Court Says $200 Billion Commission Suit Against NAR Must Go Forward

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A federal commission lawsuit seeking damages of more than $200 billion will move forward, despite a request from the National Association of Realtors and major real estate brokerages to suspend the case while another, similar suit winds its way through the courts.

On Wednesday, Jan. 17, Judge Stephen R. Bough of the U.S. District Court for the Western District of Missouri denied a joint motion to stay the case, known as Gibson for its lead plaintiff, from NAR and the other defendants.

Michael Ketchmark

The Gibson plaintiffs’ lead trial counsel, Michael Ketchmark of Ketchmark & McCreight, indicated the judge’s order was a step toward holding the defendants accountable.

“The corporate real estate companies need to change their ways, or the day of accountability will arrive soon,” Ketchmark told Inman in a statement.

“We look forward to putting these corporate titans under oath and exposing the scheme for what it is at its core: Price fixing designed to take money out of the hands of homeowners around the country.”

The defendants argued the case shouldn’t move forward until after Bough ruled on post-trial motions and a possible appeal following a historic verdict in a case known as Sitzer | Burnett, in which a jury found that NAR and franchisors Anywhere, Keller Williams, RE/MAX, HomeServices of America and two of its subsidiaries, BHH Affiliates and HSF Affiliates, had conspired to inflate broker commission rates paid by homesellers. The jury awarded $1.78 billion in damages to a class of approximately 500,000 Missouri homeowners.

Ketchmark filed the Gibson case immediately after that verdict on Oct. 31 in the same court, naming NAR, Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna Real Estate and Douglas Elliman as defendants.

On Dec. 27, NAR requested the stay, which was later joined by the other defendants, saying it “would save substantial resources for both the Court and litigants by avoiding duplication of efforts and preventing conflicting decisions that would require additional time and resources to reconcile.”

Essentially, the defendants argued that because Sitzer | Burnett concerns many of the same legal issues as in Gibson, waiting for a resolution in the former case would avoid relitigating those issues and help the court in deciding how to rule on the claims in Gibson.

But the plaintiffs opposed the stay, arguing that the post-trial rulings in Sitzer | Burnett wouldn’t end either that case or the Gibson case and therefore the latter should move forward. NAR disagreed in a subsequent Jan. 16 filing but Bough sided with the plaintiffs and denied the stay.

Judge Stephen R. Bough

“Rulings on Defendants’ arguments in Burnett would not necessarily resolve this case and the Court also finds that Plaintiffs may face hardship if a stay were granted as they would allegedly be continuing to pay inflated commission rates,” Bough’s Jan. 17 order states.

“Additionally, multiple similar lawsuits around the country have been filed against NAR and other real estate corporations where a stay has not been requested.”

Bough also disagreed with NAR’s argument that a pending motion to consolidate the Gibson case and eight other similar suits in his court warranted a stay in the Gibson case. On Dec. 27, attorneys for the plaintiffs in Gibson and another, similar suit called Umpa requested that the United States Judicial Panel on Multidistrict Litigation consolidate nine cases — Gibson, Umpa, Grace, Burton, Phillips, March, Martin, QJ Team, and Spring Way Center — and “any other cases that may be filed asserting similar claims.”

“[C]entralizing these and future similar cases before a single judge will promote the just and efficient conduct of these actions, prevent inconsistent pretrial rulings and duplicative discovery, and conserve judicial and party resources,” the motion says.

These cases challenge NAR’s cooperative compensation rule, also known as the Participation Rule, which requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated multiple listing service — or similar rules by other real estate trade groups. NAR has stood by the practice of listing brokers making offers of compensation to buyer brokers.

Mantill Williams

“The cooperative compensation practice makes efficient, transparent, and accessible marketplaces possible,” NAR spokesperson Mantill Williams told Inman in a statement.

“Sellers can sell their home for more and have their home seen by more buyers while buyers have more choices of homes and can afford representation. The National Association of Realtors disputes the claims in this action and will respond to them in court.”

Responding to Bough’s denial of the motion to stay, Howard Hanna spokesperson Lindsay Kovach told Inman in a statement, “Howard Hanna continues to monitor and navigate the ongoing legal matters in the industry. As an independently-owned and -operated brokerage, we will uphold our core values of integrity and transparency as we continue to provide client-focused service for all real estate transactions.”

Compass, Douglas Elliman, eXp Realty, and United Real Estate declined to comment for this story. Redfin and Weichert did not respond to requests for comment.

Editor’s note: This story has been updated with a comment from NAR.

Email Andrea V. Brambila.

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