Many were predicting it would happen. Almost before the jury in the recently decided Burnett class-action trial left the courtroom, attorneys who represented the plaintiffs in that case filed a new, nationwide lawsuit against the National Association of REALTORS® (NAR) and other major corporate brokerages, seeking the same damages for recent homesellers.
“The jury returned a verdict…and told these corporations to get their hands out of homesellers’ pockets,” Mike Ketchmark, who was the lead attorney for the plaintiffs, tells RISMedia. “Our goal now is to take this nationwide and bring the same relief.”
The suit names NAR, Compass, eXp World Holdings (the parent company of eXp), Redfin, Weichert, United Real Estate, Howard Hanna and Douglas Elliman, and is filed on behalf of three recent home sellers, seeking to include all other sellers from Oct. 31, 2019 onward. The 48 page initial filing contains many of the same accusations and evidence that was presented in the Burnett trial, focused on NAR reports, brokerage policies and training materials along with comparisons to commission rates in other countries.
Ketchmark says the case is the same—that NAR and major corporate brokerages worked together to create and enforce rules that inflated buyer commissions at the expense of sellers. Specifically, they claim that mandatory offers of buyer agent compensation—which some listing services are already backing down from—are anticompetitive.
NAR has already vowed to appeal the Burnett ruling, but the REALTOR® advocacy group is facing multiple challenges, including a combative Department of Justice and a second regional class action lawsuit, already in the later stages.
“We stand by the fact that NAR’s guidance for local MLS broker marketplaces ensures consumers get comprehensive, equitable, transparent and reliable home information and that brokerages of any size, service or pricing model get a fair shot at competing,” said Mantill Williams, an NAR spokesperson, in a statement. “We will continue to focus on our mission to advocate for homeownership and always put consumer interests first. It will likely be several years before is finally resolved.”
John Featherston, RISMedia’s founder and CEO, predicted that barring a successful appeal, the Burnett ruling “most likely will be remembered as a landmark case, which may have changed the course of compensation for real estate agents across the country.”
Experts who spoke to RISMedia for an exclusive report on the broader landscape of commission lawsuits described how a single verdict like the Burnett case could inspire “copycat” cases. But a nationwide class, with several more large real estate companies as defendants could prove an entirely different challenge.
“We are disappointed that before the jury decided this case, the court did not allow them to hear crucial evidence that cooperative compensation is permitted under Missouri law,” said Darryl Frost, a spokesperson for Keller Williams, in a statement. Keller Williams was a defendant in the Burnett case.
“This is not the end,” Frost continued. “Keller Williams followed the law regarding cooperative compensation and stands by the evidence presented on the 100-year-old practice of sellers’ agents offering commissions to other agents who help market and sell homes.”
Legal sources told RISMedia during the trial that plaintiffs in the Burnett case were also already preparing for the inevitable appeal as they presented their case. The judge, Stephen R. Bough, applied the stricter of two possible antitrust analyses to the case. An appeals court could rule that he was mistaken in this, opening the door for defendants to present new evidence.
With how quickly the plaintiffs’ attorneys are moving, though, real estate professionals will have to adapt as fast—or faster—in the years to come.
This is a developing story. Stay tuned to RISMedia for further updates.
