPPORT OF PETITIONERS

INTEREST OF AMICI CURIAE

The American Society of Association Executives

(ASAE) is an association of 20,000 individual execu-

tives of national, state, and local associations. The mem-

bers of ASAE manage leading business, professional,

educational, technical, industrial, and trade associations

2

representing more than 8,000 national, state, and local

associations serving more than 80 million people and

companies. Since its founding in 1920, ASAE has been

dedicated to improving the performance and effective-

ness of voluntary membership organizations, enhancing

the professionalism of association executives, and en-

couraging participation by association executives and

their organizations in public policy issues.

The American Medical Association (AMA) is a pri-

vate, voluntary, non-profit organization of physicians. The

AMA was founded in 1846 to promote the science and

art of medicine and to improve the public health. Its

290,000 members practice in all fields of medical special-

ization. The AMA’s interest in this matter stems from

its longstanding efforts to attract new members by de-

veloping programs and services. These include accredit-

ing medical schools and training programs for allied

health professionals, developing and enforcing a code of

ethics, and providing other programs that serve the mem-

bership and the public. In addition, a number of state

medical societies offer va'uable services, such as malprac-

tice insurance, to their members.

The American Dental Association (ADA) is organized

as a not-for-profit corporation under the laws of the

State of Illinois. Founded in 1859, the ADA is a volun-

tary professional association with approximately 140,000

practicing member dentists, representing approximately

75% of this nation’s dentists. The purpose of the ADA

is to encourage the improvement of the oral health of

the public and to promote the art and science of den-

tistry. The programs and services that the ADA pro-

vides its members include an annual scientific meeting on

clinical and technical advances in dentistry, seminars on

clinical skills and practice management, and materials

designed to educate patients about oral health.

The National Association of Home Builders (NAHB)

is the voice of the American shelter industry, represent-

3

ing more than 153,000 builder and associate members

around the country. NAHB’s members are involved in

all aspects of building and supplying single-family homes,

apartments, condominiums and commercial and industrial

projects, as well as land development and remodeling.

NAHB is a federated association with approximately 850

state and local affiliates. NAHB and its affiliates con-

stantly strive to develop quality programs and services

for their members.

The National Association of Social Workers (NASW),

a non-profit professional association with over 135,000

members throughout the United States and abroad, is the

largest association of professional social workers in the

world. NASW works to enhance the professional growth

and development of its members, to create and maintain

professional standards and to advance sound public pol-

icies. NASW provides a variety of membership bene-

fits including insurance and credentialing.

The National Association of Truck Stop Operators

(NATSO) is the only professional and legislative repre-

sentative of the truck stop and travel plaza industry in

North America. Currently, more than 1,000 truck stops,

most of which are owned by individuals or joint ventures

rather than major corporations, are members of this

association. Nearly 250 companies who sell products and

services to the industry and its customers have joined

as Allied members. NATSO truck stops pump about two

thirds of the national retail total of diesel fuel, collec-

tively constituting annual business exceeding $15 billion.

NATSO provides members a system of instant electronic

transmission of check-cashing and credit information and

sponsors the American Truck Foundation, funding re-

search and services on combatting drug and alcohol abuse

and helping to find missing children.

Each of the associations represented herein is thus the

leading national membership association in its respective

business or professional area. Collectively, amici repre-

4

sent hundreds of thousands of individual and business

members nationwide. The decision below is of particular

concern to all amici because of its potential seriously to

affect an association’s incentive and ability to develop

valuable programs for its members and to attract and

keep members. Accordingly, amici wish to present their

views about the national importance of this case from the

perspective of associations.

REASONS FOR GRANTING THE PETITION

The petition for certiorari demonstrates that the deci-

sion below conflicts with decisions of two courts of ap-

peals, two state Supreme Courts, and numerous district

courts on the question whether a local board of Realtors

can require real estate brokers to become members of the

board in order to gain access to the board’s multilist

service. See Pet. 10-24. The petition also demonstrates

that these conflicts are of national importance and that

the real estate industry needs a single national rule on

this question. Pet. 24-26. Amici submit that these rea-

sons for granting the petition are compelling.

From the more general perspective of national associa-

tions, there are three additional reasons for granting

the petition. First, the decision below calls into question

the basic issue of whether an association with reasonable

and fairly applied membership criteria must make its

most attractive services available to persons who choose,

for whatever reason, not to join. This issue is of signifi-

cant practical consequence for associations. If the Elev-

enth Circuit is correct that associations must make their

most valuable services available to non-members, then

membership in associations will inevitably decline. To

the extent that it does, the ability of associations to serve

their members and the public will be diminished.

Second, the decision below conflicts with the approach

taken by most federal courts regarding the antitrust sig-

nificance of an association’s membership requirements.

These courts generally hold that membership criteria of

i

5

associations trigger antitrust concerns “only in that rare

instance when such membership limitations have the

effect of unreasonably restraining trade... .” Kreuzer v.

American Academy of Periodontology, 735 F.2d 1479,

1496 (D.C. Cir. 1984). Contrary to the Eleventh Cir-

cuit, federal courts have generally rejected antitrust chal-

lenges to membership requirements as long as those re-

quirements were not themselves anticompetitive and were

not applied arbitrarily. See, e.g., E. A. McQuade Tours,

Inc. V. Consolidated Air Tour Manual Comm., 467 F.2d

178, 188 (5th Cir. 1972), cert. denied, 409 U.S. 1109

(1973) ; Ralph C. Wilson Indus., Inc. v. Chronicle Broad-

casting Co., 794 F.2d 1359, 1866 (9th Cir. 1986).

Third, regardless of whether the Eleventh Circuit

reached the correct result, the conflicts that its decision

creates with other decisions should be resolved. National

associations have nationally applicable membership re-

quirements. Accordingly, such associations need a single,

national standard with which to conform those require-

ments. Only this Court can provide the necessary and

important guidance.

1. The court below held that the Sherman Act pro-

hibits a board of Realtors from requiring licensed brok-

ers to become members of the board in order to gain

access to the board’s wholly owned multiple listing service

if a substantial portion of real estate sales is effectuated

through that service. Pet. App. 24a. The general prin-

ciple that emerges from the decision below is that an

association must make a service available to non-members

whenever the “service has ‘sufficient economic importance

that exclusion results in the denial of the opportunity to

compete effectively on equal terms.’” Jd, (quoting United

States v. Realty Multi-List, Inc., 629 F.2d 1351, 1373

(Sth Cir. 1980) (emphasis in the original).’ If this prin-

‘In formulating this principle, the Eleventh Circuit apparently

ignored the fact that as long as an individual can join an association

on reasonable, non-discriminatory terms, that individual is not de-

nied the opportunity to compete effectively on equal terms.

6

ciple is correct, any association that provides a valuable

service is potentially committing an antitrust violation

by limiting that service to members. In this analysis,

lack of access to any number of valuable services that a

non-member wants may plausibly constitute a “denial of

the opportunity to compete effectively on equal terms.”

For example, a medical society may sponsor a malprac-

tice insurance program that offers physicians favorable

premiums. A dental society may offer a unique clinical

skills enhancement program. A trade association may

offer members a group purchasing service that provides

members with lower prices than non-members can find,

or may sponsor a trade show that offers members unique

access to their potential market. In each of these exam-

ples, a non-member could allege with some plausibility

that his or her exclusion from that service “results in

the denial of the opportunity to compete effectively on

equal terms.” Therefore, an organization that confines

any of these services to members runs a serious risk of

antitrust liability under the Eleventh Circuit’s decision.

There is no reason why the antitrust laws should re-

quire associations to make their services available to non-

members when membership requirements are reasonable

and non-discriminatory. In such circumstances, there is

no boycott or exclusion (in any antitrust sense of the

term) of non-members from the service in question. In-

stead, there is only the non-member’s decision to reject

the service on the terms on which it is offered to all

potential members.

Nor should such an arrangement be condemned as an

unlawful tie-in. As the First Circuit recognized in Wells

Real Estate, Inc. v. Greater Lowell Bd. of Realtors,

850 F.2d 803 (1st Cir.), cert. denied, 488 U.S. 955

(1988), “a trade organization” is not “a ‘seller[]’ in

the usual sense ....” Jd. at 815. It is a membership

organization. The members, as represented by an elected

board of directors, determine the services, dues, and

7

obligations that will make membership in the association

as widely attractive to potential members as possible. As

the court also recognized, an association’s services are

not separate products for tying analysis, but rather are

“advantages gained by joining that trade organization”

and ones that, unlike the typically purchased product,

carry “certain responsibilities as well.” Id.

Both the representative structure of a membership

organization and the reciprocal nature of services and

obligations distinguish the association’s offer of member-

ship and services from the seller who imposes a tie-in

on an unwilling buyer. Simply put, an association cannot

exist without offering services. Yet, under the Eleventh

Circuit’s analysis any association’s decision to offer a

valuable service in conjunction with membership is a

potential tie-in.

The Eleventh Circuit’s rulings on boycott and tying

law therefore will undermine the ability and incentive of

associations to develop valuable services. Allowing poten-

tial members to choose only to avail themselves of selected

services erodes the incentive to join the association and

undercuts the ability of the association to function as a

coherent whole. Furthermore, the Eleventh Circuit’s de-

cision reduces the incentive to develop and improve valu-

able services. The more successful the service, the greater

the risk that the association will face an antitrust chal-

lenge from a non-member seeking access to those services.

In essence, the Eleventh Circuit’s ruling undermines the

ability of associations to serve their members and the

public and discourages competitive innovation.

* See Boddicker v. Arizona State Dental Ass’n, 680 F.2d 66, 67

(9th Cir.) (membership in local association “cannot be characterized

as a product or service distinct from” membership in national asso-

ciation), cert. denied, 459 U.S. 837 (1982): Pasahow, Recent Devel-

opments in Tying Law, 57 Antitrust L.J. 379, 385 (1988) (“no sepa-

rate markets exist for the interrelated benefits and burdens of asso-

ciation membership”).

8

2. Not surprisingly, the Eleventh Circuit’s decision

is inconsistent with numerous decisions resolving anti-

trust challenges to an association’s enforcement of its

membership rules. As the petition demonstrates (Pet.

12-13), the leading case is Associated Press v. United

States, 326 U.S. 1 (1945). In Associated Press, this

Court affirmed the decision of a three-judge district court

to strike down membership requirements that were arbi-

trary and were designed to allow members to exclude

competitors. Nevertheless, the Court allowed A.P. to con-

tinue to prohibit non-members from obtaining A.P. news.

Id, at 21-23. Once all competitors were free to join A.P.

on equal and reasonable terms, A.P.’s decision to make its

news available only to members would not violate Sec-

tion 1. Jd.; see Worthen Bank & Trust Co. v. National

BankAmericard Inc., 485 F.2d 119, 128-29 (8th Cir.

1973) (explaining distinction in Associated Press be-

tween unreasonable membership requirements and rules

restricting services to members), cert. denied, 415 U.S.

918 (1974).

The distinction drawn in Associated Press is fore-

shadowed in two earlier decisions of this Court. In An-

derson V. United States, 171 U.S. 604 (1898), this Court

upheld a bylaw of an association of livestock traders that

prevented non-members of the association from trading

with members. The Court found no unreasonable re-

straint of trade, observing that the purpose and effect

of the by-law was not to set prices or reduce output but

to improve the functioning of the market, and stressing

that “[a]ll yard traders have the opportunity of becom-

ing members of the exchange, and to thus obtain all the

advantages thereof.” Id. at 618; see also id. at 619.

Six years later, in Montague & Co. v. Lowry, 193 U.S.

38 (1904), this Court held that an association of manu-

facturers and dealers who refused to offer non-members

the same favorable financial terms as members did violate

Section 1. In Montague, however, membership in the as-

9

sociation was not open to all but “was a matter for the

arbitrary decision of the association,” and plaintiffs’ ap-

plication in particular “was subject to arbitrary rejec-

tion.” Jd. at 46-47. The basic principle that emerges

from Associated Press, Anderson, and Montague is that

associations may restrict services to members, but may

not impose arbitrary or unreasonable membership re-

quirements.

That principle is reflected in the subsequent decisions

of numerous lower courts.* For example, in E. A. Mc-

Quade Tours, 467 F.2d at 188, the Fifth Circuit ordered

that judgment be entered for the defendant association

where the association’s rule that excluded plaintiff from

the association’s list of approved tour operators served

the “reasonable” purpose of encouraging tour operators

to participate in the listing service and was not “applied

* Thus, lower courts have invalidated membership requirements

that arbitrarily or unfairly excluded competitors from access to im-

portant services. See, e.g., American Fed. of Tobacco Growers Vv.

Neal, 183 F.2d 869, 871 (4th Cir. 1950) (membership rule was “a

mere pretext” for excluding a competitor): Blalock v. Ladies Pro-

fessional Golf Ass’n, 359 F. Supp. 1260, 1265 (N.D. Ga. 1973)

(expulsion of member was pursuant to “completely unfettered, sub-

jective discretion” and with “the purpose . . . to exclude plaintiff

from the market”).

At the same time, courts generally have upheld requirements that

were reasonable and fairly applied. See, e.g., Hatley v. American

Quarter Horse Ass’n, 552 F.2d 646, 653-54 (5th Cir. 1977) (rule had

a “legitimate” purpose and was “not applied in a discriminatory,

arbitrary, or capricious fashion”); Deesen v. Professional Golfers’

Ass’n, 358 F.2d 165, 168 (9th Cir.) (membership “open to all persons

on the same terms” and rules not applied “in an arbitrary and un-

reasonable manner”), cert. denied, 385 U.S. 846 (1966) ; Brenner v.

World Boxing Council, 675 F.2d 445, 455 (2d Cir.) (no evidence that

“rules are administered in an arbitrary and ad hoc fashion”), cert.

denied, 459 U.S. 835 (1982) ; United States v. New Jersey Auto Glass

Dealers’ Ass’n, 1960 Trade Cases (CCH) § 69,764, at 76,978 (D.N.J.

1960) (consent decree requiring open membership but allowing ex-

pulsion for legitimate reasons such as “failure to pay dues”). But

cf. cases cited infra notes 4 & 5.

10

to [plaintiff] arbitrarily or discriminatorily.” Notably,

the rationale for the rule at issue in 2. A. McQuade is

virtually identical to the rationale for the member-

ship requirement in this case: Both served to encourage

participation in a listing service by providing “assurance

that other [participants] were themselves responsible.”

Id.; see Pet. 4-5 (quoting Pet. App. 27a).

The facts of this case also are comparable to those in

Ralph C. Wilson Indus., Inc. v. Chronicle Broadcasting

Co., 794 F.2d 1359, 1366 (9th Cir. 1986). There, as here,

despite the allegation of a “boycott,” the defendant as-

sociation did not exclude anyone: The only obstacle to

plaintiff’s obtaining the association’s services was plain-

tiff’s unwillingness to join the association at the pre-

vailing “membership rates, [which were] predetermined

at an equal rate for all stations within the same market.”

Id. The court therefore ordered judgment for the asso-

ciation. Jd. Had the Eleventh Circuit employed the Ninth

Circuit’s analysis in Wilson or the Fifth Circuit’s in Mc-

Quade, it would have affirmed the judgment of the dis-

trict court dismissing plaintiffs’ complaint.

The Eleventh Circuit’s decision with respect to re-

spondents’ tying claim also is inconsistent with prevail-

ing authority. As demonstrated in the petition, the

Eleventh Circuit’s decision creates the prospect of per se

liability whenever an association offers a valuable service

and has engendered good will—a result that is inconsist-

ent with the conclusion in Associated Press and other

cases that such arrangements do not violate Section 1.

See Pet. 21-24. And as discussed supra, p. 7 & n.2, the

court also erred in treating association membership as

a product separate from the services the association pro-

vides for purposes of tying analysis. The Eleventh Cir-

cuit’s mechanical application of the separate products

test in Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466

U.S. 2, 21-22 (1984), without regard to functional or

efficiency concerns, has produced an untenable result. See

11

Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737

F.2d 698, 703-04 (7th Cir.) (explaining how separate

products test, applied mechanically, leads to absurd re-

sults “that a sugary cereal was a tie-in ( sugar tied to

cereal)” or that “belts are tie-ins of buckles to straps’’),

cert. denied, 469 U.S. 1018 (1984).

The Eleventh Circuit decision thus conflicts with other

association cases and with sound antitrust principles. It

also compounds the confusion created by other cases in

which the Sherman Act has been applied to associations

in a manner apparently inconsistent with Associated

Press. Associations sponsoring trade shows, for example,

have been required to allow non-members to participate

in those events. And one court of appeals has reversed

a finding of summary judgment for the defendant asso-

ciation even though there appeared to be no evidence

that membership rules were unreasonable or discrimina-

tory.” By compounding the uncertainty that these deci-

sions have created over the application of the Sherman

Act to an association’s membership requirements, the

Eleventh Circuit’s decision underscores the need for a

definitive ruling from this Court.

3. Quite apart from whether the decision below is

correct, the more than 20,000 national associations in

this country need a clear statement as to the applica-

bility of the Sherman Act to their membership rules. The

interlocutory posture of this case therefore is no reason

to deny the petition. The holding of the Eleventh Circuit

4 See United States v. Western Winter Sports Representatives

Ass’n, 1962 Trade Cases (CCH) {| 70,418, at 9 76,683 (N.D. Cal.

1962) (consent decree prohibits association from limiting participa-

tion in trade show to association members) ; National Ass’n of

Women’s & Children’s Apparel Salesmen, Inc. v. FTC, 479 F.2d 139,

142-43 n.7 (5th Cir.) (FTC cease-and-desist order, not challenged on

merits, prohibits limiting trade show to members), cert. denied, 414

U.S. 1004 (1973).

© See McDonnell v. Michigan Chapter No. 10, 587 F.2d 7, 8-9 (6th

Cir. 1978).

12

denands the immediate attention of every national

association.

National associations must adopt national rules regard-

ing such basic issues as membership requirements. These

associations therefore face the difficult questions whether

and how to revise national policies to ensure compliance

in all jurisdictions, including the Eleventh Circuit. As

a result of the potential liability created by the decision

below, they face these questions now. Because national

associations need a uniform rule in this important and

recurring area of antitrust law, this Court should grant

the petition and clarify their responsibilities to non-

members.

CONCLUSION

For the foregoing reasons and those stated in the peti-

tion, the petition for a writ of certiorari should be

granted.

Respectfully submitted,

FRANK M. NORTHAM FRANK M. NORTHAM *

AMERICAN SOCIETY OF 1747 Pennsylvania Avenue, N.W.

ASSOCIATION EXECUTIVES Suite 1000

1575 Eye Street, N.W. Washington, D.C. 20006

Washington, D.C. 20005 (202) 785-9500

KIRK B. JOHNSON * Counsel of Record

EDWARD B. HIRSHFELD

MICHAEL L. ILE

AMERICAN MEDICAL ASSOCIATION

515 North State Street

Chicago, Illinois 60610

(312) 464-4600

13

MARY K. LOGAN

THOMAS H. BOERSCHINGER

AMERICAN DENTAL ASSOCIATION

211 East Chicago Avenue

Chicago, Illinois 60611

(312) 440-2889

GARY KOMAROW

NATIONAL ASSOCIATION OF HOME BUILDERS

1201 15th Street, N.W.

Washington, D.C. 20005

(202) 336-8217

ROBERT COHEN

NATIONAL ASSOCIATION OF SOCIAL WORKERS

750 First Street, N.E., Room 808

Washington, D.C. 20002

(202) 408-8600

G. TIMOTHY LEIGHTON

NATIONAL ASSOCIATION OF TRUCK STOP OPERATORS

1199 North Fairfax Street, Suite +801

Alexandria, Virginia 22314

(703) 549-2100

February 7, 1992