Unlike two federal cases that claim seller costs are inflated by commission sharing, New Jersey homebuyer’s lawsuit argued that buyers are the ones unfairly impacted.

After experiencing several legal setbacks last week, the National Association of Realtors has emerged victorious in one of the antitrust lawsuits it’s fighting — though the win may only be temporary.

On Monday, Judge Andrea R. Wood of U.S. District Court for the Northern District of Illinois Eastern Division dismissed a lawsuit seeking class-action status filed by New Jersey homebuyer Judah Leeder in January 2021 against NAR and real estate franchisors Realogy, Keller Williams, RE/MAX, and HomeServices of America.

Judge Andrea R. Wood

The suit alleged that the sharing of commissions between listing and buyer brokers is a conspiracy in restraint of trade in violation of the Sherman Antitrust Act for inflating buyer costs in the form of higher home prices, which “bake in” commissions.

The Leeder suit is different from other antitrust commission suits filed against the same defendants in that the others — Moehrl and Sitzer/Burnett — allege commission sharing inflates seller costs. Wood is the same judge overseeing the Moehrl case.

In a memo accompanying her order to dismiss the Leeder complaint, Wood agreed with the defendants that homebuyers are indirect purchasers of their buyer broker’s services because those services are purchased for them by homesellers, making those buyers ineligible for recovering damages from antitrust violators.

Leeder’s suit requested that the court stop NAR from enforcing a rule that requires listing brokers to offer a buyer broker commission in order to submit a listing to a Realtor-affiliated multiple listing service. But the fact that homesellers, who Wood said are the direct purchasers of buyer broker services, are pursuing a similar case in Wood’s jurisdiction worked against that request.

“The Court agrees that home sellers, as the direct purchasers of buyer-broker services, are necessarily more directly injured by Defendants’ alleged antitrust violations,” Wood wrote.

“Moreover, home sellers are, in fact, vindicating the public interest in antitrust enforcement as they are actively challenging the same NAR rules as Leeder before this Court in Moehrl v. The National Association of Realtors.

“Not only are the plaintiffs in Moehrl asserting a claim for damages … , they are also requesting the exact injunction that Leeder requests here. Thus, denying Leeder antitrust standing to seek injunctive relief will not ‘leave a significant antitrust violation undetected or unremedied.'”

Wood said she thought it was unlikely that Leeder would be able to “plead adequately that he is a direct purchaser of buyer-broker services,” but still dismissed the case without prejudice, meaning she granted him leave to amend his complaint and attempt to do so.

Charlie Lee

At NAR’s midyear conference Tuesday morning, Charlie Lee, NAR’s senior counsel and director of legal affairs, said the court’s decision was “good news.”

“We are confident that based on the judge’s skepticism that the decision should stand, however, we understand the fight may continue, and we will be prepared accordingly,” he told hundreds of MLS executives at the MLS Forum of the Realtors Legislative Meetings.

“NAR will continue to argue that local broker marketplaces serve the best interests of consumers, listing brokers making offers of compensation give first-time, middle- [and] low-income homebuyers an increased shot at homeownership and professional representation, and that compensation is negotiable and established by the market based on service and consumer priorities.”

Regarding the Moehrl case — which is bigger than the Sitzer/Burnett case that just won class-action status, and has the potential to rock the real estate industry by changing how agents are paid — Lee noted that that case is now entering into class certification proceedings.

“We will be making a similar argument [as in Sitzer],” Lee said. “We will be adamant in our position that homesellers are simply different [from each other], and that the named plaintiffs could not serve as adequate representatives and that certification is inappropriate.

“We remain steadfast and confident in our arguments in Moehrl.”

Inman reached out to an attorney for Leeder, Carol Lee O’Keefe, for comment and will update this story if and when we hear back.

Read the ruling:

What do you think of the ruling? Let us know in the comments below.

Email Andrea V. Brambila.

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