Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
Broker lawsuit rulings ripple through courts
The National Association of Realtors® (NAR) won a pair of major rulings in the ongoing saga of brokers suing over Realtor® membership requirements and MLS access. After winning dismissal of the lawsuits filed in Texas and Pennsylvania, NAR lawyers cited these rulings to judges overseeing separate cases in Georgia and Michigan as evidence the broker lawsuits are without merit.
Broadly, brokers have argued that making Realtor® membership at multiple levels (the “three-way agreement”) or tying MLS access to Realtor® membership violates antitrust laws.
Federal district judges are not required to follow rulings of other district judges, and all of the broker lawsuits are based on different local markets and factual precedent.
In the Michigan case, plaintiffs pushed back, claiming that the Texas case was based on a different antitrust statute and lacked allegations and evidence that their lawsuit has provided.
“While Plaintiffs acknowledge that some of the claims set forth in (the Texas case) are similar to those in this case, they are not the same, nor are they dispositive of the Plaintiffs’ action,” lawyers for the Michigan brokers wrote,
NWMLS faces ‘expensive’ discovery after judge rules for Compass
A federal judge dealt a blow to the Northwest Multiple Listing Service (NWMLS) on Wednesday, denying its attempt to halt discovery in an explosive federal antitrust case that’s part of a nationwide legal showdown reshaping how homes are sold across America.
U.S. District Judge Jamal N. Whitehead rejected NWMLS’ motion to stay discovery while the listing service fights to dismiss the lawsuit brought by Compass, according to court documents filed Wednesday with the U.S. District Court for the Western District of Washington in Seattle.
The ruling means Compass can now dig through NWMLS’ internal documents and communications—exactly what it wanted to avoid. In his ruling, Whitehead wrote that while NWMLS’s motion to dismiss “would be dispositive if successful,” the court wasn’t “convinced that the plaintiff will be unable to state a claim for relief.” He also noted that granting the motion for dismal would unnecessarily delay litigation.
Compass first sued NWMLS in April, after a back-and-forth over private listing rules the independent-MLS has long enforced. Compass later filed another lawsuit against Zillow based on similar disputes.
Mr. Cooper data breach lawsuit takes big step forward
A federal judge is allowing a class-action lawsuit against mortgage mega-servicer Mr. Cooper—currently in the process of being acquired by Rocket—to move forward in part, ruling that the company must face claims of breach of contract and negligence from customers over a 2023 cyber attack that leaked millions of people’s private data to hackers.
In October of 2023, Texas-based Mr. Cooper disclosed that it had suffered a “data breach,” which was later revealed to be a successful cyber attack by malicious actors who obtained Social Security numbers and other highly sensitive information from almost 14 million former and current customers.
“Plaintiffs have sufficiently alleged that Defendants failed to adequately prepare for a cyberattack and secure their (private information),” Judge David C. Godbey wrote, noting that Mr. Cooper previously admitted it was regularly targeted by hackers and pointed to the plaintiffs’ allegations that the company didn’t take “reasonable measures” to protect data.
Some claims, including invasion of privacy, were dismissed, while Godbey also declined to rule on allegations of numerous state-level violations in the consolidated class-action lawsuit. He set a tentative deadline for next March to certify that class, with plaintiffs asking to include all 14 million people affected by the attack.
Buyer lawsuit delayed as plaintiffs grapple with MLS data
Batton, the original homebuyer commission lawsuit, has been granted an extension of September 22 for the plaintiffs to file their class certification motion. The extension has been granted for the plaintiffs to obtain the necessary data through discovery.
In court filings, lawyers for the plaintiffs claim that they only discovered during the lawsuit that many of the defendants don’t gather or store the kind of data—on home prices, commissions and home characteristics—that they need for expert testimony. Seeking that information from MLSs and portals has been complicated, they claimed, and specifically cited multiple MLSs that provided incomplete or unwieldy datasets.
One MLS deleted commission data and had to work with vendors to restore it, the plaintiffs said.
Judge LaShonda Hunt expressed some frustration with the delay, but ultimately granted another extension, saying she would not approve any further delays to the deadlines.
CrossCountry Mortgage accused of kickback scheme with small brokerage
Multiple lawsuits filed this summer are alleging that CrossCountry Mortgage struck a backroom deal with North Carolina-based Raleigh Realty—which boasts only about 20 agents—to send referrals in exchange for cash in violation of RESPA.
Allegedly, a “co-marketing agreement” was used to obscure what plaintiffs describe as a blatant pay-to-play deal between the brokerage and the mortgage company, with the lawsuit including a screenshot from a Raleigh Realty executive telling agents they had to refer clients to a particular loan officer. Agents who didn’t follow the directive were “reprimanded, suspended, and otherwise disciplined” according to the lawsuit.
Because they were steered to loans with higher rates, the plaintiffs claim they are paying tens of thousands of dollars more over the life of their loan. They are asking for triple damages, as well as a declaration that both companies violated RESPA.
