Pocket Listing Suit Against NAR “Paused” For Settlement Talks

Key Takeaways:

– The antitrust lawsuit against the National Association of Realtors (NAR) over its pocket listing policy may be coming to a close if a settlement is reached.
– NAR was dismissed from the case “without prejudice,” meaning that the plaintiff, ThePLS.com, can decide to refile the claims against NAR later.
– ThePLS.com and the other defendants in the case have reached a settlement-in-principle, indicating that they have agreed on key terms of a deal.
– The case is currently inactive, and the parties have until Feb. 26 to either file a dismissal or reopen the case if a settlement is not completed.
– The PLS decided to temporarily dismiss NAR from the case to allow for discussions on a resolution, but they have the right to refile the case if no resolution can be achieved.
– NAR’s dismissal does not involve any payment or rule changes.
– The PLS, now known as The NLS, was founded by Mauricio Umansky and other top-producing agents at luxury brokerage The Agency.
– Umansky and Jason Haber have also launched a new NAR rival called the American Real Estate Association (AREA).
– The antitrust lawsuit against NAR is related to its Clear Cooperation Policy, which requires listing brokers to submit a listing to their MLS within one business day of marketing a property to the public.
– The PLS filed the lawsuit in May 2020, alleging that NAR and MLSs violated antitrust laws with the Clear Cooperation Policy.
– The case was initially dismissed but was overruled on appeal and returned to the lower district court.
– NAR is also facing a similar pocket listing case brought by Top Agent Network.

inman:

NAR was dismissed without paying any money or making any rule changes, but The PLS says it can reopen the case if they don’t come to a deal.

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An antitrust lawsuit filed nearly four years ago against the National Association of Realtors over its pocket listing policy may be coming to a close — but only if the case settles.

On Friday, Jan. 26, attorneys for NAR and plaintiff ThePLS.com informed the U.S. District Court of the Central District of California’s Western Division that NAR was dismissed as a defendant in the case “without prejudice,” meaning that The PLS could decide to refile its claims against NAR later.

Two days before, The PLS and the other defendants in the case — California Regional MLS (CRMLS), Bright MLS and Midwest Real Estate Data (MRED) —  told the court they had reached a settlement-in-principle of all claims between them, meaning they had agreed on key terms of a deal.

The case is currently in inactive status, and the parties have until Feb. 26 to either file a dismissal of the case or a motion to reopen the case if a settlement is not completed.

In a statement, The PLS co-founder Christopher Dyson told Inman that NAR’s loss at trial in a case known as Sitzer | Burnett, and an ever-rising pile of similar commission-related antitrust lawsuits, influenced The PLS’s decision to, at least temporarily, dismiss NAR from the case.

Christopher Dyson of The Agency. Credit: The Agency

“With the Burnett result, and similar cases hanging over the head of NAR, ThePLS.com thought it prudent to pause its action against NAR to give the parties an opportunity to discuss a resolution of the issues at the core of the PLS’s lawsuit,” Dyson said.

“However, if no resolution of the issues presented in the lawsuit can be achieved with NAR, ThePLS.com has the right to refile the case — as NAR has already stated.”

At the Sitzer | Burnett trial, 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. If that jury award stands, it will be automatically trebled by law to more than $5.3 billion.

Mantill Williams

In a statement, NAR spokesperson Mantill Williams indicated that NAR’s dismissal from the pocket listing case was made without any money changing hands and without requiring any policy changes from the 1.5-million-member trade group.

“NAR is pleased that PLS decided to dismiss this long-pending litigation without NAR making any payment or rule change,” Williams said.

The PLS, which became The NLS in 2022, was founded by Mauricio Umansky, CEO and founder of luxury brokerage The Agency, along with Chris Dyson, James Harris and David Parnes, top-producing agents at The Agency. ThePLS.com has several owners: FASP Realty, Midnight Capital, Harris Family Trust, David Parnes Living Trust, Green Collective and Sidehill Ventures.

Mauricio Umansky

Mauricio Umansky at Inman Connect New York

At Inman Connect New York last week, Umansky officially announced the launch of a new NAR rival, the American Real Estate Association (AREA), which Umansky co-founded with Jason Haber, a New York-based Compass agent and founder of the NAR Accountability Project. The two founded AREA as a response to the scandals and legal trouble they say NAR has not properly handled.

It is unclear whether AREA’s status as a direct NAR rival will affect this antitrust litigation. Inman has reached out to The PLS for comment and will update this story if and when a response is provided.

In May 2020, The PLS, formerly a private listing network for real estate agents, filed a federal antitrust lawsuit against NAR and the MLSs over a policy designed to curb pocket listings.

The suit alleged the defendants had violated the federal Sherman Antitrust Act and California’s Cartwright Act for adopting the Clear Cooperation Policy, which requires listing brokers to submit a listing to their MLS within one business day of marketing a property to the public.

Office exclusives, or listings marketed entirely within a brokerage without submitting them to an MLS, are exempt from the policy. Some real estate brokers have threatened mutiny over the office exclusives exception to the Clear Cooperation Policy, which they argue benefits large, national brokerages at the expense of smaller, independent brokerages.

The controversial rule is meant to effectively end the growing practice of publicizing listings for days or weeks without making them universally available to other agents, in part to address fair housing concerns. The Clear Cooperation Policy went into effect on Jan. 1, 2020, and its implementation deadline was May 1, 2020. Some MLSs have instituted hefty fines to enforce it.

The PLS’s case was initially tossed in a lower court, but that decision was overruled on appeal and returned to the lower district court.

NAR is also fighting a similar pocket listing case brought by Top Agent Network, which is ongoing.

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Property Chomp's Take:

The antitrust lawsuit filed against the National Association of Realtors (NAR) over its pocket listing policy may be reaching a resolution, as NAR was dismissed as a defendant in the case. However, the case can still be reopened if a settlement is not reached.

The lawsuit, filed nearly four years ago by ThePLS.com, alleged that NAR violated antitrust laws with its policy on pocket listings. Pocket listings refer to properties that are marketed and sold privately, without being listed on the Multiple Listing Service (MLS).

The PLS and the other defendants in the case, including California Regional MLS (CRMLS), Bright MLS, and Midwest Real Estate Data (MRED), have reached a settlement-in-principle of all claims between them. This means that they have agreed on key terms of a deal. The case is currently in inactive status, and the parties have until February 26 to either dismiss the case or reopen it if a settlement is not completed.

The decision to dismiss NAR from the case was influenced by NAR's loss in a similar commission-related antitrust lawsuit known as Sitzer | Burnett. The PLS decided to temporarily dismiss NAR to give the parties an opportunity to discuss a resolution. However, if a resolution cannot be reached, The PLS has the right to refile the case.

NAR's dismissal from the pocket listing case does not involve any monetary payment or policy changes from the trade group. NAR spokesperson Mantill Williams stated that NAR is pleased with the dismissal without any money changing hands or rule changes.

The PLS, which has since become The NLS, was founded by Mauricio Umansky, CEO of luxury brokerage The Agency, along with other top-producing agents. Umansky recently announced the launch of a new NAR rival called the American Real Estate Association (AREA). It is unclear how AREA's status as a direct NAR rival will affect this antitrust litigation.

The pocket listing case filed by The PLS is one of several lawsuits challenging NAR's policies. The Clear Cooperation Policy, which requires listing brokers to submit a listing to their MLS within one business day of marketing a property to the public, has been a subject of controversy. Some brokers argue that the policy benefits larger brokerages at the expense of smaller ones.

While the case may be reaching a resolution, it remains to be seen whether a settlement will be reached or if the case will be reopened. The outcome of this litigation will have significant implications for the real estate industry and NAR's policies going forward.

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