While Howard Hanna saw some allegations thrown out in the homebuyer commission lawsuit facing the brokerage in the Eastern District of Pennsylvania (known as Davis v. Hanna Holdings), the company must face claims that it conspired to inflate commissions.
Judge Wendy Beetlestone ruled on Monday, March 9 to dismiss the plaintiffs’ claims of a conspiracy by Howard Hanna to inflate commissions in the states of Colorado, New York, Oregon, Pennsylvania, Virginia and Wisconsin. Hanna’s request to dismiss all other claims in the suit, across numerous other states, was denied.
Howard Hanna won a previous partial dismissal in this same suit last June when Beetlestone dismissed plaintiffs’ claims that Howard Hanna conspired with the National Association of Realtors® (NAR) and other brokerages to fix commission, as well as more than a dozen state-level claims based on consumer protection or unjust enrichment statutes.
Following this, plaintiffs then requested to file a second amended complaint, which Howard Hanna opposed claiming it did not address issues raised in the dismissal ruling. The motion was then granted by Beetlestone.
The second amended complaint once again brought forward the claims of a horizontal conspiracy (meaning that Howard Hanna was conspiring with other brokerages, its direct competitor) and reintroduced the argument of consumer protection laws in 21 states (including Colorado, New York, Oregon, Pennsylvania, Virginia and Wisconsin).
In her opinion on her dismissal ruling, Beetlestone stated that the amended complaint originally cited Colorado, New York, Oregon, Pennsylvania, Virginia and Wisconsin, however the plaintiffs withdrew these claims, which led to her ruling.
She also noted that she found factual and legal standing behind all other claims by the plaintiffs—a horizontal conspiracy and an “unreasonable restraint of trade” (meaning some sort of agreement to limit competition, aka the horizontal conspiracy alleged between Howard Hanna, NAR and other brokerages).
Specifically, Beetlestone said that plaintiffs “plausibly” put forward the factual elements of this conspiracy at what is still an early stage in the lawsuit. She wrote that Hanna’s citation of its victory in a seller-filed commission lawsuit was not relevant, and that participation in NAR and local associations could be used as “direct” evidence of an “illicit” agreement.
The DOJ also set its eyes on the lawsuit back in December, filing a statement of interest in which it stated that commissions are still possibly inflated and urging a judge to view “unreasonable” association rules as inherently unlawful.
“This case presents another opportunity for a court to assess purportedly anticompetitive agreements infecting the real-estate industry,” the DOJ wrote in the statement.
Howard Hanna declined to comment due to the ongoing nature of the lawsuit.
