KANSAS CITY— In the Burnett case, where recent homesellers have sought to prove that the National Association of REALTORS® (NAR) and several big brokerages conspired over rules that inflated commissions, it is all coming down to an eight-member jury.
The defense is expected to rest its case today, with the jury already issued their instructions. The verdict, whatever it is, will reverberate through the industry for decades to come.
Here are the highlights of Friday’s proceedings, along with behind-the-scenes maneuvering over the weekend.
Gary Keller says his company is “agnostic” on commissions
-In the courtroom, Gary Keller took the stand first thing Friday morning, speaking for much of the day. He started by outlining the “foundational values” of his business, characterizing Keller Williams as a family company that will “never ask an agent to compromise their religious beliefs or family time for their business.”
-Keller went on to describe how he got involved in real estate—meeting an agent in college, where he was planning to become a rock musician, but was inspired to get a real estate degree.
-David Kully, attorney for Keller Williams, walked Keller through the background of a book he wrote, which the plaintiffs used earlier in the trial as a key point of attack. Keller described it as a “small business model book,” and claimed mentions of specific commission rates were because “we didn’t want to make it confusing” for consumers. Anything implying that it was used to try and set a commission rate was “taken out of context.”
He also emphasized that rates should vary with agents, as they are “specific to your market, specific to your values.”
-Keller also had a chance to directly address a speech he made at Keller Williams’ “Family Reunion” event, that the plaintiffs have pointed to as explicit evidence of price fixing. He claimed that specific commission rates he used in that speech were “historical data” rather than a reference to set amounts. The jury was shown a video of talking points from the speech, which covered a wide variety of other real estate topics.
-On cross examination, Keller was pressed on a ranking he received as the second “Most Powerful Person in Real Estate.” Keller claimed he didn’t know what that meant, with a shrug.
-Eventually, Kully got around to directly addressing the core of the plaintiffs’ argument—that commission rates are stable and inflated due to the influence of NAR and big brokerages.
Keller claimed that rates do in fact, vary year to year, and called accusations of rate setting “ludicrous.” Keller Williams is “agnostic” on commissions, he said.
“There is no factual proof,” he said.
Keller defended his reference to specific commission rates again as merely averages, and said he never told agents what to charge. When shown an excerpt from a Keller Williams manual detailing an award given to agents based on a 3% commission rate, Keller said that agents had to interpret that themselves.
-During cross examination, Keller was forced to address several conflicting statements he had made about commissions in general, including a reference to agents being “under siege,” which he claimed was about take-home pay and not commission rates. Another email written by Keller focused on how technology was reducing commissions.
“(I was) talking about what agents net, not what they charge,” he said.
-The topic of the alleged conspiracy was also directly addressed, with Keller saying he is “not involved” with NAR or local boards.
“I’m either all work or all play,” he claimed. “Nothing against NAR or local boards, I just need to run my business.”
-At the same time, Keller admitted that his company did require NAR membership from its agents, which Keller said was so they could have access to the MLS. It was up to the agents to say if they had any issue with that policy, he said, adding that he believed that “if there is some conflict of interest, that they would express that.”
Pressed during cross examination, Keller admitted that agents “have to join (the) MLS or they have to quit work.”
-Keller defended the value of buyer agents—a topic that came up more and more in the later days of the trial—focusing on affordability for buyers.
“If you can take the burden of any money not having to come out of their pocket, it helps the buyer and it helps the seller,” he said.
-On cross examination, Keller was pressed on whether he brought another witness, Marc King, due to the fact that he grew up in Missouri, where the trial is taking place. Keller claimed he didn’t know where that witness lived, accusing the plaintiffs of “questioning (his) integrity.”
Keller Williams employees deny NAR involvement, rate setting
-Marc King, president of Keller Williams, also spoke at length (though not as long as his boss). He also had a chance to tell his story, as someone who started as an agent locally in Missouri. He also focused a good amount of his testimony on basics and values of the business, calling agent count the “number one metric” for Keller WIlliams.
-King described various trainings as well as Keller’s book as “models,” and said they only worked “if you use your own numbers.” Agents setting their own commission is important because they have their own businesses and expenses, and any specific rate used in the training is just “an illustration.”
“It’s a math formula,” he said. “You have to have a number in there to do the math.”
-As far as the conspiracy accusations, King said he didn’t care if agents joined NAR, again emphasizing that it was MLS access that was most important. He also claimed that he didn’t personally speak to competitors, saying that those interactions were limited to cordial hellos at events.
-Two former Keller Williams employees appeared by video deposition. Both testified that when a Keller Williams executive ran for president of NAR, the company did not take a stance and that not all agents supported her candidacy in the close election.
-One employee said they did not think Keller Williams’ agents had any significant influence on NAR or NAR policy, as there are 180,000 of them, all with different opinions.
Defendants continue to push for more jury instructions
-RE/MAX, which already settled the case, objected on Sunday to a verdict form proposed by other defendants which would still ask the jury to find the company liable and assess damages.
“The case against (RE/MAX) has been stayed, and (RE/MAX) did not present evidence during the pending trial,” lawyers for the company wrote in a court filing. “The Court should not include any mention of (RE/MAX) in the verdict form.”
-The judge granted a motion by the defendants to disallow plaintiffs from replaying clips from video depositions during closing arguments.
-In a lengthy filing disputing jury instructions, NAR and Keller Williams continued to argue that the judge and jury should take a broader view of the antitrust issues in the case. Specifically, they asked the judge to allow the jury to decide whether the antitrust actions allegedly taken outweighed benefits to the market.
They also disputed some of the plaintiffs’ characterizations of geographic areas, and asked that it be made clear that RE/MAX and Anywhere previously settled the case to “avoid the expense, inconvenience and distraction of litigation” and that those companies “continue to deny the allegations against them.”
-HomeServices requested again that a video clip depicting “vulgar” appearance by Allan Dalton, a BHHS executive, on a podcast, be stricken from the record. They also asked for references to a Department of Justice investigation and Inman coverage of the trial, which was flaunted by the plaintiffs, be struck.
-Defendants also asked the jury be given more lengthy descriptions of MLS functions and rules, and NAR’s status as a trade organization. They also requested significant changes to how the defendants are described, including the structure of subsidiaries and franchisors.
Stay tuned for more updates from the courtroom.
William Schmidt contributed to this reporting.