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HomeServices of America has lost an appeal in one of two bombshell commission cases against the National Association of Realtors and four real estate franchisors, clearing the way for a trial in federal court this October.
On Wednesday, a three-judge panel of the U.S. Court of Appeals for the Eighth Circuit affirmed a lower district court ruling that HomeServices can’t enforce arbitration agreements signed by seller clients of franchisees under its purview.
That means those sellers can stand alongside hundreds of thousands of sellers in four multiple listing service markets in Missouri asking for reimbursement of $1.3 billion in commissions they paid to buyer agents over the past eight years — plus potential treble damages that could raise that total to around $4 billion.
The appeals court determined that the lower court ruled correctly for one simple reason: The contracts the sellers signed were not directly with HomeServices.
“HomeServices is neither a party nor a third-party beneficiary of the Listing Agreements or the Arbitration Agreements,” the judges’ opinion reads.
“Thus, the Arbitration Agreements are inapplicable to any dispute between the unnamed class members and HomeServices.”
The antitrust class action known as Sitzer/Burnett is scheduled for a three-week trial beginning Oct. 16 in Kansas City, Missouri.
Last month, the district court judge presiding over the case, Stephen R. Bough of the U.S. District Court in Western Missouri, affirmed a backup trial date of Feb. 26, 2024, over the objections of defendant Keller Williams, in case HomeServices’ appeal was not fully decided in time for an October trial.
Michael Ketchmark
The appeals court ruling makes an October trial more likely, though Bough will ultimately decide whether that date holds at a Sept. 8 pretrial conference.
“The day of accountability is near,” plaintiffs’ attorney Michael Ketchmark, of Ketchmark & McCreight PC, told Inman in an emailed statement.
“A tremendous amount of evidence has been hidden from the public by these defendants. All of that is about to change when we expose their wrongdoing to a jury in Missouri. It is clear that the defendants are afraid of the free market and fair and open competition but they’re about ready to return to it.”
Many of the legal filings in the case have been filed under seal.
Sitzer/Burnett, which names NAR, Keller Williams, Anywhere (formerly, Realogy), RE/MAX, HomeServices and HomeServices subsidiaries BHH Affiliates and HSF Affiliates as defendants, was originally filed in 2019 and won class-action status in April 2022.
The suit alleges that some NAR rules — including one that requires listing brokers to offer buyer brokers a commission in order to list a property in a Realtor-affiliated MLS — violate the Sherman Antitrust Act by inflating seller costs.
“Should the court confirm the Oct. 16, 2023 trial date, Keller Williams will be ready to try the case and vigorously defend against plaintiffs’ claims,” Keller Williams spokesperson Darryl Frost told Inman in an emailed statement.
HomeServices and RE/MAX declined to comment for this story. NAR also declined to comment, noting Wednesday’s ruling “had nothing to do with NAR.” Anywhere did not respond to a request for comment.
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