Three additional plaintiffs have been added to a lawsuit involving the sharing of commissions between listing and buyer brokers.
Two Missouri law firms suing several real estate giants over buyer broker commissions updated their federal suit on Friday, adding three more homeseller plaintiffs.
The suit’s original plaintiffs are sellers Joshua Sitzer and Amy Winger, who sold a home in the Kansas City metro area in 2017. The plaintiffs added to the case are Scott and Rhonda Burnett, who sold a home in the Kansas City area in 2016, and Ryan Hendrickson, who sold a home in the St. Louis area on May 10, 2019.
The defendants in the case are the National Association of Realtors (NAR), Realogy Holdings Corp., Keller Williams Realty, RE/MAX LLC, HomeServices of America Inc. and HomeServices subsidiaries BHH Affiliates LLC, HSF Affiliates LLC, and The Long & Foster Companies Inc.
The amended complaint alleges the sharing of commissions between listing and buyer brokers violates the Sherman Antitrust Act by inflating seller costs and seeks to have homebuyers pay their broker directly, rather than having listing brokers pay buyer brokers from what the seller pays the listing broker.
The Sitzer update closely follows the filing of an amended complaint in a similar, bigger federal case in Illinois in which nine law firms representing homeseller Christopher Moehrl and seven other plaintiffs are suing the same defendants.
The Sitzer suit is not entirely identical to Moehrl in that it alleges violation of the Missouri Antitrust Law and the Missouri Merchandising Practices Act in addition to the Sherman Antitrust Act.
The bombshell Moehrl suit also purports to cover transactions made through 20 multiple listing services across the country, none of which are in Missouri, while the Sitzer complaint is on behalf of sellers who listed their homes in four MLSs in Missouri: MARIS, Heartland MLS, Southern Missouri MLS and the Columbia Board of Realtors MLS. These MLSs have some 30,000 subscribers combined.
But the amended Sitzer suit’s allegations are similar, including a renewed emphasis on buyer steering.
“[G]iven the requirement for seller brokers to make a blanket, unilateral offer of commission to buyer brokers (which is visible through the MLS system only to other realtor participants, and not to consumers), buyer brokers face strong incentives to ‘steer’ their buyer clients toward homes where the buyer broker would receive a greater commission percentage,” the complaint said.
The amended Sitzer complaint, like the amended Moehrl complaint, also calls out Keller Williams’ training scripts for encouraging steering and discouraging sellers from reducing buyer broker commissions.
In a legal filing in the Moehrl case on Friday, the defendants said they would move to transfer the Sitzer suit to the same Illinois court as the Moehrl suit and have it consolidated with the Moehrl litigation.
One other difference between the two cases is that the Moehrl suit specifically alleges that “Defendants’ unlawful conduct” is the subject of an active investigation by the Antitrust Division of the U.S. Department of Justice, which has demanded that MLS system vendor CoreLogic turn over a bevy of information on MLS data, including all documents relating to any MLS members’ ability to search based on the amount or type of compensation offered by listing brokers to buyer brokers. The DOJ declined to comment on the lawsuit’s allegations.
The Sitzer suit only mentions that the DOJ Antitrust Division “is currently and actively investigating practices in residential real estate brokerage marketplace, with an apparent focus on compensation paid to brokers” without specifically saying the defendants themselves are under probe.
The Sitzer complaint does call out NAR and the real estate industry’s “history of anticompetitive conduct,” including noting that until 1950 “[R]ealtors operated under express agreements to use specified commission percentages in home sale transactions, until the United States Supreme Court declared that scheme an illegal price-fixing arrangement under the federal antitrust laws in United States v. Nat’l Ass’n of Real Estate Bds., et al.” National Association of Real Estate Boards was NAR’s predecessor until the trade group changed its name in 1972.
Shortly after filing the amended Moehrl complaint, plaintiffs’ attorneys submitted a motion on June 19 to have NAR and the real estate firms produce any civil investigative demands (CIDs) they had received from the DOJ that related to buyer broker commissions or any of the conduct alleged in the amended complaint.
“It is clear from both news reports and the one CID that has become available to Plaintiffs that the CIDs being issued by the DOJ are highly relevant to this litigation,” plaintiffs’ attorneys argued.
The attorneys noted that the “Defendants have declined to answer whether they have received CIDs relating to the practices at issue here.”
But on Monday, Judge Andrea R. Wood denied the motion without prejudice and without comment, staying discovery in the case for now.
NAR and the real estate companies had opposed the motion to produce the CIDs (without admitting whether they actually existed), arguing that discovery should be stayed at least until they had responded to the plaintiffs’ amended complaint with motions to dismiss and those motions were resolved.
Wood gave the Moehrl defendants until Aug. 9 to submit their responses to the amended complaint. She also gave the parties until Aug. 16 to submit a proposed protocol for the handling of electronic documents produced in discovery, including a protective order — meaning that even if CIDs are produced in the case, the public may not get to see them.
Inman asked the defendants for comment on the amended Sitzer complaint and on whether they had received CIDs from the DOJ. RE/MAX and HomeServices, on behalf of itself and its subsidiaries, declined to comment. NAR, Realogy and Keller Williams did not respond.
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