Opinion · Supreme Court of the United States

United States v. National Ass'n of Real Estate Boards

339 U.S. 485

Type
Opinion
Court
Supreme Court of the United States
Jurisdiction
Federal
Date
1950-06-05
Topic
general

How later courts describe this case

  • stating that a factual finding is not “clearly erroneous” merely because there are two permissible views of the evidence
  • deferring to the trial court’s findings based on a written code of ethics and bylaws
  • relying on federal tax cases to hold that directed verdict in criminal price-fixing trial did not bar civil suit, where civil suit was based solely on record made in criminal trial
  • "It is not enough (under Rule 52(a)) that we might give the facts another construction, resolve the ambiguities differently . . ."
  • “So long as reasonable minds could differ, we cannot say that one of those minds is clearly erroneous.”
  • judgment of acquittal in criminal action does not bar civil action based on same facts under res judicata principles because burden of proof was less stringent in civil action
  • civil and criminal actions for violation of Sherman Act
  • civil antitrust action permissible following criminal acquittal

Citator

UpLaw has not yet analyzed United States v. National Ass'n of Real Estate Boards. The absence of a flag is not a finding that it is good law.

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pending
Cited by
299 opinions

Headnotes

  1. Antitrust & Competition Law — Sherman Act § 3 — Local Conduct in the District of Columbia The absence of interstate commerce is no barrier to a suit to enjoin violations of § 3 of the Sherman Act involving purely local conduct in the District of Columbia, because Congress specifically made § 3 applicable to such conduct and had power to do so under Article I, § 8, Clause 17 of the Constitution. 339 U.S. at 488
  2. Antitrust & Competition Law — Price Fixing Price fixing is per se an unreasonable restraint of trade; an agreement shown either by adherence to a price schedule or by proof of consensual action fixing a uniform or minimum price is itself illegal under the Sherman Act, regardless of the end it was designed to serve, and it is not for the courts to determine whether in a particular setting price fixing serves an honorable or worthy purpose. 339 U.S. at 489
  3. Antitrust & Competition Law — Price Fixing The fact that no penalties are imposed for deviations from prescribed price schedules is immaterial to a finding of an illegal price-fixing scheme, because subtle influences may be as effective as the threat or use of formal sanctions in holding people in line. 339 U.S. at 489
  4. Antitrust & Competition Law — Sherman Act § 3 — "Trade" — Personal Services The business of a real estate broker is "trade" within the meaning of § 3 of the Sherman Act; the fact that the business involves the sale of personal services rather than commodities does not remove it from the category of trade, as the Act is aimed at combinations directed to control of the market by suppression of competition in the marketing of both goods and services. 339 U.S. at 489–492
  5. Antitrust & Competition Law — Labor Exemption — Inapplicability to Independent Brokers The services of real estate brokers cannot be assimilated to those of employees, nor compared to cases applying the antitrust laws to labor unions, notwithstanding § 6 of the Clayton Act declaring that the labor of a human being is not a commodity or article of commerce and exempting labor unions and their members from the antitrust laws; the brokers are entrepreneurs in business on their own, not parties to an employee-employer relationship to which the antitrust laws have made special concessions. 339 U.S. at 489–490
  6. Antitrust & Competition Law — Sherman Act — Meaning of "Trade" The word "trade" as used in the Sherman Act is employed in its broad sense, equivalent to occupation, employment, or business carried on for the purpose of profit or gain, and includes activities involving personal services as well as goods; the term encompasses all occupations in which men are engaged for a livelihood. 339 U.S. at 490–493
  7. Antitrust & Competition Law — Res Judicata — Prior Criminal Acquittal An acquittal in a criminal prosecution for conspiracy to violate § 3 of the Sherman Act is no bar to a subsequent civil suit to enjoin the same conspiracy, because the difference in the degree of the burden of proof in criminal and civil cases precludes application of the doctrine of res judicata; the civil action is independent of the criminal cause and is remedial in nature, aimed at putting an end to the restraint rather than imposing punishment for past acts. 339 U.S. at 492–494
  8. Civil Procedure — Findings of Fact — Clearly Erroneous Standard A district court's finding of fact will not be set aside unless clearly erroneous, and a reviewing court may not substitute its own construction of the facts, resolve ambiguities differently, or find a more sinister cast to actions the trial court apparently deemed innocent; the reviewing court's mandate is not to set aside findings of fact unless they are clearly erroneous. 339 U.S. at 494–496
UNITED STATESv. REAL ESTATE BOARDS,339 U.S. 485(1950)
70 S.Ct. 711
UNITED STATESv. NATIONAL ASSOCIATION OF REAL ESTATE BOARDS ET AL.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA.
No. 428.
Argued March 31, 1950.
Decided May 8, 1950.
1. That no interstate commerce is involved is not a barrier to a suit to enjoin violations of § 3 of the Sherman Act involving purely local conduct in the District of Columbia, since Congress specifically made § 3 applicable to such conduct and had power to do so under Art. I, § 8, Clause 17 of the Constitution.AtlanticCleaners Dyersv.United States,286 U.S. 427. P. 488.

2. If the business of a real estate broker is "trade" within the meaning of § 3 of the Sherman Act, evidence that the Washington Real Estate Board had adopted standard rates of commissions for its members, that its code of ethics required members to maintain such standard rates, that members agreed to abide by the code, and that the prescribed rates were used in the great majority of transactions, although the Board had invoked no sanctions for departure therefrom, is sufficient to show a price-fixing scheme violative of § 3. Pp. 488-489.
(a) That such price-fixing may serve a worthy or honorable end is immaterial. P. 489.
(b) That no penalties were imposed for deviations from the price schedules is immaterial. P. 489.


3. The business of a real estate broker is "trade" within the meaning of § 3 of the Sherman Act. Pp. 489-492.
(a) The services of real estate brokers cannot be assimilated to those of employees, nor can the present case be compared to those involving the application of the antitrust laws to labor unions — notwithstanding § 6 of the Clayton Act declaring that "the labor of a human being is not a commodity or article of commerce" and exempting labor unions and their members from the antitrust laws. Pp. 489-490.
(b) The fact that the business of a real estate broker involves the sale of personal services rather than commodities does not take it out of the category of "trade" within the meaning of § 3 of the Sherman Act, which is aimed at the fixing of prices andPage 486other unreasonable restraints in the case of services as well as goods. Pp. 490-491.
(c) The activity of a real estate broker is commercial and carried on for profit; and the competitive standards which the Sherman Act sought to preserve in the field of trade and commerce are as relevant to the brokerage business as to other branches of commercial activity. P. 492.


4. That appellees were acquitted in a criminal prosecution for conspiracy to violate § 3 of the Sherman Act is no bar to this civil suit to enjoin the same conspiracy, since the doctrine ofres judicatais not applicable.Helveringv.Mitchell,303 U.S. 391. Pp. 492-494.

5. The finding of the District Court that the National Association of Real Estate Boards and its executive vice president did not in fact conspire with the Washington Board to fix and prescribe the rates of commission to be charged by members of the latter is sustained, since it was not "clearly erroneous" within the meaning of Rule52of the Federal Rules of Civil Procedure. Pp. 494-496.84 F. Supp. 802, affirmed in part and reversed in part.
In a civil suit in a federal district court to enjoin a
conspiracy to fix rates of commissions of real estate brokers
in the District of Columbia in violation of § 3 of
the Sherman Act, judgment was entered for defendants.
84 F. Supp. 802. On appeal to this Court,affirmed in
part and reversed in part, p. 496.
The Assistant to the Attorney General FordandVictorH. Kramerargued the cause for the United States. With them on the brief wereSolicitor General Perlman,Assistant Attorney General Bergson, Herbert N. MaletzandJ. Roger Wollenberg.Roger J. Whitefordargued the cause for the National Association of Real Estate Boards et al., appellees. With him on the brief wasJohn J. Wilson.William E. Leahyargued the cause for the Washington Real Estate Board et al., appellees. With him on the brief wasWilliam J. Hughes, Jr.Page 487
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
This is a civil action brought by the United States to enjoin appellees1from engaging in a price-fixing conspiracy in violation of § 3 of the Sherman Act,26 Stat. 209,15 U.S.C. § 3.2The core of the case is the charge that the members of the Washington Real Estate Board combined and conspired to fix the commission rates for their services when acting as brokers in the sale, exchange, lease and management of real property in the District of Columbia.

The same conspiracy was charged in a criminal proceeding.3The criminal case was tried first. At the end of the Government's case the court granted the defendants' motion for a judgment of acquittal.80 F. Supp. 350. Appellees then moved for summary judgment in this civil suit, contending that the judgment of acquittal in the criminal case isresjudicatahere. That motion was denied.4Page 488

The civil case was then tried. It was stipulated that the trial would be on the record in the criminal case, the United States reserving the right to offer additional exhibits. No evidence was offered by appellees. The court entered judgment for the appellees, holding that the agreement to fix the rates of brokerage commissions, which had been shown, was not a violation of the Act.84 F. Supp. 802. The case is here on appeal.32 Stat. 823,62 Stat. 989,15 U.S.C. § 29.First. The fact that no interstate commerce is involved is not a barrier to this suit. Section 3 of the Sherman Act5is not leveled at interstate activities alone. It also puts beyond the pale certain conduct purely local in character and confined to the District of Columbia. That Congress has the power so to legislate for the District by virtue of Art. I, § 8, Clause 17 of the Constitution and did so by § 3 was settled byAtlantic CleanersDyersv.United States,286 U.S. 427,432-435.Second. The Washington Board has adopted standard rates of commissions for its members — charges which cover the wide range of services furnished by a real estate agent. The Board's code of ethics provides that "Brokers should maintain the standard rates of commission adopted by the board and no business should be solicited at lower rates." Members agree to abide by this code. The prescribed rates are used in the great majority of transactions, although in exceptional situations a lower charge is made. But departure from the prescribed rates has not caused the Washington Board to invoke any sanctions. Hence the District Court called the rate schedules "non-mandatory."

Enough has been said to show that under our decisions an illegal price-fixing scheme has been proved, unless thePage 489fixing of real estate commissions is not included in the prohibitions of § 3 of the Act. Price-fixing isper sean unreasonable restraint of trade. It is not for the courts to determine whether in particular settings price-fixing serves an honorable or worthy end. An agreement, shown either by adherence to a price schedule or by proof of consensual action fixing the uniform or minimum price, is itself illegal under the Sherman Act, no matter what end it was designed to serve. That is the teaching of an unbroken line of decisions. SeeUnited Statesv.Socony-Vacuum Oil Co.,310 U.S. 150,218et seq.; UnitedStatesv.Paramount Pictures,334 U.S. 131,142,143. And the fact that no penalties are imposed for deviations from the price schedules is not material. SeeEasternStates Lumber Assn. v.United States,234 U.S. 600,608-609;American Column Co. v.United States,257 U.S. 377,411;Federal Trade Commissionv.Pacific Paper Assn.,273 U.S. 52,62. Subtle influences may be just as effective as the threat or use of formal sanctions to hold people in line.Third. The critical question is whether the business of a real estate agent is included in the word "trade" within the meaning of § 3 of the Act. The District Court thought not. It was of the view that where personal services are involved, a combination to fix the price or compensation is legal. It seemingly was influenced by the declaration in § 6 of the Clayton Act,38 Stat. 731,15 U.S.C. § 17, that "the labor of a human being is not a commodity or article of commerce . . . nor shall such [labor] organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws." But we think it a misconception to assimilate the services involved here to those of employees or to compare the present case to those involving the application of thePage 490antitrust laws to labor unions. Cf.Apex Hosiery Co. v.Leader,310 U.S. 469;United Statesv.Hutcheson,312 U.S. 219. We do not have here any more than we did inAmerican Medical Assn. v.United States,317 U.S. 519, orUnited Statesv.Women's Sportswear Mfrs.Assn.,336 U.S. 460, cf.Columbia River Packers Assn. v.Hinton,315 U.S. 143, an aspect of the employee-employer relationship to which the antitrust laws have made special concessions.

Members of the Washington Board are entrepreneurs. Some are individual proprietors; others are banks or corporations. Some may have no employees; others have large staffs. But each is in business on his own. The fact that the business involves the sale of personal services rather than commodities does not take it out of the category of "trade" within the meaning of § 3 of the Act. The Act was aimed at combinations organized and directed to control of the market by suppression of competition "in the marketing of goods and services." SeeApex Hosiery Co. v.Leader, supra, p. 493.

Justice Story inThe Nymph, 18 Fed. Cas. 506, while construing the word "trade" in the Coasting and Fishery Act of 1793,1 Stat. 305, said,
"The argument for the claimant insists, that `trade' is here used in its most restrictive sense, and as equivalent to traffic in goods, or buying and selling in commerce or exchange. But I am clearly of opinion, that such is not the true sense of the word, as used in the 32d section. In the first place, the word `trade' is often, and indeed generally, used in a broader sense, as equivalent to occupation, employment, or business, whether manual or mercantile. Wherever any occupation, employment, or business is carried on for the purpose of profit, or gain, or a livelihood, not in the liberal arts or in the learned professions,Page 491it is constantly called a trade. Thus, we constantly speak of the art, mystery, or trade of a housewright, a shipwright, a tailor, a blacksmith, and a shoemaker, though some of these may be, and sometimes are, carried on without buying or selling goods."


It is in that broad sense that "trade" is used in the Sherman Act. That has been the consistent holding of the decisions. The fixing of prices and other unreasonable restraints have been consistently condemned in case of services as well as goods. Transportation services (United Statesv.Freight Assn.,166 U.S. 290,312;UnitedStatesv.Joint Traffic Assn.,171 U.S. 505), cleaning, dyeing, and renovating wearing apparel (Atlantic CleanersDyersv.United States,286 U.S. 427), the procurement of medical and hospital services (American MedicalAssn. v.United States, supra, 528), the furnishing of news or advertising services (Farmer's Guide Co. v.Prairie Co.,293 U.S. 268;Associated Pressv.UnitedStates,326 U.S. 1) — these indicate the range of business activities that have been held to be covered by the Act. InAtlantic Cleaners Dyersv.United States, supra, 435, 437, the Court rejected the view that "trade" as used in § 3 should be interpreted in the narrow sense which would exclude personal services. It held, speaking through Mr. Justice Sutherland, that § 3 used the word in the broad sense in which Justice Story used it inThe Nymph, supra. Chief Justice Groner made an extended analysis and summary of the problem inUnited Statesv.AmericanMedical Assn.,72 App.D.C. 12,16-20,110 F.2d 703,707-711, where the Court of Appeals for the District of Columbia held that the practice of medicine in the District was a "trade" within the meaning of § 3 of the Act. Its conclusion was that the term included "all occupations in which men are engaged for a livelihood." We doPage 492not intimate an opinion on the correctness of the application of the term to the professions. We have said enough to indicate we would be contracting the scope of the concept of "trade," as used in the phrase "restraint of trade," in a precedent-breaking manner if we carved out an exemption for real estate brokers. Their activity is commercial and carried on for profit. The fact that no goods are manufactured or bought or sold in the process is as irrelevant here as it was inAtlantic Cleaners Dyersv.United States, supra. No reason of policy has been advanced for reading § 3 of the Act less literally than its terms suggest. The competitive standards which the Act sought to preserve in the field of trade and commerce seem as relevant to the brokerage business as to other branches of commercial activity.Hopkinsv.United States,171 U.S. 578, andAndersonv.United States,171 U.S. 604, are not opposed to this conclusion. It was held in those cases that commission merchants and yard traders on livestock exchanges were not engaged in interstate commerce even though the livestock moved across state lines (cf.Staffordv.Wallace,258 U.S. 495), and therefore that the rules and agreements between the merchants and traders (which included in theHopkinscase the fixing of minimum fees) did not fall under the ban of the Sherman Act. But we are not confronted with that problem here. As noted, we are concerned here not with interstate commerce but with trade or commerce in the District of Columbia.Fourth. Appellees claim that the judgment of acquittal in the criminal action isres judicatain this action.Helveringv.Mitchell,303 U.S. 391, iscontraand rules this case. There Mitchell had been tried and acquitted of a criminal charge of wilfully attempting to evade payment of his income tax. Thereafter suit was brought toPage 493collect the taxes owed plus a 50 per cent penalty for fraudulent evasion. The acquittal in the criminal case was held not to be a bar to the collection of the penalty.6"The difference in degree of the burden of proof in criminal and civil cases" was held to preclude application of the doctrine ofres judicatain the civil suit.303 U.S. 397. In the present case the motions for judgment of acquittal raised the question whether the evidence overcame all reasonable doubt of the guilt of appellees.7The ruling on them did not determine whether by the lesser degree of proof required in a civil case appellees might be found to have conspired to fix commissions. The civil action is independent of the criminal cause (StandardSanitary Mfg. Co. v.United States,226 U.S. 20,52) and is remedial in nature. It has been repeatedly held that though the civil suit is bottomed on the same facts, it isPage 494not barred by the prior judgment of acquittal in the criminal case. SeeStonev.United States,167 U.S. 178;Murphyv.United States,272 U.S. 630;Helveringv.Mitchell, supra. The result is not altered by the circumstance that the court in ruling on the sufficiency of the evidence may have started with an erroneous construction of the law.Fifth. The District Court found that two of the appellees — National Association and Herbert U. Nelson8— did not conspire with the Washington Board to fix and prescribe the rates of commission to be charged by the members of the latter. No more particularized findings were made. Appellant asks us to set aside that ruling. The question is whether we may do so in light of Rule52of the Federal Rules of Civil Procedure which provides in part:
"Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses."


The National Association is a nationwide, incorporated trade association of which the Washington Board is a member. Active members of the Washington Board are also members of the National Association. The National Association has a code of ethics which includes an article stating that "the schedules of fees established by the various Real Estate Boards are believed to represent fair compensation for services rendered in their communities and should be observed by every Realtor." It is provided in the by-laws of the National Association (1) that each member board shall adopt the code of ethics of the National Association as a part of its rules and regulations for violation of which disciplinary action mayPage 495be taken, and (2) that any member board that neglects or refuses to maintain and enforce the code of ethics with respect to the activities of its constituent members may be expelled from membership in the National Association. The appellant also points to evidence showing the activities of the National Association in developing a national schedule of commissions which, it is alleged, were influential in shaping the fees adopted by the Washington Board in 1944.

Appellant relies chiefly on the code of ethics and by-laws of the National Association, as it clearly may (Associated Pressv.United States, supra, pp. 8, 12), to establish the restraint of trade. But we cannot say that the District Court was "clearly erroneous" in finding that the National Association and Nelson were not laced into the conspiracy to fix the commissions in the District of Columbia. The statement in the code of ethics that the schedule of fees "should be observed" is somewhat ambiguous. It may be advisory only. The provision of the by-laws that violations of the code of ethics of the National Association should be the basis of disciplinary action against both member boards and their constituent members is aimed at thirty-five articles of the code of ethics, not selectively at the fee provision. So we are left somewhat in doubt as to the extent if any to which the National Association and Nelson were architects of the fee-fixing conspiracy or participants in it. At best their relationship to it is, on this record, a somewhat attenuated one.

It is not enough that we might give the facts another construction, resolve the ambiguities differently, and find a more sinister cast to actions which the District Court apparently deemed innocent. SeeUnited Statesv.YellowCab Co.,338 U.S. 338,342;United Statesv.GypsumCo.,333 U.S. 364,394-395. We are not given thosePage 496choices, because our mandate is not to set aside findings of fact "unless clearly erroneous."

The judgment of the District Court is reversed except as to the National Association and Nelson; and as to them it is affirmed.So ordered.

MR. JUSTICE FRANKFURTER and MR. JUSTICE CLARK took no part in the consideration or decision of this case.
MR. JUSTICE JACKSON, dissenting.
If real estate brokerage is to be distinguished from the professions or from other labor that is permitted to organize, the Court does not impart any standards for so doing.

It is certain that those rendering many kinds of service are allowed to combine and fix uniform rates of pay and conditions of service. This is true of all laborers, who may do so within or without unions and whose unions frequently do include owners of establishments that employ others, such as automobile sales agencies. See, for example,International Brotherhood of Teamsters, etc. v.Hanke, ante, p. 470. I suppose this immunity is not confined to those whose labor is manual, and is not lost because the labor performed is professional. The brokerage which is swept under the antitrust laws by this decision is perhaps a borderline activity. However, the broker furnishes no goods and performs only personal services. Capital assets play no greater part in his service than in that of the lawyer, doctor or office worker. Services of the real estate broker, if not strictly fiduciary, are at least those of a trusted agent and, oftentimes, advisory as to values and procedures. I am not persuaded that fixing uniform fees for the broker's labor is more offensive to the antitrust laws than fixing uniform fees for the labor of a lawyer, a doctor, a carpenter, or a plumber. I would affirm the decision of the court below.Page 497
  1. Page 487 National Association of Real Estate Boards, a nation-wide incorporated trade association; Herbert U. Nelson, its executive vice-president; Washington Real Estate Board, an incorporated association of real estate brokers in Washington, D.C.; and 15 of its members individually and as representatives of a class consisting of all members of the Washington Board. ↩
  2. Page 487 "Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade or commerce in any Territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations, is declared illegal." ↩
  3. Page 487 The indictment was returned against the Washington Real Estate Board and the National Association of Real Estate Boards. ↩
  4. Page 487 An appeal from that order was dismissed. 85 U.S. App.D.C. 165,176 F.2d 631. ↩
  5. Page 487 See note 2,supra. ↩
  6. Page 493 Since the Court ruled that the 50 per cent penalty was not a criminal penalty but a civil administrative sanction (303 U.S. 398-406), the case was considered distinct fromCoffeyv.United States,116 U.S. 436, which held that the facts ascertained in a criminal case as between the United States and the claimant could not be again litigated between them in a civil suit which was punitive in character. The fact that in case of corporations dissolution can result from a civil suit under the antitrust laws does not make the proceeding any the less remedial. The civil suit aims to put an end to the restraint, not to impose punishment for past acts. SeeSchineTheatresv.United States,334 U.S. 110,128. ↩
  7. Page 493 The motions apparently were made under Rule29of the Federal Rules of Criminal Procedure which provides in part: "MOTION FOR JUDGMENT OF ACQUITTAL. Motions for directed verdict are abolished and motions for judgment of acquittal shall be used in their place. The court on motion of a defendant or of its own motion shall order the entry of judgment of acquittal of one or more offenses charged in the indictment or information after the evidence on either side is closed if the evidence is insufficient to sustain a conviction of such offense or offenses." ↩
  8. Page 494 See note 1,supra. ↩