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

Key Takeaways:

– A federal court judge denied a request from the defendants to suspend the case pending the outcome of post-trial motions after the Sitzer | Burnett verdict.
– The lawsuit seeking damages of over $200 billion will move forward despite a request from the National Association of Realtors and other real estate brokerages to suspend the case.
– The lead trial counsel for the plaintiffs, Michael Ketchmark, believes that this is a step towards holding the defendants accountable.
– The defendants argued that the case should be suspended until the court ruled on post-trial motions and a possible appeal in the Sitzer | Burnett case.
– The plaintiffs opposed the stay, stating that the rulings in the Sitzer | Burnett case would not necessarily resolve the Gibson case.
– The judge sided with the plaintiffs and denied the stay, stating that the plaintiffs may face hardship if a stay were granted.
– There is a pending motion to consolidate the Gibson case and eight other similar suits, which the judge did not believe warranted a stay in the Gibson case.
– The cases challenge the cooperative compensation rule of the National Association of Realtors, which requires listing brokers to make an offer of compensation to buyer brokers.
– Several real estate corporations, including Compass, Douglas Elliman, eXp Realty, and United Real Estate, declined to comment on the case.

inman:

A federal court judge denied a request from the defendants to suspend the case pending the outcome of post-trial motions after the Sitzer | Burnett verdict.

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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.

“Howard Hanna continues to monitor and navigate the ongoing legal matters in the industry,” Howard Hanna spokesperson Lindsay Kovach told Inman in a statement responding to Bough’s denial of the motion to stay.

“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.”

As of Wednesday evening, Compass, Douglas Elliman, eXp Realty, and United Real Estate had declined to comment for this story and NAR, Redfin and Weichert had not responded to requests for comment.

Email Andrea V. Brambila.

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Property Chomp's Take:

A federal court judge has denied a request from the defendants to suspend a lawsuit seeking damages of more than $200 billion. The National Association of Realtors (NAR) and major real estate brokerages had requested a suspension of the case, known as Gibson, while another similar suit is being processed. However, Judge Stephen R. Bough of the U.S. District Court for the Western District of Missouri denied the motion to stay the case, indicating that the plaintiffs would face hardship if the case was put on hold and that the issues in the case were not necessarily resolved by the outcome of the other suit. The Gibson case was filed immediately after a historic verdict in the Sitzer | Burnett case, in which it was found that NAR and several franchisors had conspired to inflate broker commission rates. The jury awarded $1.78 billion in damages to a class of Missouri homeowners. Lead trial counsel for the Gibson plaintiffs, Michael Ketchmark, stated that the judge's order was a step towards holding the defendants accountable and exposing the scheme of price fixing. The Gibson case challenges 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.

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