Join the movement at Inman Connect Las Vegas, July 30 – August 1! Seize the moment to take charge of the next era in real estate. Through immersive experiences, innovative formats, and an unparalleled lineup of speakers, this gathering becomes more than a conference — it becomes a collaborative force shaping the future of our industry. Secure your tickets now!
HomeServices of America has asked a federal court to deny a request from the plaintiffs in the bombshell Sitzer | Burnett case to order the real estate franchisor to pay $4.7 billion, the vast majority of the damages awarded in a jury verdict this fall.
On April 1, attorneys for Berkshire Hathaway affiliate HomeServices told the U.S. District Court for the Western District of Missouri that the March 18 request from the plaintiffs, a motion for entry of judgment, was “premature” because the court had not yet approved plaintiffs’ settlements with the other defendants.
“The pending status of the settlements in this case renders the proper amount to award Plaintiffs in a judgment against HomeServices indeterminate,” HomeServices’ opposition filing reads.
“Plaintiffs’ proposed entry of judgment, however styled, would not be a final decision.”
On Oct. 31, jurors found that the National Association of Realtors, Keller Williams, RE/MAX, Anywhere, HomeServices and two of its subsidiaries, BHH Affiliates and HSF Affiliates, conspired to inflate broker commission rates paid by homesellers. The jury awarded $1.78 billion in damages to a class of approximately 500,000 Missouri homeowners.
Anywhere and RE/MAX settled before the Sitzer | Burnett trial, for $83.5 million and $55 million, respectively. Keller Williams settled on Feb. 1 for $70 million and NAR settled on March 15 for $418 million. Added up, the deals come to $626.5 million. None of the settlements have received final approval from the court.
In their motion, attorneys for the homeseller plaintiffs formally asked the court to treble the Sitzer | Burnett damages award, as required under federal antitrust law, to $5.36 billion, and to hold the HomeServices defendants liable for the full amount after subtracting the amount from the other settlements: $4,729,432,616. That would be 88 percent of the trebled award.
But HomeServices argued that if the settlements were rejected or challenged, the math on the final judgment would change, creating an “administrative mess.”
“Plaintiffs’ penciled-in numbers for the amount by which the jury’s award should be offset by settlements are provisional because the settlements are subject to objection from the absent class members and judicial scrutiny prior to approval by this court in order to ensure that the settlements comply with due process,” the opposition filing states.
“Plaintiffs’ attempt to treat the settlement amounts as effectively final ignores the fact that courts commonly reject class-action settlements when reviewing them for fairness, reasonableness, and adequacy,” the filing adds.
The franchisor made clear that it does not expect settlement proceedings to be “mechanical and uncontroversial” and that the U.S. Department of Justice might seek to get involved, as it has in another major commission lawsuit, Nosalek.
“These purportedly nationwide settlements were negotiated with attorneys representing only a fraction of the nationwide class of people who would be affected by the settlements,” the filing says.
“And the Department of Justice has already objected to settlements of similar claims in other cases. Thus, the judgment Plaintiffs seek for this court to enter would necessarily be provisional because of its relation to contested issues.”
The plaintiffs also seek an award of attorneys’ fees and costs of the suit and interest on the damages amount, starting the day after the verdict, Nov. 1, at the rate of 5.4 percent per year, compounded annually. But HomeServices told the court that interest on the damages amount should start accruing on a different date: when the court enters its final judgement.
In addition, the franchisor argued that, under the law, the plaintiffs must “demonstrate a danger of hardship if its request is not granted,” but the plaintiffs did not.
“Plaintiffs point to no hardship or prejudice that they will suffer if judgment is not entered until all claims against all parties in this case are fully resolved,” the filing says.
“Nor can they in light of the fact that, by the parties’ mutual agreement and as subsequently ordered by the Court, any judgment cannot be executed until thirty days after the court has resolved all post-trial motions, briefing for which is still not complete.
“Even then, Plaintiffs could not execute a judgment with an uncertain damages amount — each of the settlements must receive final approval first.”
HomeServices’ attorneys stressed that nothing would be accomplished by the court making a final judgment before the settlements are finalized.
“[The plaintiffs] do not have an appeal that they seek to hasten, and the HomeServices Defendants can hardly have an immediate interest in appealing when they are still in the midst of briefing their … post-trial motions,” the filing says.
“And Plaintiffs certainly will not be prejudiced by having withheld money owed to them by HomeServices because they would not be entitled to receipt of those funds unless HomeServices’ appeal rights were exhausted without success.
“Nor would they be prejudiced by having withheld the funds other defendants have agreed to pay them in settlements because the triggering condition for receipt of those funds is the Court’s final approval of the settlements, not its entry of judgment against HomeServices.”
In a phone interview, Michael Ketchmark, lead counsel for the Sitzer | Burnett plaintiffs, told Inman the law did not require the plaintiffs to prove hardship and objected to HomeServices’ characterization of the plaintiffs’ request as premature.
“We’re not asking to move anything up,” Ketchmark said. “We’re asking that the judgment be tripled under the law. They think it’s complicated for us to take $5.4 billion and minus off the amount that the other two defendants at trial paid. I have a calculator. Heck, I have one on my phone. I can do it. It takes me less than two minutes. I don’t know why they think that’s complicated.”
Michael Ketchmark | Plaintiffs’ attorney
Ketchmark stressed that he’s hearing from real estate brokerages daily who are settling the commission lawsuits against them and agreeing to change their business practices, including no longer requiring franchisees and their affiliated agents to join or be members of NAR or follow the Realtor Code of Ethics or NAR’s MLS policy handbook.
“It’s time that Berkshire Hathaway gets on board,” Ketchmark said.
In addition, as part of NAR’s settlement, the 1.5 million-member trade group agreed to eliminate a NAR rule at the center of the case. Known as the cooperative compensation rule or the Participation Rule, it requires listing brokers to make blanket, unilateral offers of compensation to buyer brokers in order to submit a listing in a Realtor-affiliated multiple listing service. If the proposed settlement is approved, NAR would implement rule changes in July.
“What [HomeServices doesn’t] want to do is to acknowledge they’re on the hook now for nearly $5 billion because they haven’t done the right thing and followed these practice changes and admit what they’re doing is wrong and changed the way they’re doing it,” Ketchmark said.
“HomeServices and Berkshire Hathaway continue to defend a rule the rest of the industry is abandoning,” he added. “Instead of arguing about things like this as to what the final judgment is, they ought to find a way to protect their agents and their brokers.”
Even if HomeServices’ opposition filing is successful and the final judgment is delayed by three or four months, “judgment day is coming someday,” Ketchmark said. “They can’t delay it forever.”
HomeServices has been careful to leave its options open when it comes to resolution of the commission cases it is fighting. Last week, asked whether HomeServices planned to settle another bombshell case, Moehrl, HomeServices executive vice president Chris Kelly told Inman, “HomeServices position remains unchanged as we are aggressively pursuing all options for resolving our involvement in the underlying litigation.”
Read HomeServices’ opposition filing:
