RE/MAX International, Inc. reported today that it has filed a law suit against Smythe, Cramer Co. in United States District Court in Cleveland, Ohio.  The suit charges Smythe, Cramer with breaching a settlement agreement reached in September 2000 which had brought to a conclusion federal antitrust litigation in which Smythe, Cramer was accused of participating in an unlawful conspiracy against RE/MAX and its franchisees in northeast Ohio.

The new law suit challenges a Smythe, Cramer policy in effect from late February 2001 until late 2002 which called for the imposition of special notice letters (or adverse splits) based on the percentage of current and/or former Smythe, Cramer agents affiliated with a broker.  RE/MAX International charges that the policy violated their settlement with Smythe, Cramer in that it was created for the purpose of discriminating against RE/MAX franchises based on their affiliation with RE/MAX International, Inc. and/or their use of the RE/MAX business model. 

Last month, in an action brought by a Cleveland area RE/MAX franchisee, an arbitrator ruled that an adverse split imposed against that RE/MAX office was improper because it was intended to target offices based on their affiliation with RE/MAX and their use of the RE/MAX business model.  According to the new suit brought by RE/MAX International, although Smythe, Cramer has recently withdrawn the policy in question, it has threatened to replace it with a new one in the near future.

Dave Liniger, chairman of RE/MAX International, said, "We have filed this new case against Smythe, Cramer in order to get the benefit of what we bargained for in our settlement of the antitrust case.  It is very unfortunate that we must again resort to litigation to obtain fair treatment from Smythe, Cramer for our franchisees.  The action taken by Smythe, Cramer was wrong, and we are determined to stand by our franchisees in order to prevent it from happening again."

The law suit also charges Smythe, Cramer with tortuously interfering with RE/MAX International's prospective relationships and with violating federal and state antitrust laws.  According to Steve Squeri, RE/MAX senior vice president and general counsel, "The complaint also alleges that Smythe, Cramer's actions are harmful to competition.  We contend that, through its recent adverse split policy, Smythe, Cramer has attempted to do what public policy would otherwise not allow it to do -- create a penalty for its current and former agents who might affiliate with another broker, regardless of how long they were with Smythe, Cramer or how many years ago they left Smythe, Cramer."

Published: January 8, 2003

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