Masiello v. Arizona Association of Realtors et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Joseph Masiello,
Plaintiff,
v.
Realty Executives LLC,
Defendant.
No. CV-24-00045-PHX-DLR
ORDER
Before the Court is Defendant Realty Executives, LLC’s motion to dismiss the
amended class action complaint. (Doc. 91.) The motion is fully briefed, and the Court heard
oral argument on October 21, 2025. (Docs. 94, 100, 104.) For the following reasons, the
motion is granted.
I. Background
Until recently, the National Association of Realtors (“NAR”) and its local chapters
had a longstanding “Buyer-Broker Commission Rule” (“the Rule”), which effectively
required home sellers to offer a percentage of their home’s sale price as commission for
the broker representing the buyer. (Doc. 85 at ¶¶ 1–3, 42.) If sellers did not comply with
the Rule, they would lose access to Multiple Listing Services (MLSs), databases where
virtually all homes in Arizona are sold. (Id. at ¶ 3.)
In 2021, Plaintiff Joseph Masiello sold his home on an Arizona MLS through
HomeSmart Holdings Inc, a large brokerage. (Id. at ¶ 18.) Mr. Masiello paid a 2%
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commission ($8,200) to the seller broker and a 2.5% commission ($10,250) to the buyer
broker. (Id.)
Mr. Masiello filed a class action complaint against more than a dozen real estate
brokers and local NAR chapters, alleging that an agreement to implement the Rule was an
anticompetitive conspiracy in violation of federal and state antitrust laws, 15 U.S.C. § 1
and A.R.S. § 44-1402. (Doc. 1 at ¶¶ 5–6.) Mr. Masiello alleges that several realty groups,
including Realty Executives, encouraged brokers and other affiliates to become members
of the NAR or its local chapters, served in leadership roles in the local NAR chapters, and
otherwise implemented the Rule “in the day-to-day transactions involving home sales in
Arizona.” (Doc. 85 at ¶ 6.)
Various Defendants, including HomeSmart, subsequently resolved their potential
liability through a nationwide NAR settlement and other settlements, leaving only two
Defendants named in the amended complaint: brokers Realty Executives and My Home
Group Real Estate, LLC. (Id. at ¶ 22.) The Court granted a stay to My Home Group pending
final approval of a settlement in the Western District of Missouri. (Doc. 98.) Realty
Executives, meanwhile, moved to dismiss for lack of Article III standing and antitrust
standing. (Doc. 91 at 3, 5.) As explained below, the Court agrees that Mr. Masiello lacks
Article III standing to complain about Realty Executives’ alleged anticompetitive conduct,
so the Court does not reach the antitrust standing issue.
II. Legal Standard
Under Article III of the Constitution, federal courts may adjudicate only “cases” or
“controversies.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 559 (1992). Standing is “an
essential and unchanging part of the case-or-controversy requirement of Article III.”
Wolfson v. Brammer, 616 F.3d 1045, 1056 (9th Cir. 2010) (quotation omitted). Article III
standing requires a plaintiff to show: (1) an “injury in fact,” (2) that is “fairly traceable” to
the defendant, and (3) a likelihood that the injury will be “redressed by a favorable
decision.” Lujan, 504 U.S. at 560–61 (citations and quotations omitted). “If none of the
named plaintiffs purporting to represent a class establishes the requisite of a case or
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controversy with the defendants, none may seek relief on behalf of himself or any other
member of the class.” O'Shea v. Littleton, 414 U.S. 488, 494 (1974).
III. Discussion
As a preliminary matter, Mr. Masiello alleges an injury in fact. Using data from
comparable international real estate markets, Mr. Masiello claims that an American home
seller should pay a commission fee of 3% or less in a competitive market. (Doc. 85 at ¶¶
59–60.) However, Mr. Masiello paid 4.5% in commission when he sold his home, totaling
$18,450. (Id. at ¶ 18.) Accepting these allegations as true, Mr. Masiello paid about 1.5%
more in commission than he should have paid in a competitive market, totaling
approximately $6,150.
The dispute here is about traceability. Mr. Masiello does not allege that he transacted
with Realty Executives. He instead transacted with HomeSmart and an unnamed buyer
broker. (Id.) Nonetheless, Mr. Masiello argues that his injury is fairly traceable to Realty
Executives’ conduct because Realty Executives participated in a conspiracy that harm him.
(See Doc. 94 at 4–5.)
Generally, “a plaintiff who has no cause of action against the defendant can not
fairly and adequately protect the interests of those who do have such causes of action. This
is true even though the plaintiff may have suffered an identical injury at the hands of a
party other than the defendant.” La Mar v. H & B Novelty & Loan Co., 489 F.2d 461, 466
(9th Cir. 1973) (internal quotations omitted). However, “this position does not embrace
situations in which all injuries are the result of a conspiracy or concerted schemes between
the defendants at whose hands the class suffered injury.” Id. “[T]he action of any of the
conspirators to restrain or monopolize trade is, in law, the action of all.” Beltz Travel Serv.,
Inc. v. Int’l Air Transp. Ass’n, 620 F.2d 1360, 1367 (9th Cir. 1980). Essentially, “[b]ecause
antitrust liability is joint and several, a Plaintiff injured by one Defendant as a result of the
conspiracy has standing to represent a class of individuals injured by any of the
Defendant’s co-conspirators.” See In re NASDAQ Mkt.-Makers Antitrust Litig., 169 F.R.D.
493, 508 (S.D.N.Y. 1996).
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When a conspiracy claim is necessary to the plaintiff’s theory of traceability, the
plaintiff must properly allege the conspiracy. After all, if a defendant did not plausibly
participate in a conspiracy that harmed the plaintiff, then the plaintiff’s injury cannot
plausibly be traced to defendant’s conduct. It therefore is proper for the Court to consider
whether Mr. Masiello has plausibly alleged that Realty Executives participated in a
conspiracy because doing so is necessary to resolve the issue of traceability.
An antitrust conspiracy is a tacit or express agreement to illegally restrain trade. Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 553 (2007). A plaintiff alleging conspiracy must
plead “allegations plausibly suggesting (not merely consistent with) agreement.” Id. at 545.
“[M]ere allegations of parallel conduct—even consciously parallel conduct—are
insufficient to state a claim under § 1 [of the Sherman Antitrust Act]. Plaintiffs must plead
something more, some further factual enhancement, a further circumstance pointing toward
a meeting of the minds of the alleged conspirators.” In re Musical Instruments & Equip.
Antitrust Litig., 798 F.3d 1186, 1193 (9th Cir. 2015) (citation and quotations omitted).
Facts pointing toward a conspiracy may include direct allegations of an agreement or
circumstantial “plus factors” that make it plausible to infer the existence of a conspiracy.
United States v. Apple, Inc., 791 F.3d 290, 315 (2d Cir. 2015). “Whereas parallel conduct
is as consistent with independent action as with conspiracy, plus factors are economic
actions and outcomes that are largely inconsistent with unilateral conduct but largely
consistent with explicitly coordinated action.” In re Musical Instruments, 798 F.3d at 1194.
Courts often conceptualize complex conspiracies as wheels. A “hub-and-spoke”
conspiracy consists of “both vertical agreements between the hub and each spoke and a
horizontal agreement among the spokes to adhere to the hub's terms, often because the
spokes would not have gone along with the vertical agreements except on the
understanding that the other spokes were agreeing to the same thing.” Apple, 791 F.3d at
314 (quotation omitted). By contrast, a “rimless” conspiracy “is one in which various
defendants enter into separate agreements with a common defendant, but where the
defendants have no connection with one another, other than the common defendant's
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involvement in each transaction.” Dickson v. Microsoft Corp., 309 F.3d 193, 203 (4th Cir.
2002).
A hub-and-spoke conspiracy may be treated as a single conspiracy in which all
participants are jointly and severally liable for any harm attributable to the conspiracy. See
In re Musical Instruments, 798 F.3d at 1192 (“One conspiracy can involve both direct
competitors and actors up and down the supply chain, and hence consist of both horizontal
and vertical agreements.”). However, “a rimless wheel conspiracy is not a single, general
conspiracy but instead amounts to multiple conspiracies between the common defendant
and each of the other defendants.” Dickson, 309 F.3d at 203. Thus, Mr. Masiello’s injury
can fairly be traced to Realty Executives if Realty Executives participated in the same
conspiracy as HomeSmart or the buyer broker that Mr. Masiello transacted with—that is,
if there was a horizontal agreement between the brokers.
Here, the allegations do not plausibly suggest a horizontal conspiracy between
brokers. In arguing otherwise at oral argument, Mr. Masiello cited Relevent Sports, LLC v.
United States Soccer Federation, Inc., where the court held that “adoption of a binding
association rule designed to prevent competition is direct evidence of concerted action.”
61 F.4th 299, 307–09 (2d Cir. 2023). Mr. Masiello argues that the fact that Realty
Executives adopted the Rule plausibly suggests on its own that Realty Executives was in a
horizontal conspiracy with other brokers who adopted the Rule. But the Court is not
persuaded that this is enough to allege an anticompetitive horizontal conspiracy when there
are non-conspiratorial reasons for adopting the Rule.
Mr. Masiello “fail[s] to account for conscious parallelism and the pressures of an
interdependent market.” In re Musical Instruments, 798 F.3d at 1195. “[V]ertical
agreements, lawful in the abstract, can in context be useful evidence for a plaintiff
attempting to prove the existence of a horizontal cartel, particularly where multiple
competitors sign vertical agreements that would be against their own interests were they
acting independently[.]” Apple, 791 F.3d at 319–20 (internal quotations and citations
omitted). But to account for conscious parallelism, a plaintiff generally must allege that
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“individual action would be so perilous in the absence of advance agreement that no
reasonable firm would make the challenged move without such an agreement.” In re
Musical Instruments, 798 F.3d at 1195; see also Twombly, 550 U.S. at 566–67 (finding that
“there was just no need for joint encouragement” to engage in allegedly anticompetitive
conduct when each competitor had an independent reason for wanting to engage in the
conduct). Nothing in the amended complaint suggests that it would be perilously
unreasonable for one broker to independently adopt the Rule.
In re Insurance Brokerage Antitrust Litigation is instructive here. 618 F.3d 300 (3d
Cir. 2010). There, commercial insurance purchasers sued insurers and insurance brokers
for entering formal “strategic partnerships,” wherein the brokers funneled clients to certain
insurers and insulated them from competition. See id. at 308, 312. In exchange, the insurers
paid the brokers contingent commission payments, which led to higher premiums for
purchasers. See id. The plaintiffs alleged that this was a hub-and-spoke conspiracy with the
brokers as the hub and the insurers as spokes in horizontal agreement. See id. at 327.
However, this was a rimless wheel conspiracy. See id. at 335–36. First, the existence
of the vertical agreements alone did not plausibly suggest a horizontal conspiracy between
the insurers. Id. at 327. Furthermore, although charging higher prices was theoretically
against the insurers’ competitive interests, the insurers had sufficient market incentive to
enter agreements with the brokers because the brokers controlled the market. Id. at 327–
28. The court wrote:
[T]he defendant brokers decided to consolidate the pool of
insurers to which they referred business in order to improve
efficiency and extract higher commissions from each of their
insurer-partners. As defendants point out, “[o]nce a broker
decided to organize its business in this fashion, each insurer
had sound, independent business reasons to pay contingent
commissions to become and remain a ‘preferred insurer.’
Paying such commissions helped the insurer to compete for
and retain a larger share of its partners' business than if it had
no such vertical relationships.” In short, the obvious
explanation for each insurer's decision to enter into a
contingent commission agreement with a broker that was
consolidating its pool of insurers was that each insurer
independently calculated that it would be more profitable to be
within the pool than without. The complaints themselves
reinforce this conclusion with their portrait of a concentrated
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brokerage market, in which a handful of brokers controlled the
majority of client business, and an unconcentrated, more
competitive market of insurers vying for premium dollars.
According to plaintiffs' own account, “[t]he Insurer Defendants
are thus largely dependent on the Broker Defendants to assure
access to business and protect their market share.” (“The close
bond between broker and client gives brokers tremendous
influence, and often decisive control, over the placement of
their clients' insurance business.”). Given this economic
landscape, each insurer had an obvious incentive to enter into
the “strategic partnerships” offered by the defendant brokers,
irrespective of the actions of its competitors.
Id. (citations to the record omitted).
This matter is remarkably similar. Both the brokers in Insurance Brokerage and the
NAR dominated their respective markets and accordingly incentivized compliance with
anticompetitive rules. Since at least the 1980s, the NAR has restricted access to MLSs
unless brokers complied with the NAR’s rules. (See Doc. 85 at ¶ 26). The NAR formally
adopted the Rule in 1996. (Id. at ¶ 31). Nearly all homes are sold on MLSs, so the NAR
largely controlled the real estate market. (Id. at ¶ 3). Mr. Masiello acknowledges that
“[a]ccess to MLSs was essential for brokers to effectively serve buyers and sellers in the
market.” (Id. at ¶ 67.) So, the NAR established a longstanding market structure wherein
brokers could either comply with the Rule and gain access to the critically important MLSs
or reject the Rule and lose access to the MLSs.
Thus, just as the insurers in Insurance Brokerage had strong independent incentives
to comply with the insurance brokers’ requirements, each real estate broker here had an
obvious incentive to agree to the Rule, irrespective of the actions of its competitors.1
Therefore, the mere fact that the brokers all adopted the Rule does not plausibly suggest
that there was a horizontal conspiracy among the brokers.
The amended complaint does not contain any other facts that might suggest a
horizontal conspiracy between the brokers. It instead focuses on the separate relationships
1 This market structure does not excuse the real estate brokers from their
participation in the allegedly anticompetitive vertical conspiracies with the NAR and its
local chapters. See Flintkote Co. v. Lysfjord, 246 F.2d 368, 375 (9th Cir. 1957). Rather, the
market structure simply suggests that the brokers had rational incentives to comply with
the Rule beyond horizontal agreements with other brokers.
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between the local NAR chapters and each broker. (Doc. 85 at ¶¶ 51–55.) Thus, Mr.
Masiello at most alleges a rimless wheel conspiracy. The Court must therefore treat the
agreements between each broker and the local NAR chapters as separate conspiracies. Even
if Realty Executives entered an anticompetitive agreement with the NAR and its local
chapters, Realty Executives cannot be jointly and severally liable for the harm other
brokers caused Mr. Masiello. This means Mr. Masiello lacks Article III standing to sue
Realty Executives because his alleged injury is not fairly traceable to Realty Executives’
conduct.
IV. Leave to Amend
“The court should freely give leave when justice so requires.” Fed. R. Civ. P.
15(a)(2). However, a “court may deny such a motion if permitting an amendment would
prejudice the opposing party, produce an undue delay in the litigation, or result in futility
for lack of merit.” Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). Mr.
Masiello does not request leave to amend in his moving documents, nor has he filed a
motion for leave to amend under Local Rule 15.1(a). Moreover, at oral argument, Mr.
Masiello indicated that he has no additional facts to allege beyond those found herein to be
deficient. Therefore, the Court will not grant Mr. Masiello leave to amend because doing
so would be futile.
V. Conclusion
In sum, Mr. Masiello lacks Article III standing because his theory of traceability
depends on alleging a horizontal conspiracy between Realty Executives and other brokers,
but the amended complaint fails to do so.
IT IS ORDERED that Realty Executives’ Motion to Dismiss (Doc. 91) is
GRANTED. Mr. Masiello’s claims against Realty Executives are DISMISSED.
Dated this 27th day of January, 2026.
Douglas L. Rayes
Senior United States District Judge
Case 2:24-cv-00045-DLR Document 105 Filed 01/27/26 Page 8 of 8