Kline v. Coldwell, Banker & Co.

In 1970, Mr. and Mrs. Kline (plaintiffs) sold their home in Los Angeles County for $42,500. They paid their real estate broker a 6 percent commission, totaling $2,550. Mr. and Mrs. Sherman also sold their home in Los Angeles County and paid a 6 percent commission totaling $2,700. The Klines later sued 32 named real estate brokers and five associations of brokers (brokers) (defendants), alleging that the named brokers and additional unidentified brokers had conspired to set an inflated commission rate for residential real estate sales. The complaint asked the district court to certify a class of approximately 400,000 sellers and a class of approximately 2,000 brokers. The Klines proposed to identify members of the class of brokers by having the court order the five named associations of brokers to provide lists of the names and addresses of all of their members during the four years prior to the filing of the lawsuit. The members of the class of sellers would then be identified by having the court order that each member of the class of brokers provide the names and addresses of each person who paid the broker a commission for the sale of residential real estate during the same four-year period. The Klines proposed sending a notice to each identified member of the class of sellers, informing them of the right to opt out of participation in the class but assuring them that they would incur no financial obligations for choosing not to opt out. As evidence of the alleged conspiracy, the Klines relied on a commission schedule that the Los Angeles Realty Board had distributed to its members. The district court granted the Klines’ request to certify both classes, and the brokers appealed.