What’s different about the $200B(!) Gibson commission lawsuit

HousingWire011 mins

Key Takeaways:

– Judge Stephen Bough, who oversaw the Sitzer/Burnett real estate commission lawsuit, will also preside over the Gibson lawsuit brought by Michael Ketchmark.
– The Gibson lawsuit is seeking class action status and damages could exceed $200 billion.
– The goal of the Gibson case is to bring about nationwide changes in the real estate industry.
– Prior to the Gibson suit, the Moehrl commission lawsuit in Illinois posed a significant threat to the industry with potential damages of around $40 billion.
– The Gibson lawsuit accuses defendants of conspiring to inflate real estate agent commissions in violation of the Sherman Antitrust Act.
– The lawsuit names several defendants, including the National Association of Realtors, Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna, and Douglas Elliman.
– The lawsuit alleges that the NAR’s Clear Cooperation rule is the “cornerstone of the conspiracy.”
– The Gibson suit differs from the Sitzer/Burnett suit in terms of the defendant list, evidence presented, and nationwide scope.
– Redfin and United Real Estate, which have different business models, are named defendants in the Gibson lawsuit.
– The trial for the Gibson lawsuit will likely take years and the jury will be new.
– NAR asserts that the practice of listing brokers making offers of compensation to buyer brokers is best for consumers.

HousingWire:

The Missouri judge who oversaw the landmark Sitzer/Burnett real estate commission lawsuit will also preside over the Gibson lawsuit brought by Michael Ketchmark, who represented the plaintiffs in Sitzer/Burnett.

The class action-seeking Gibson case was assigned to Judge Stephen Bough, whose forthcoming injunctive relief ruling in the Sitzer/Burnett case is keeping the real estate industry rapt. Damages for the Gibson suit could exceed $200 billion before automatic trebling, according to comments Ketchmark shared with Inman News.

“One of our goals in filing the Gibson case is to make sure any changes are brought nationwide,” Ketchmark told the publication. “We’re extremely focused on making sure any change that comes from this is real change.” 

Prior to the filing of the Gibson suit, the Moehrl commission lawsuit in Illinois was considered the largest threat to the industry, with trebled damages that could reach roughly $40 billion.

Accepted by the court on Oct. 31, 2023, the Gibson lawsuit pits three Missouri home sellers, Don Gibson, Lauren Criss and John Meiners, against National Association of Realtors, Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna and Douglas Elliman.

Like the Sitzer/Burnett, Moehrl and Nosalek lawsuits, the Gibson suit accuses the defendants of conspiring to inflate real estate agent commissions in violation of the Sherman Antitrust Act. According to the plaintiffs’ initial complaint filing, the “cornerstone of the conspiracy” is NAR’s Clear Cooperation rule, which requires all home sellers to make a blanket, unilateral offer of buyer broker compensation when listing a property on the MLS.

While many aspects of this lawsuit mirror that of the Sitzer/Burnett suit, including the lead attorney for the plaintiffs, the allegations made, and the judge overseeing the case, there are some notable differences in Gibson, including the much larger defendant list; the evidence that will be presented; and the fact that the suit encompasses home sales nationwide, not just in Missouri.

One of the named defendants has a very different business model than the more traditional brokerages named in Sitzer/Burnett. Redfin, which has criticized NAR and its rules, argued for increased consumer transparency, and gives a discount to the seller, is a party to the Gibson suit. Redfin was likely named because its salaried agents offer standard commission rates to buyer brokers.

Like RE/MAX in Sitzer/Burnett, United Real Estate, a flat fee brokerage, was also named to the Gibson lawsuit. Its agents also offer buyer broker compensation.

In addition, when this lawsuit eventually reaches trial (the time period covers Oct. 31, 2019 to present), which will likely take years, the jury will be new and the rule of law regarding commission arrangements could be quite different.

“We are currently reviewing the new filing, and it appears to be a copycat lawsuit,” Mantill Williams, NAR’s vice president of communications, wrote in an email shortly after the Gibson suit was filed. “We continue to assert that the practice of listing brokers making offers of compensation to buyer brokers is best for consumers. It gives the greatest number of buyers a chance to afford a home and professional representation, while also giving sellers access to the greatest number of buyers.”

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