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KANSAS CITY, Mo. — Defendants in a class-action antitrust trial challenging the practice of requiring homesellers to pay buyer agent commissions protested to the court Tuesday afternoon after an attorney for the plaintiffs showed the jury a video in which a Berkshire Hathaway HomeServices executive compared cutting commissions to performing sex work.
An attorney for HomeServices suggested that any decision rendered by the jury could be reversed by an appeals court because of how unfairly damaging seeing the video allegedly was.
The case, known as Sitzer | Burnett, alleges the National Association of Realtors and real estate franchisors Keller Williams, Anywhere (formerly, Realogy), RE/MAX, HomeServices of America and two of its subsidiaries BHH Affiliates and HSF Affiliates engaged in a conspiracy to inflate real estate commissions.
On Tuesday afternoon, HomeServices began its defense by calling Ron Peltier, the company’s founder and chairman emeritus, to the stand. When plaintiffs’ lead counsel Michael Ketchmark of Ketchmark and McCreight, cross-examined Peltier, he played a video of a Tom Ferry podcast interview with Allan Dalton, CEO of Real Living Real Estate and senior vice president of Berkshire Hathaway HomeServices, sharing “the most effective commission cutting technique” with the audience, which he said he’d also shared “at our events.”
In the September 2019 video, months after this case was filed, Dalton shares a script he got from a top producer he knows to respond to a seller asking for a commission cut, telling the audience “this is the only technique that I know works every time” and “you might want to write this down.”
“There’s no bleeping bleeping way I’m going to cut my bleeping bleeping commission,” Dalton says.
“What do you think, I’m a bleeping bleeping hooker standing outside the Lincoln Tunnel at three o’clock in the morning giving bleeping bleepings to sailors?
“If you think I’m going to cut my bleeping bleeping commission, you can take this home and shove it up your bleeping bleeping and I know that it will fit.”
Ketchmark went on to point out that Peltier had said HomeServices operates with “the highest degree of integrity.”
He asked Peltier if the comments on the podcast reflected that way of operating.
“I’m not speaking for him,” Peltier replied. “He’s not speaking for us. He’s on a podcast.”
Ketchmark then asked Peltier if he would have fired Dalton had he known about the comments.
“I care not to answer. I don’t muzzle 50,000 people and I don’t speak for them,” Peltier responded, noting that he did not consider Dalton’s comments “acceptable behavior.”
When pressed about firing Dalton, Peltier said, “I’m not making decisions for HomeServices anymore.”
In response, Ketchmark asked, “Then why are you here?”
Peltier said he was there to answer “relevant questions.” HomeServices’ lead counsel, Robert MacGill of MacGill, declined to redirect the questioning and Peltier was excused from the stand.
However, after the judge in the case, Stephen R. Bough of the U.S. District in Western Missouri, dismissed the jury for the day, Timothy Ray, an attorney representing Keller Williams, told Bough that the video was not admitted as a trial exhibit and that the defendants had not previously seen it.
He also complained to the judge that Ketchmark had brought up an Inman article to the jury about NAR’s decision to change its interpretation of the primary NAR rule at issue in this case, which Ray said “was completely inappropriate and highly prejudicial to us,” adding “Mr. Ketchmark knows better.”
Along with the podcast video, Ray claimed that the “cumulative effect” of Ketchmark’s actions is that it’s “increasingly difficult for defendants to get a fair trial.”
MacGill told the judge that “we have very specific concerns about what Mr. Ketchmark did” and that Ketchmark wasn’t “honoring discovery obligations” by not producing the video earlier.
MacGill also noted that this circuit, the 8th Circuit Court of Appeals, had reversed a case for similar conduct. He said he thought at a minimum the Dalton video should be stricken for its “prejudice to us” and that the jury should be instructed to disregard it. Bough said they would discuss the matter Wednesday morning.
Regarding Ketchmark’s use of the Inman article, Bough said that while he didn’t think the article itself was inaccurate, he didn’t think Ketchmark’s use of the article constituted “proper impeachment.”
Ketchmark had mentioned the article to contradict an assertion by NAR Director of Engagement Rodney Gansho that NAR changed its interpretation of the rule at issue in this case over the summer. The case is specifically challenging a NAR policy known as the Participation Rule, or the cooperative compensation rule, which requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated multiple listing service. NAR had previously said for years that the offer of compensation had to be more than zero and recently changed its interpretation to allow listing brokers to offer zero after Bright MLS decided to make that rule change.
On Tuesday evening, NAR told Inman for the first time that “in response to Bright MLS changes in July, NAR sent out a notice in August” telling MLSs its new interpretation of the rule.
After court adjourned Tuesday, Ketchmark told Inman that “we complied with all the rules and all the obligations and we’re moving forward. We’re going to let the jury resolve this case.”
Referring to a media briefing NAR held earlier this month, Ketchmark added, “They have an aggressive PR team that literally had a press conference before trial and they’re upset that I’m talking to reporters.
“This is the United States of America. They have an entire public relations team feeding the world their storyline. We’re going to lay the facts out in court. We’re trying to hold them accountable for their conduct.”
On Wednesday, defendants will resume their defense. The jury may start their deliberations as soon as Monday.