The opinion of the court was delivered by: LEISURE
LEISURE, District Judge :
Plaintiff, The Brokers' Assistant ("TBA"), a real estate brokerage service firm, brings suit against defendants, Williams Real Estate Co., Inc. ("Williams"), Edward S. Gordon Company, Inc. ("Gordon"), Cushman & Wakefield, Inc. ("Cushman"), and Cross & Brown Co. ("Cross") (hereinafter referred to collectively as "defendants"), allegedly for unlawfully refusing to provide information to TBA, with the intent of putting TBA out of business, as well as limiting competition in the real estate brokerage industry. In this action TBA raises the following three claims: (1) violation of § 1 of the Sherman Act, 15 U.S.C. § 1 (1985 & Supp. 1986), (2) violation of the Donnelly Act, N.Y. Gen. Bus. Law § 340 (McKinney 1968), and (3) tortious interference with TBA's business relations with third-parties.
Williams, Cushman, and Cross counterclaim that TBA obtained its listing information improperly and that it engaged in unfair competition. Cross further counterclaims for copyright infringement. Finally, Cushman counterclaims for TBA's alleged violation of Section 443 et seq. of the N.Y. Real Prop. Law (McKinney 1968).
At this juncture, TBA has moved for leave to amend its complaint to add a request for punitive damages under its tortious interference claim. Fed. R. Civ. P. 15(a). Defendants have cross-moved for summary judgment and in opposition to TBA's motion for leave to file its amended complaint. TBA has also moved for summary judgment to dismiss defendants' counterclaims.
In order for movants to succeed on their motions for summary judgment, they must meet the difficult burden imposed under Fed. R. Civ. P. 56. The movants must "show that there is no genuine issue as to any material fact" and that they are "entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The nonmovant is "to be given the benefit of all reasonable doubts in determining whether a genuine issue of material fact exists." Reading Industries, Inc. v. Kennecott Copper Corp., 631 F.2d 10, 13 n.6 (2d Cir. 1980), cert. denied, 452 U.S. 916, 69 L. Ed. 2d 420, 101 S. Ct. 3051 (1981) (citation omitted). See also United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962); Bailey v. Hartford Fire Ins. Co., 565 F.2d 826, 830 (2d Cir. 1977). "The Court may determine only whether issues of fact exist; it may not pass any judgment on the quality of the proof by trying such factual issues." Martin Ice Cream Co. v. Chipwich, Inc., 554 F. Supp. 933, 935 (S.D.N.Y. 1983). Accord Wilson-Rich v. Don Aux Assocs., Inc., 524 F. Supp. 1226, 1229 (S.D.N.Y. 1981). Moreover, it must draw all reasonable inferences in favor of the party opposing the motion. Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir. 1980).
Even though the Court characterizes the burden imposed by Rule 56 as difficult, this does not imply that it is unduly cautious with respect to ruling on motions for summary judgment. The Court recognizes that frivolous litigation can impose high costs on blameless parties. See United States v. Matheson, 532 F.2d 809, 813 (2d Cir.), cert. denied, 429 U.S. 823, 50 L. Ed. 2d 85, 97 S. Ct. 75 (1976). It is also aware of the recent Supreme Court and Second Circuit decisions, see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Celotex Corp. v. Catrett, 474 U.S. 944, 106 S. Ct. 342, 88 L. Ed. 2d 285 (1986); Argus Inc. v. Eastman Kodak Co., No. 85-7549 (2d Cir. Sept. 8, 1986), which indicate a growing willingness on the part of the federal courts to use summary judgment as an effective tool for expediting litigation. This trend notwithstanding, the Court concludes that, for the reasons set forth below, the instant motions for summary judgment must be denied.
With respect to TBA's motion to amend its complaint, movant's burden is lighter. Rule 15(a) requires courts to grant leave to amend freely "when justice so requires." Consistent with the liberal policy behind this rule, the Court hereby grants TBA's motion for leave to amend its complaint.
Defendants are licensed real estate brokers. They act as leasing agents and brokers of commercial office space in the New York metropolitan area. Defendants do business, in part, by entering into exclusive listing agreements with owners of office buildings. Defendants also represent tenants looking for commercial space. Defendants are paid a commission when one of their exclusive listings is leased or when a tenant they represent leases space.
Brokers need information in order to do business. As TBA notes, "[t]he more information a broker has, and the better he is able to organize and use it, the better he will be able to match tenants with owners and thereby earn commissions."
Brokers use various forms of listing services to match prospective tenants with appropriate spaces. The larger brokers, including defendants, maintain and distribute their own listings. Smaller brokers use less sophisticated methods to keep track of available space.
Defendants allege that, in the past, they have only permitted licensed real estate brokers, and certain owners whose property defendants manage, to have access to defendants' listing information. In addition, defendants insist that the brokers' use of the information is restricted to submission to prospective tenants seeking to lease space. TBA also allegedly restricts the use of the information it provides in this manner.
TBA, however, puts these facts in dispute by introducing evidence that "defendants widely disseminate information about their exclusive listings . . . ."
TBA charges that "defendants maintain lists of thousands of people to whom they send collections of listings at regular intervals."
Moreover, as TBA points out, broad distribution of this information is consistent with defendants' interests because defendants, as agents for building owners, cannot make deals if customers are unaware of available space.
The extent of the distribution of defendants' listing information is a genuine issue in dispute. The materiality of this dispute will become more clear upon discussion of the law governing this matter.
TBA is a young company, founded with the purpose of applying computer technology in the field of commercial real estate. Specifically, TBA has sought to develop a service which organizes and makes available to brokers current information regarding the real estate market. However, TBA does not engage in the brokerage business per se.
TBA provides its subscribers with access to TBA's data base of real estate listings. According to TBA, this enables the subscriber to "locate all available space of any desired size, at any desired location, and in any desired price range . . . ."
TBA contends that its service can benefit all brokers by increasing the amount of usable information available in the market.
Defendants challenge this description of TBA's service. They argue that TBA merely redistributes listings provided by the brokers. TBA responds by pointing out that "it is the formatting, updating and customizing" of information, and not its mere listing, that is valuable to subscribers.
Therefore, another genuine issue in dispute is the extent to which TBA does more than just republish lists.
TBA spent considerable time developing its service. It purchased equipment, hired staff
and designed computer programs.
TBA also surveyed the real estate community to gauge the community's interest in its service. TBA prepared financial predictions and it joined the Real Estate Board of New York. Especially significant in this case, TBA contacted each of the defendants and arranged to be placed on their mailing lists and to receive updates of their exclusive listings from their listings departments. TBA arranged to receive similar listings from hundreds of other brokers.
In July 1983, TBA began soliciting and selling subscriptions for its services. TBA promoted its business through advertising, telephone, and on-site demonstrations. Within eight months, TBA had enlisted thirty-five subscribers, paying total fees of $21,000 on a monthly basis. Subscribers were enthusiastic about
This juncture marks another considerable point of departure between the parties. Defendants vaguely assert, both as a defense to TBA's claims and as a component of their misappropriation claims, that TBA obtained defendants' listing information improperly. However, the evidence submitted by TBA indicates that defendants were aware of, and consented to, TBA's access to and use of defendants' information.
This set of facts is also in dispute, thus rendering summary judgment inappropriate. the service. Even non subscribers appeared to appreciate the benefit TBA conferred upon the real estate market.
During this time TBA obtained and verified, through telephone conversations, more listing information from defendants. The frequency of these telephone conversations ranged from bi-weekly to monthly. However, the length of these telephone conversations and their importance to TBA are issues in dispute.
Michael Cohen ("Cohen"), a Vice-President and member of the Executive Policy Committee of defendant Williams, visited TBA's offices in January 1984. In a conversation with Steven Gross ("Gross"), a Vice-President of TBA, Cohen said he was the son of Jerry Cohen, owner of Williams. It is in dispute whether upon this visit Cohen also said he intended to put TBA out of business. It is undisputed that at this meeting Cohen also told Gross that major brokerage firms, including defendant Williams, would from that time on refuse to provide TBA with listings of available space. Finally, Cohen said that, ten years before, his father had put another listing service out of business.
Subsequent to this conversation, Cohen called the presidents of defendants. Cohen described the substance of the conversations he had with these individuals in the following way:
[I said that Williams] had just learned about TBA and what it did and the fact that it was apparently obtaining, without the knowledge or consent of officers of Williams, a copy of our list of available space for republication and resale purposes and also listing information from the listing departments of several other large brokerage firms in New York City.
Cohen also stated during these conversations that Williams had stopped providing TBA with the listing information. He asked each person what his firm was doing or would do about the situation.
TBA disputes this version of the conversations Cohen had with the presidents of defendants. TBA does not have direct evidence of these particular conversations. However, TBA does produce evidence of another conversation that Cohen had with an executive at another real estate brokerage firm. Plaintiff contends that this later conversation is a more accurate representation of what actually took place in all the conversations.
Dennis Karr, a Senior Vice President of Jones, Lang Wooton, a non-party competitor of defendants, testified that in a conversation he had with Cohen, "[Cohen] said a group of firms had decided collectively that they were not going to provide their listing information to [TBA]."
Karr testified that Cohen said that he had
[c]ome to an agreement or come to a conclusion with several other firms that they would withhold listings information from [TBA]. [Cohen] asked [Karr] to consider that [Jones, Lang Wooton] similarly withhold their -- our listings information on our agency buildings from [TBA].
TBA alleges that, within a week of Cohen's phone calls, the presidents of defendants promptly instructed their employees to cease doing business with TBA. Defendants' employees could no longer provide information to TBA on the phone. Defendants also removed TBA from their mailing list. When Cohen was later asked by Gross about defendants' simultaneous refusal to do business with TBA, Cohen said he was not claiming that it was a "coincidence."
Another material fact in dispute in this case involves the timing of Williams' and the other defendants' cutting off of TBA. It is undisputed that Williams had already implemented its new policy of severing TBA's information access before Cohen's phone calls. TBA charges, in the face of defendants' denials, that defendants immediately cut off TBA after their phone conversations with Cohen.
Cushman responds to TBA's version of the facts by alleging that after Cohen's phone call, it conducted its own investigation of TBA before cutting TBA off. This allegation is in sharp contrast with evidence introduced by TBA to the effect that Cushman cut off TBA while its president was still on the phone with Cohen.
Cross also claims that it did not sever relations with TBA immediately after Cohen's phone call. Cross alleges that after Cohen's phone call, its Vice-President of Administration was directed to conduct an investigation of TBA. However, in his deposition, the Vice-President denied knowledge of such a directive and admitted that he conducted no investigation.
Finally, TBA claims that Gordon's president told Cohen, on the phone, that he would "take care of it", presumably meaning TBA.
TBA claims that defendants' actions had a devastating impact on TBA. It is clear to this Court that, without information regarding the space handled by defendants, the value of TBA's service to its subscribers was certainly reduced. TBA's "faucet was turned off;"
it was "dead in the water."
The loss of TBA's access to defendants' information has made TBA's service less attractive. The once increasing number of TBA subscribers has leveled off. Subscribers have cancelled or reduced orders. Moreover, customers have warned that the decreased value of TBA's service may cause them to reconsider their subscriptions.
TBA has cut its staff and moved to smaller offices. TBA has curtailed its services and no longer provides listings of retail stores and industrial space. In sum, TBA's business has declined markedly.
Section 1 of the Sherman Act
In order to sustain its claim under Section 1 of the Sherman Act, plaintiff must establish two elements: first, that the defendants entered into a "contract . . . combination or conspiracy"; and second, that such agreement was in "restraint of trade or commerce among the several states." 15 U.S.C. § 1; Monsanto Co. v. Spray-Rite Serve Corp., 465 U.S. 752, 761, 79 L. Ed. 2d 775, 104 S. Ct. 1464 (1984).
The issue before this Court upon defendants' motion for summary judgment is not whether TBA has presented enough evidence to establish its antitrust claim. Rather, the Court only faces the question of whether defendants have satisfied their burden so as to be entitled to summary judgment.
The aforementioned standard governing the granting of summary judgment, see supra at 3-4, is modified somewhat by the law of antitrust. "[A]ntitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case." Matsushita, 106 S. Ct. at 1357. As the Supreme Court further noted:
conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. To survive a motion for summary judgment . . . a plaintiff seeking damages for a violation of § 1 must present evidence "that tends to exclude the possibility" that the alleged conspirators acted independently. [Plaintiff], in other words, must show that the inference of conspiracy is reasonable in ...