NAR hit with another lawsuit over ‘forced membership’
A case filed in Pennsylvania challenges membership rules and accuses associations of discriminatory treatment of minority real estate professionals.
The National Association of Realtors is, once again, the target of litigation from within the industry.
A new lawsuit filed last week challenges NAR's mandatory membership policies, similar to an earlier case filed in Michigan, but the latest suit also includes allegations of discrimination.
The case: On Oct. 16, Maurice Muhammad of Progressive Realty filed a complaint in U.S. District Court's Eastern Pennsylvania district over a policy that requires agents to join NAR in order to gain access to listings on association-owned MLSs.
The Pennsylvania Association of Realtors and the Greater Lehigh Valley Multiple Listing Service were also named as defendants.
The suit focuses on two related areas: NAR membership policies in general, and the alleged discriminatory effects of those policies.
A membership monopoly: In the filing, Muhammad argues that mandatory NAR membership violates antitrust laws "by maintaining a monopoly over MLS services and forcing real estate professionals into mandatory membership" with the three parties named in the suit — NAR, the state association in Pennsylvania and the Greater Lehigh Valley MLS, which is owned and operated by Greater Lehigh Valley Realtors.
Due to the structure of association-owned MLSs, "real estate professionals are compelled to join NAR to gain access to MLS listings, without which they cannot conduct business effectively," Muhammad claims.
Discrimination, selective discipline and a lack of representation: Muhammad further alleges that such policies have led to "a coercive environment that disproportionately affects minority professionals who lack the financial resources to afford mandatory membership fees" and who "receive little to no benefit from such membership and face discrimination within these organizations."
Specific discriminatory practices, according to the filing, include "selective enforcement of professional rules, inequitable application of disciplinary measures, and the exclusion of minority professionals from leadership positions." Muhammad cites the "overwhelmingly non-diverse" leadership structures at the three organizations as a contributing factor.
While the filing doesn't provide details, Muhammad asserts that he personally received discriminatory treatment "including biased handling of complaints and unfair enforcement of membership obligations."
What the plaintiff is seeking: Along with the elimination of membership requirements, Muhammad is requesting a number of reforms, including policies that ensure greater representation of minority professionals in decision-making roles at the associations and the establishment of an impartial dispute resolution system.
He has also asked for monetary compensation of no less than $5.6 million in addition to punitive damages.
Related complaints: In August, a group of Michigan agents sued NAR as well as their state and local Realtor associations over the mandatory membership rule. The lawsuit came after the plaintiffs said they contacted the organizations multiple times to request MLS access without a membership requirement.
The Alabama Association of Realtors took a different approach in September, bypassing litigation but sending a letter to NAR asking the national trade group to allow Alabama Realtors to choose which associations they want to join. NAR's "Three-Way Agreement" requires members of local associations to also join (and pay dues to) their state association and NAR.