UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF KENTUCKY
UNITED STATES OF AMERICA,
KENTUCKY REAL ESTATE COMMISSION,
| Civil Action No. 3:05-cv-00188-S
AMENDED FINAL JUDGMENT
WHEREAS, Plaintiff, United States of America, filed its Complaint
on March 31, 2005, and Plaintiff and Defendant, by their respective
attorneys, have consented to the entry of this Final Judgment, as amended
on July 15, 2005 (the "Amended Final Judgment"), without trial or adjudication
of any issue of fact or law, and this Amended Final Judgment shall not
be evidence against or an admission by any party regarding any issue
of fact or law;
AND WHEREAS, Defendant agrees to be bound by the provisions of this
Amended Final Judgment pending its approval by the Court;
AND WHEREAS, Plaintiff requires Defendant to take certain actions
for the purpose of remedying the loss of competition alleged in the
AND WHEREAS, Defendant has represented to the United States that the
actions required below can and will be made and that Defendant will
later raise no claim of hardship or difficulty as grounds for asking
the Court to modify any of the provisions contained below;
NOW THEREFORE, before any testimony is taken, without trial or adjudication
of any issue of fact or law, and upon consent of the parties, it is
ORDERED, ADJUDGED, AND DECREED:
This Court has jurisdiction over the subject matter of and each of the
parties to this action. The Complaint states a claim upon which relief
may be granted against Defendant under Section 1 of the Sherman Act, as
amended, 15 U.S.C. § 1.
As used herein, the term:
- "Defendant" means the Kentucky Real Estate Commission, its successors
and assigns, and its commissioners, directors, officers, managers,
committees, agents, and employees.
- "Disciplinary Action" means:
- the Defendant's revocation or suspension of, or refusal to grant,
a license to provide Real Estate Brokerage Services in Kentucky;
- the Defendant's imposition of a reprimand, fine, probation,
or other penalty or condition; or
- the initiation, by the Defendant or at its request, of an administrative,
criminal, or civil proceeding.
- "Enforcing" a Regulation means any manner--formal or informal--in
which Defendant requires compliance with any Regulation, including,
but not limited to, investigations or hearings of purported violations
of the Regulation, and any Disciplinary Actions for any violation
of the Regulation.
- "Inducement" means money, a free gift, a prize, or any other thing
of value that a Licensee would offer a potential client or customer.
- "Licensee" means any person who is licensed by Defendant under
chapter 324 of the Kentucky Revised Statutes or any future recodification
thereof and legally can perform acts of real estate brokerage, and
any person who legally can perform acts of real estate brokerage
while acting under the supervision of a licensed broker.
- "Licensee Price" means any commission, fee, or charge that the
Licensee offers to charge, or does charge, for its Real Estate Brokerage
Services, and includes any discounts.
- "Price Advertising" means advertising information about the Licensee
Price or any discount, Rebate, or Inducement.
- "Real Estate" means real property, and includes timeshares, options,
leaseholds, and other interests less than leaseholds.
- "Real Estate Brokerage Services" means any service that only a
Licensee is authorized to provide pursuant to applicable Kentucky
statutes and regulations.
- "Rebate" means a payment of monies or anything of value by, or
on behalf of, a Licensee to a client or customer (or to a third
party authorized by the client or customer to receive the payment)
that is in connection with the provision of Real Estate Brokerage
Services. Examples of Rebates directed to third parties include,
but are not limited to, payments to charities, home inspectors,
and moving services. A Rebate does not include compensation paid
for Real Estate Brokerage Services to any third party who is not
licensed in Kentucky to perform such services; this Amended Final
Judgment does not authorize a client or customer to permit or direct
such payments to an unlicensed third party for performing such services.
- "Rebate Ban" means any Regulation, including, but not limited
to, the Defendant's Regulation at 201 Ky. Admin. Reg. 11:011, Section
1(5) and 201 Ky. Admin. Reg. 11:121, Section 1(2), that might prevent
Licensees from offering or using any Licensee Price, discounts,
Rebates, or Inducements, or using any Price Advertising to notify
consumers of any Licensee Price, discounts, Rebates, or Inducements.
- "Regulation" means any Kentucky administrative regulation, and
includes any formal or informal policy, restriction, rule or legal
interpretation adopted or applied by Defendant.
This Amended Final Judgment applies to the Kentucky Real Estate Commission,
as defined above, and all other persons in active concert or participation
with it who receive actual notice of this Amended Final Judgment by
personal service or otherwise.
IV. PROHIBITED CONDUCT
Defendant is enjoined from, directly or indirectly, or through any Regulation,
Disciplinary Action or other conduct:
- Entering into, continuing, maintaining, or renewing any agreement,
contract, or Regulation to fix, establish, raise, stabilize, suppress,
eliminate, regulate, or maintain the level of commissions, discounts,
Rebates, Inducements, or the Licensee Price;
- Prohibiting, restricting, impeding, or discouraging any Licensee
from Price Advertising or from offering any Licensee Price, discounts,
Rebates, or Inducements;
- Investigating any Licensee for Price Advertising or for offering
any Licensee Price, discounts, Rebates, or Inducements;
- Threatening or taking any Disciplinary Action against any Licensee
for Price Advertising or for offering any Licensee Price, discounts,
Rebates, or Inducements;
- Enforcing the Rebate Ban; or
- Inducing, urging, encouraging, or assisting any person or organization
to take any of the actions prohibited by this Section of the Amended
V. OTHER ACTIONS
- Until the Rebate Ban is repealed and eliminated, Defendant shall
treat the Rebate Ban as preempted by the federal antitrust laws
and null and void.
- Defendant shall address the substance of this Amended Final Judgment--including
that Licensees are free to compete by offering any Licensee Price,
discounts, Rebates, or Inducements--in the training or educational
materials that Defendant prepares, reviews, or approves for the
following courses (including any course in the future, which may
have a different name, but covers substantially the same topics):
the Kentucky Core course, the Brokerage Management course, and a
- All Disciplinary Actions--to the extent they related to the offering
of any discounts, Rebates, or Inducements--shall be null and void.
Any records in the Defendant's possession, custody, or control relating
to a Licensee subject to such Disciplinary Action shall reflect
- Within thirty (30) days from July 13, 2005, Defendant shall notify
- each Licensee who--as of July 13, 2005--is on probation or whose
license is suspended or revoked for offering a discount, Rebate,
or Inducement, that the license may be reinstated, at the Licensee's
request, to the extent that the Licensee otherwise meets the contemporary
licensing requirements under the Kentucky Revised Statutes.
- each Licensee, who--as of July 13, 2005--is being investigated
or subject to a Disciplinary Action for offering a discount, Rebate,
or Inducement, that such investigation or action--to the extent
it relates to the offering of discounts, Rebates, or Inducements--has
ceased with no further Disciplinary Action taken. Any records
in the Defendant's possession, custody, or control relating to
the affected Licensee shall reflect the same.
- Within one-hundred-and-twenty (120) days from July 13, 2005, Defendant
shall display prominently on the first page of its newsletter the
On July 13, 2005, under the terms of a settlement with the
U.S. Department of Justice Antitrust Division, the Kentucky Real Estate
Commission agreed to stop enforcing regulations that restricted the
use and advertisement of rebates, inducements or discounts by KREC licensees.
The proposed Amended Final Judgment effecting the settlement and a letter
of explanation were mailed to each KREC licensee. Any licensee who did
not receive this mailing may request another copy. Links to the proposed
Amended Final Judgment and the explanatory letter can also be found
on the "Real Estate Licensing Laws in Kentucky" and "Legal Information"
pages of KREC's website, http://www.krec.ky.gov/.
- Within thirty (30) days from July 13, 2005, Defendant shall mail
or deliver a copy of the proposed Amended Final Judgment, under
cover of the letter attached hereto as "Appendix A," to each Licensee.
- For a period of three (3) years from July 13, 2005, Defendant
shall mail or deliver a copy of the proposed Amended Final Judgment,
under cover of the letter attached hereto as "Appendix A," to each
new Licensee of Defendant within forty-five (45) days of each such
person's acceptance by Defendant as a Licensee.
- Within thirty (30) days from July 13, 2005, and for a period of
sixty (60) days thereafter,
- Defendant shall prominently publish the proposed Amended Final
Judgment and the letter attached hereto as "Appendix A" on the
home page of its website, http://www.krec.ky.gov/.
- After such sixty (60) day period, and for a following period
of three (3) years, Defendant shall maintain a link from its "Real
Estate Licensing Laws in Kentucky" and "Legal Information" web
pages, or their equivalent, to the Amended Final Judgment and
the letter attached hereto as "Appendix A" in a manner that provides
reasonable notice to interested parties.
- Defendant shall notify Plaintiff at least thirty (30) days prior
to any proposed change to its Regulations that may affect Defendant's
compliance obligations arising out of the Amended Final Judgment.
- As soon as Defendant is aware of any proposed change to any statute
or executive order that may affect its compliance obligations arising
out of the Amended Final Judgment, Defendant shall immediately notify
VII. LIMITING CONDITIONS
- With the exception of such actions that are prohibited elsewhere
in this Amended Final Judgment, nothing shall alter the Defendant's
general authority to adopt and enforce reasonable Regulations, or
to take Disciplinary or other action designed to prevent violations
of the Kentucky Revised Statutes. Such authority includes the right
- advertising that is fraudulent, false, deceptive, or misleading
within the meaning of Kentucky Revised Statutes, Chapter 324,
- any promise, assertion, representation, or statement of fact
that is false, deceptive, or misleading; or constitutes under
Kentucky law an otherwise illegal lottery scheme, whereby there
is the payment of valuable consideration for the chance to receive
a prize; or
- for the protection of the client or customer, failure by Licensees
to disclose in writing to their clients or customers the terms
of any offered Rebates or Inducements.
VIII. COMPLIANCE INSPECTION
- For the purposes of determining or securing compliance with this
Amended Final Judgment, or of determining whether the Amended Final
Judgment should be modified or vacated, and subject to any legally
recognized privilege, from time to time duly authorized representatives
of the United States Department of Justice, including consultants
and other persons retained by the United States, shall, upon written
request of a duly authorized representative of the Assistant Attorney
General in charge of the Antitrust Division, and on reasonable notice
to Defendant, be permitted:
- access during Defendant's office hours to inspect and copy,
or at Plaintiff's option, to require Defendant to provide copies
of, all books, ledgers, accounts, records and documents in the
Defendant's possession, custody, or control, relating to any matters
contained in this Amended Final Judgment; and
- to interview, either informally or on the record, Defendant's
commissioners, officers, employees, or agents, who may have their
individual counsel present, regarding such matters. The interviews
shall be subject to the reasonable convenience of the interviewee
and without restraint or interference by Defendant.
- Upon the written request of a duly authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
Defendant shall submit written reports or interrogatory responses,
under oath if requested, relating to any of the matters contained
in this Amended Final Judgment as may be requested.
- No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person
other than an authorized representative of the executive branch
of the United States, except in the course of legal proceedings
to which the United States is a party (including grand jury proceedings),
or for the purpose of securing compliance with this Amended Final
Judgment, or as otherwise required by law.
IX. RETENTION OF JURISDICTION
This Court retains jurisdiction to enable any party to this Amended Final
Judgment to apply to this Court at any time for further orders and directions
as may be necessary or appropriate to carry out or construe this Amended
Final Judgment, to modify any of its provisions, to extend the duration
of the Amended Final Judgment, to enforce compliance, and to punish violations
of its provisions.
X. EXPIRATION OF FINAL JUDGMENT
This Amended Final Judgment will expire ten (10) years from the date of
its entry, but only if the Rebate Ban has been repealed and eliminated.
For purposes of this Amended Final Judgment, any notice or other communication
shall be given to the person at the address set forth below (or such
other addresses as the recipient may specify in writing):
For the United States:
Litigation III Section
U.S. Department of Justice
325 Seventh Street, N.W., Suite 300
Washington, D.C. 20530
For the Defendant:
Lee B. Harris
Kentucky Real Estate Commission
10200 Linn Station Road, Suite 201
Louisville, KY 40223
With a copy to:
John S. Reed
David J. Hale
Reed Weitkamp Schell & Vice PLLC
500 West Jefferson Street, Suite 2400
Louisville, KY 40202-2812
XII. PUBLIC INTEREST DETERMINATION
Entry of this Amended Final Judgment is in the public interest.
Court approval subject to procedures
of Antitrust Procedures and Penalties
Act, 15 U.S.C. § 16
United States District Judge
(Letterhead of the Kentucky Real Estate Commission)
The Kentucky Real Estate Commission, under the terms of a settlement
with the U.S. Department of Justice, has agreed to stop enforcing regulations
that restricted the use and advertisement of rebates, inducements, or
discounts by you or any other licensee. A copy of the proposed Amended
Final Judgment is enclosed.
In order that you may readily understand the terms of the proposed
Amended Final Judgment, we describe below its essential provisions,
although you must realize that the proposed Amended Final Judgment itself
is controlling, rather than the following explanation of its provisions:
- The Commission must allow you or any other licensee to offer customers
rebates, discounts, or other inducements. The Commission must also allow
you or any other licensee to use truthful and non-misleading advertisements
to notify consumers of rebates, inducements, or other discounts, which
you may choose to offer.
- The Commission will no longer enforce any ban against rebates,
discounts, or other inducements. Specifically, the Commission will not
enforce the regulation at 201 Ky. Admin. Reg. 11:011, Section 1(5) and
201 Ky. Admin. Reg. 11:121, Section 1(2), that, in the absence of the
proposed Amended Final Judgment, had prevented you from offering rebates,
discounts, or other inducements.
- You and any other licensee are now free to compete by offering
consumers rebates, discounts, and other inducements.
- If you were disciplined for offering a rebate, discount, or other
inducement, then that disciplinary action shall be deemed null and void,
and the Commission will note that in its records.
Please note that the proposed Amended Final Judgment does not alter
the Commission's authority to enforce its regulations generally and
to prohibit advertising or other conduct that is fraudulent, false,
deceptive, or misleading. Moreover, licensees still cannot offer illegal
lottery schemes. Also enclosed are the relevant portions of a new Kentucky
Administrative Regulation filed July __, 2005. This regulation requires
licensees to disclose in writing to their clients and customers the
terms of all rebates and inducements.
|| [appropriate Commissioner or officer]