Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
The wheels of justice may turn slowly, but the last week of February (into the first week of March) brought updates aplenty to the legal action facing the real estate industry.
“Commission lawsuits,” the phrase haunting every REALTOR® these past months, is back in the news. And new class-action lawsuits have also been filed, but of a different nature than commissions. A law affecting renters living in New York will not have its day before the Supreme Court.
Read on for those updates and more.
New movement in Moehrl commission case
Filed in 2019 in the Northern District of Illinois, Moehrl v. National Association of REALTORS® alleges anticompetitive practices by the defendants (NAR and HomeServices of America are the only defendants who haven’t settled–Keller Williams’ settlement also has yet to be approved), such as steering, price fixing, and structuring of buyer agent compensation. NAR has pushed to consolidate other ongoing commission lawsuits into Moehrl.
In December 2023, the defendants pushed for a “summary judgment” in their favor (essentially, the judge makes a decision without the case going to trial). On February 26, 2024, the plaintiffs filed a countermotion for at least a partial summary judgment in their favor.
Also on February 26, the plaintiffs filed to exclude the expert testimony of David Stevens on behalf of the defendants. Stevens is a mortgage industry professional; he is currently the CEO of Mountain Lake Consulting, Inc. and previously served as president and CEO of the Mortgage Bankers Association (MBA) as well as assistant secretary of housing and federal housing commissioner at the United States Department of Housing and Urban Development (HUD).
The plaintiffs allege that Stevens’ testimony “offers opinions that lie far beyond his experience and expertise in the U.S. mortgage financing industry.” In particular, Stevens’ included opinions on mortgage practices in other countries and antitrust are cited as evidence against him in the motion, as he is not considered an expert on these issues.
Update on sexual harassment charges against eXp agents
Since early 2023, eXp Realty and eXp World Holdings have been the subject of a civil suit alleging that, from 2018 to 2020, Michael Bjorkman and David Golden took advantage of company recruiting events to drug and assault women–and that company leadership “turned a blind eye.”
On February 29, 2024, Judge André Birotte Jr. (judge of the United States District Court for the Central District of California) allowed several of the case’s accusations to move forward, including the charges of assault, and that eXp CEO Glenn Sanford failed to implement proper “safeguards.” As of March 1, 2024, plaintiffs and defendants have requested a five-month delay for the trial. Should it be granted, the trial will begin in April of 2024.
This civil lawsuit should not be confused with a similar lawsuit against eXp, Bjorkman and Golden filed by eXp agent Anya Roberts in December 2023.
An eXp spokesperson told RISMedia via email that, “eXp hopes and trusts the court will give a full and fair hearing to the plaintiffs as they pursue claims against the individuals who allegedly assaulted them. However, the claims against eXp and its leadership have no basis in fact or law, and to which eXp vehemently denies. The court has dismissed some claims and we are prepared to present and defend our position on the others.”
Loan Factory faces new class-action suit
A class of loan originators filed a class-action suit against California-based company Loan Factory and its CEO, Thuan Nguyen. The plaintiffs, represented by lead plaintiff Derek Daniel Bobadillan (branch manager of the Bobadilla Finance Team Home Loan), are loan professionals unaffiliated with Loan Factory who had their personal information displayed on Loan Factory’s “Find a Loan Officer” page without the company asking for their permission.
Loan Factory using the likeness of non-affiliated professionals without consent would violate California state privacy and intellectual property law. The complaint states:
“Naturally, Mr. Bobadilla and the Class place great value on their online personas and must control carefully any specific uses of their names, images, likenesses, and personal information because of the economic value of their names, images, likenesses, and personal information to generate leads for loans.”
However, the issue at hand is more than just that. The plaintiffs (who, again, are not affiliated with Loan Factory and thus its competitors) allege that by Loan Factory displaying their personal information on the site, potential business for them was instead steered towards Loan Factory (i.e. when customers Googled the plaintiffs’ names, they would be redirected to Loan Factory).
The plaintiffs are thus requesting both restitution for lost profits and a statement of wrongdoing by Loan Factory. The personal information in question is no longer displayed on the Loan Factory website as of this time.
Supreme Court denies certification to rent stabilization case
Two ongoing challenges to New York City’s 1969 Rent Stabilization Law (which grants tenant protections, such as limits on how much landlords can charge on six-unit or more buildings built before 1974) were decided on February 20, 2024. The U.S. Supreme Court declined to grant certification (hear the cases), effectively deciding the cases for the defendants and allowing the Rent Stabilization law to stand.
The challenges were brought forth by two New York landlords: 74 Pinehurst LLC and 335-7 LLC. In 74 Pinehurst LLC V New York and 335-7 LLC. V New York, the landlords took specific issue with a 2019 amendment to the Rent Stabilization Law that landlords can only set aside one unit of a rent-stabilized building for personal or family use. The plaintiffs argued such regulations on property rights are unconstitutional under the Fifth Amendment. Justice Clarence Thomas wrote that these cases, with their “Generalized allegations,” were not the proper venue by which to decide the question of constitutionality.
In other words, though the Rent Stabilization Law stands for now, future challenges could be forthcoming given Justice Thomas’ apparent openness to hearing them.
