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Looks like Anywhere Real Estate won’t be able to dodge turning over documents on its nationwide implementation of a controversial National Association of Realtors’ commission rule after a federal court judge ruled in favor of the plaintiffs Monday.
The decision is no surprise after the judge said during oral arguments last week that she was “baffled” as to why the holding company previously known as Realogy wouldn’t agree to a compromise agreed to by all other real estate franchisor defendants in the case. (Although Realogy changed its name to Anywhere earlier this year, the company is still referred to by its old name in legal filings, including by its own attorneys.)
The antitrust case known as Nosalek, after its lead homeseller plaintiff (formerly, Bauman), alleges that large, broker-owned multiple listing service MLS Property Information Network (MLS PIN), which boasts approximately 46,000 agent and broker subscribers, is not directly required to abide by NAR rules but has nonetheless adopted a rule similar to a NAR rule that requires listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing to MLS PIN.
The plaintiffs call the rule the “Buyer Broker Commission Rule.” Unlike other, similar federal commission suits Moehrl and Sitzer/Burnett, Bauman/Nosalek does not name NAR as a defendant, but rather names MLS PIN.
In August, the plaintiffs filed a motion to compel defendant Realogy to produce all documents relating to its implementation of the rule across the country — not just in the MLS PIN service area, which includes Massachusetts, Rhode Island and New Hampshire.
According to the plaintiffs’ filing, all of the other real estate franchisor defendants — RE/MAX, Keller Williams and HomeServices of America — agreed to produce documents on their implementation of the rule nationwide, so long as those documents aren’t tied to implementation of the rule in specific geographic regions other than that of MLS PIN.
Because of the similarity of the NAR rule and the MLS PIN rule and because of the alleged power of the franchisors over both, the motion contended that the defendants’ discussions about the NAR rule may be relevant to their thoughts on the MLS PIN rule.
However, Anywhere opposed the plaintiffs’ efforts to expand discovery in the case beyond MLS PIN’s service area, arguing that the rule at issue in the case is MLS PIN’s specific version of the rule.
But Judge M. Page Kelley of the U.S. District Court in Massachusetts disagreed.
“Such discovery is relevant to plaintiffs’ claim, first, because [MLS PIN’s rule] and the NAR Rule are substantively identical and [MLS PIN’s rule] almost certainly was modeled on the NAR Rule,” Kelley wrote in an order Monday.
“Second, plaintiffs allege that Realogy was involved in, if not the implementation, then at least the perpetuation of both rules.”
Kelley disagreed with Realogy’s argument that because Realogy did not exist until 2006 and MLS PIN adopted the rule in 1996, Realogy would not have any relevant information about the maintenance of the MLS PIN rule. (Realogy predecessor HFS did exist in 1996.)
“Even if Realogy does not have discovery in its possession or control relevant to [MLS PIN’s rule] creation in 1996, it may have relevant documents concerning its continued perpetuation after 2006,” Kelley wrote.
As she noted at oral arguments, the plaintiffs have the burden at trial of showing that the defendants made “a conscious commitment to a common scheme designed to achieve an unlawful objective” and evidence that Realogy discussed “such ‘a commitment to a common scheme’ at the national level regarding the NAR Rule could very well bear on plaintiffs’ claims regarding the nearly identical rule in the Covered Area,” Kelley added.
Kelley granted the plaintiffs’ motion to compel to the extent that Realogy must turn over documents on the same terms to which the other franchisor defendants agreed.
“In responding to plaintiffs’ discovery requests, Realogy shall interpret the term ‘Buyer-Broker Commission Rule’ to reach documents concerning (i) the specific MLS PIN Rule on offers of compensation, and (ii) any discussion as a general matter of rules requiring listing agents to offer cooperative compensation to buyer agents (a) in MLS PIN’s service area; (b) nationally; or (c) in unspecified geographies (and thus generally applicable),” Kelley wrote.
At the Council of MLSs (CMLS) annual conference last week, Chris Osborn, counsel for broker-owned Northwest MLS, said it was “frightening” that the plaintiffs in the case had sued an independent MLS rather than NAR, but that the case was “proceeding at a snail’s pace.”
“I think they’re waiting to see what happens [in Sitzer and Moehrl] and not spend more money on that,” Osborn said.
“They want to ride the coattails of the big boys.”
Anywhere did not respond to an emailed request for comment.
Read the judge’s order: