Plaintiffs’ Lead Attorney Files New, Nationwide Lawsuit Against ‘Remaining Large Corporate Real Estate Companies’ Minutes After Verdict Is Handed Down
KANSAS CITY—After four years working its way slowly through the federal judicial system and two weeks of contentious courtroom drama, the landmark Burnett class-action case delivered a massive blow to organized real estate today, with an eight-member jury deliberating for less than three hours before finding that real estate power players conspired to inflate commissions in violation of federal law, awarding $1.78 billion to the plaintiffs.
Focused on buyer agent commissions—specifically, mandatory offers of compensation paid by seller agents to buyer agents—the ruling is already sending shockwaves across the industry, as the plaintiffs’ attorneys filed an identical, nationwide lawsuit within minutes of the verdict being handed down, naming even more large real estate companies.
The National Association of REALTORS® (NAR), HomeServices of America and Keller Williams were named defendants in the Burnett case, with RE/MAX and Anywhere choosing to settle in the weeks before the trial, paying around $130 million altogether and agreeing to change policies.
Mike Ketchmark, lead attorney for the plaintiffs, told RISMedia that the new nationwide lawsuit names “NAR and the remaining large corporate real estate companies,” alleging the exact same “misconduct” that he was able to prove to the Kansas City jury.
“The jury returned a verdict…and told these corporations to get their hands out of homesellers’ pockets,” Ketchmark said. “Our goal is to take this nationwide and bring the same relief across the country.”
Darryl Frost, spokesperson for Keller Williams, said that while the company respects the jurors “who decided the case based on the issues in front of them,” the company still disagrees with how the case was decided.
“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,” Frost wrote in a statement. “This is not the end. 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. Looking forward, we will consider all options as we assess the verdict and trial record, including avenues of appeal.”
Earlier in the trial, the judge disallowed defendants from referencing state laws, although NAR did briefly refer to these statutes in closing arguments.
Mantill Williams, a spokesperson for NAR, was even more explicit in regards to an appeal.
“This matter is not close to being final as we will appeal the jury’s verdict,” he said in a statement. “In the interim, we will ask the court to reduce the damages awarded by the jury. 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. We will continue to focus on our mission to advocate for homeownership and always put consumer interests first.”
It remains unclear what will change—or when—as far as the rules and practices that the plaintiffs successfully challenged in this case. Another, much larger class action trial still looms, focused on many of the same policies and same defendants, scheduled tentatively for early next year.
Experts and real estate insiders have offered varying opinions on how this kind of verdict will affect real estate, with most agreeing that major changes are likely based on precedent-setting cases like this one.
RISMedia Founder, President and CEO John Featherston, who attended the opening days of the trial, said he found the plaintiffs’ case “to be extremely weak on it’s foundation.”
“Yet the plaintiff’s skilled attorneys accomplished their of goal of convincing the jury of everyday folks,” he continued. “Barring the decision being overturned through appeal, the residential real estate industry’s compensation commission sharing model will most likely be changed.”
NAR CEO Bob Goldberg was asked directly during this trial whether the organization would change its policies if the jury found in favor of the plaintiffs. He declined to say, adding there would need to be a “legal review.”
For the average agent, the immediate impact is also unclear. Part of the plaintiffs’ ask was for a “permanent injunction” against the defendants, preventing them from forcing sellers to pay the buyer-broker. Some regions are already taking steps to loosen or end the system of “cooperative compensation,” and other companies have sought to distance themselves from NAR.
Additionally the Department of Justice has indicated that simply allowing offers of $0 in the MLS—as several big MLSs have already done—is not enough, as it pursues its own investigation of alleged antitrust violations in the real estate industry.
This is a developing story. Check back here for industry reactions post-verdict and ongoing updates.
William Schmidt contributed to this reporting.