In a flurry of filings, defendants in the Moehrl commission class action lawsuit, which is currently the closest to a potential trial, are trying to have the case thrown out or at least disallow expert testimony presented by the plaintiffs.
All three remaining defendants in the case—the National Association of REALTORS® (NAR), Keller Williams and HomeServices of America—filed motions for summary judgment yesterday evening, asking Judge Andrea R. Wood to immediately rule in their favor based on the progression of the case so far.
“At this stage of the litigation, Plaintiffs are no longer entitled to rely on their allegations and inferences based on those allegations,” wrote attorneys for Keller Williams in their filing. “After three years of discovery, involving sworn deposition of over 60 witnesses and the production of millions of pages of documents, Plaintiffs cannot produce evidence that supports the conclusions the Court drew from Plaintiffs’ allegations.”
The Moehrl suit is similar in most respects to the Burnett case, which saw a jury award $1.8 billion to recent homesellers in Missouri last October. In both, people who recently listed their properties on NAR-affiliated MLSs claim that NAR conspired with big brokerages to create and enforce rules that inflated commissions they paid.
But Moehrl is much larger in scope, with a certified class spanning 20 MLSs across multiple states, with a “conservative” estimate of damages roughly six times larger than Burnett.
But Wood said recently that she would not be leaning too heavily on the Burnett ruling as Moehrl moves forward toward a trial in late 2024.
It seems very unlikely that Wood will choose to rule against the plaintiffs at this advanced point in the case—at least in every one of these motions. All three defendants make their own arguments as to why the evidence, legal issues and context should compel Wood to rule immediately in their favor, without a trial.
Plaintiffs will also have a chance to file arguments opposing the motions to dismiss, before Wood rules.
Mostly, defendants focused on the allegations of a conspiracy, claiming that any evidence they worked to enforce or create alleged anti-competitive rules was circumstantial—or non-existent.
NAR, in its filing, laid out four total reasons that the organization claimed are grounds to immediately end the litigation, including lack of standing by the plaintiffs, who are not “direct purchasers” because they did not make offers of compensation to buyer agents themselves, and lack of evidence of a conspiracy, saying plaintiffs “misread” NAR rules.
“(NAR) policies unambiguously prohibit the exact conduct Plaintiffs complain is anticompetitive and the…material facts are undisputed, any one of which is sufficient to dispose of Plaintiffs’ claim as a matter of law,” wrote NAR’s lawyers.
HomeServices, for its part, also dug in against accusations of conspiracy, calling all the alleged antitrust behavior “unilateral conduct,” and echoing many of the arguments made in the Burnett trial. Also like Burnett, lawyers for HomeServices sought to distance themselves from the conduct of affiliates, noting that plaintiffs, in the discovery process, “pursued long lines of questioning of subsidiary company employees on their internal policies, wrongly positing that such policies are attributable to the HomeServices Defendants.”
“The HomeServices Defendants do not dictate policies that individual HomeServices brokerage subsidiaries adopt or the subjects addressed by those policies,” the lawyers continued. “More importantly, the HomeServices Defendants were not involved in the subsidiaries’ claimed anticompetitive conduct and did not impose the Buyer Broker Commission Rule on the subsidiaries or otherwise dictate how they should handle cooperative offers of compensation.
Plaintiffs in the Burnett case spent a significant amount of time connecting the decisions and policies of HomeServices’ executives to the actions of affiliate or franchise brokerages.
Keller Williams argued that its own policy requiring agents to join local MLSs (and by extension, NAR) was made “independently” of NAR or other defendants, and claimed the company does not monitor or enforce that policy.
“Without some evidence that Keller Williams adopted the policy to ensure agent adherence with NAR’s rules or indication that Keller Williams communicated about its policy with NAR or anyone outside the company—evidence that simply does not exist—Keller Williams’ policy cannot support having Plaintiffs’ claims against Keller Williams presented to a jury,” the company’s lawyers wrote.
NAR also spent significant space in its motion emphasizing the alleged pro-competitive aspects of the organization’s rules, claiming that “cooperative compensation,” where the seller agent pays the buyer agent a portion of the commission, is beneficial to both sides of a transaction.
This line of argument will be key if the case goes to trial, as the judge in the Burnett case disallowed defendants from presenting evidence to the jury that the disputed rules were pro-competitive, based on a specific application of antitrust analysis.
When Wood certified the class in Moehrl last March, she wrote that she “expresses no view on the proper mode of analysis at this stage.”
Challenging the experts
Along with asking for immediate judgment, the defendants also joined in a motion to exclude the expert testimony commissioned by the plaintiffs. Dueling claims by economists were a key factor in the Burnett trial, and blocking the plaintiffs’ chosen witness would be a major victory.
The two disputed witnesses are Einer Elhauge, a Harvard law school professor and antitrust expert, and Nicholas Economides, a New York University business and economics professor.
Economides, back in March, presented a methodology for calculating potential damages, using a 1.55% commission rate for buyer agents drawn from other allegedly comparable markets outside the United States. By that measure, he estimated $13.7 billion in damages to the class, while saying he used “extremely conservative” assumptions to arrive at that figure.
Elhauge has performed comprehensive studies of real estate rules and practices, claiming to have evidence that if sellers knew they were paying buyer agents, they would refuse or negotiate lower commissions.
In their joint motion, the defendants called Economides’ methodology “unreliable,” saying he failed to take into account historic factors related to buyer agent usage in the United States, and that his selection of supposedly comparable countries to the United States was “arbitrary and self-serving.”
They also questioned Elhauge’s methods, and accused him of using “speculative predictions” that should be inadmissible.
NAR’s motion for summary judgment went further into these objections, claiming that Elhauge and Economides could have used domestic markets not affiliated with NAR as comparisons—an argument that was used unsuccessfully in the Burnett case.The REALTOR® organization cited their own expert witness, Harvard-educated antitrust researcher Lauren Stiroh, who found that MLSs in the United States not affiliated with NAR actually have higher commission rates than those covered in Moehrl.
