Plaintiffs in the Gibson case have filed in opposition to eXp’s motion for a stay following its proposed settlement, looking to halt the settlement’s approval process so it can be evaluated.
Earlier this month, the brokerage filed that it had struck a settlement in seller-filed commission lawsuits for $34 million, and agreed to “adopt certain practice changes.” The settlement was negotiated in the Georgia-based Hooper case, a smaller Burnett copycat case.
But plaintiffs behind the much larger Gibson case—the same lawyers who represented plaintiffs in Burnett—claim that settlement was reached via a “reverse auction process,” in which the “defendant selects among attorneys for competing classes and negotiates an agreement with the attorneys who are willing to accept the lowest class recovery (typically in exchange for generous attorney fees).”
In their filing asking a judge to deny eXp’s request for a pause in the Gibson case, plaintiffs pointed to the Manual on Complex Litigation, which “warns that courts should be skeptical of the adequacy and fairness of a proposed settlement arrived at via a reverse auction.”
The plaintiffs stated that eXp had met with them prior to negotiate possible settlement terms, which were then rejected by the brokerage. eXp then went on to negotiate and settle in the Hooper case.
According to a supplemental filing, the Gibson plaintiffs said they spoke to the lawyers behind Hooper on October 8, the day after the settlement was struck. The Hooper plaintiffs allegedly confirmed that they “did not consider eXp’s cash on hand, amount of eXp’s cash equivalents, or eXp’s lack of debt” when negotiating the settlement.
The argument plaintiffs have presented is that eXp’s settlement “does not provide adequate and fair value for the class given eXp’s financial resources, which equal or exceed those of Anywhere, RE/MAX, Keller Williams, and Compass—defendants in Burnett and Gibson that all agreed to materially larger settlements than eXp.”
To get more specific, Anywhere settled for $85 million, RE/MAX for $55 million, Keller Williams for $70 million and Compass for $57.5 million. The Gibson plaintiffs pointed out that eXp’s market capitalization is currently close to $2 billion, more than both Anywhere and RE/MAX combined.
They also argued that the Hooper case should be transferred into the same court—the Western District of Missouri, where the Burnett trial took place—a motion that had already been proposed in the Hooper case itself previously. The plaintiffs stated that “both the law and the facts strongly support” the transfer, which should allow the court to “evaluate the adequacy and fairness of eXp’s proposed settlement.”
eXp said in a statement that the plaintiffs filing is “seeking to influence which court will decide if eXp’s nationwide settlement is approved.” The brokerage stated it is “confident its settlement will be found to be fair, reasonable and adequate.”
