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Tuesday, September 17, 2019

Sixth Circuit won't pierce corporate veil in class action against real estate companies

By Kyla Asbury | Nov 24, 2014

CINCINNATI (Legal Newsline) - A federal appeals court has ruled that circumstantial evidence is insufficient to support "piercing the corporate veil" in a class action lawsuit against real estate companies.

The three-judge panel stated that, after its own independent review of the record, it agrees with the district court's conclusion that the circumstantial evidence is insufficient, according to an opinion filed Nov. 13 in the U.S. Court of Appeals for the Sixth Circuit.

The appeal was argued on March 18.

Chief Judge R. Guy Cole Jr. and circuit judges Alan E. Norris and Julia Smith Gibbons voted in the majority, with Norris authoring the opinion.

The panel states that it is mindful that the plaintiffs have come forward with a good deal of circumstantial evidence that supports its theory of collusion.

"What is missing, however, is the critical element mentioned in Matsushita and reiterated in Re/Max International: countering the conclusion reached by the district court that the conduct at issue was also consistent with permissible competition and therefore does not support an inference of antitrust conspiracy," the opinion states.

The class action lawsuit was initially filed in the U.S. District Court for the Western District of Kentucky on Oct. 11, 2005. On Nov. 7, 2008, the district court certified the class. The district court's order granting summary judgment to the defendants was filed under seal on July 18, 2012. The plaintiffs then appealed.

The plaintiffs - Casey William Hyland, Christopher R. Burnette and Mystic Burnette - claimed the defendants conspired to fix, maintain and inflate real estate broker commissions and associated fees in Kentucky.

Several of the original named defendants reached settlement agreements. HomeServices of America Inc., HomeServices of Kentucky Inc., Semonin Realtors, Rector-Hayden Realtors and McMahan Company Inc. are the remaining defendants.

The plaintiffs contend that the district court erred by granting summary judgment to defendants by excluding the opinions of the plaintiffs' experts with respect to the ultimate question of whether collusion among the defendants was the likely economic explanation of the pricing of commissions and by finding that defendant HomeServices of America Inc. was not responsible for the acts of its subsidiary, HomeServices of Kentucky Inc.

The panel states that because it holds that HSK did not engage in price fixing, HSA has no derivative liability.

"Moreover, our independent review of the record makes clear to us that, as the district court concluded, there is insufficient evidence to support piercing the corporate veil," the opinion states.

Hyland, the Burnettes and the class members are represented by Christopher Lovell of Lovell Stewart Halebian Jacobson LLP in New York.

The HomeServices defendants are represented by Robert D. MacGill and Karoline E. Jackson of Barnes & Thornburg LLP in Indianapolis.

McMahan is represented by Matthew C. Blickensderfer of Frost Brown Todd LLC in Cincinnati.

U.S. Court of Appeals for the Sixth Circuit case number: 12-5947

From Legal Newsline: Kyla Asbury can be reached at classactions@legalnewsline.com.

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