Less than a month after the same court upheld the National Association of Realtors®’ settlement in the historic Burnett lawsuit, the Court of Appeals for the Eighth Circuit has now also upheld the settlements in the Gibson commission lawsuit.
The Gibson lawsuit is the main copycat of the Burnett case, originally filed on the same day the verdict was given in the Burnett—Oct. 31, 2023—by the same lawyers.
The settlements being challenged included Compass, Redfin, The Real Brokerage, Realty ONE Group, At World Properties (@properties parent company), Douglas Elliman, Engel & Völkers, HomeSmart and United Real Estate. These settlements contributed $110.6 million to the total $1.018 billion to the funds collected to pay back to class members.
Challengers—lawyers who represented plaintiffs in other copycat cases—had previously filed objections that the settlements “exceeded” the scope of certified classes, and the amounts settled were “grossly disproportionate” to what was adequate, along with other technical and legal arguments as they urged the appellate judges to carve out exceptions or overturn lower court rulings.
In the Eighth Circuit’s opinion, judges affirmed the Gibson settlements for similar reasons as they did the Burnett settlement, referring to the recent judgement several times throughout.
In the Burnett ruling, the Eighth Circuit said that the settlement satisfied relevant federal rules, and that copycat cases used the “same factual predicate” as the original lawsuit. This was again stated in the Gibson ruling.
The judges additionally affirmed in the Burnett filing that “practice changes address the challenged rules and attempt to remediate the harm” caused by “inflated home prices.”
“The plaintiffs in Burnett challenged the NAR rule in a class action and won at trial. A major settlement followed where the district court expanded the class nationwide and released claims from similar copycat lawsuits. We affirmed the district court’s approval of that settlement.”
The four challengers—James Mullis, Monty March, Robert Friedman and Benny Cheatham—were also participants in appealing NAR’s Burnett settlement. Their arguments were similar to the ones made against the Burnett settlement: The Gibson settlements do not cover “claims asserted by class members to recover damages in separate transactions when they purchased a home.”
There were also challenges related to the Real Estate Board of New York (REBNY), with objectors arguing they could not be looped together in the settlements due to REBNY’s long independence from NAR.
This was also denied by the court, with the filing stating that the judges found it “probative to the point that the nucleus is the relationship between conspiratorial MLS rules and inflated prices, not the geography or the particular MLS involved.”
The objectors also argued that the settlements “greatly exceed the scope for which classes were certified and for which discovery was conducted,” that the settlement amount “is grossly disproportionate to the amount appropriate to adequately compensate the injured parties and neither the Court nor members of the class have had the opportunity to review records that would adequately allow them to determine ability to pay,” and that the practice changes made were “illusory.”
The filing noted that when the district court approved the aforementioned settlements, it found that nationwide expansion of the class to be “proper,” and found that “(t)he slight differences that the New York objectors contend exist between the relevant NAR and REBNY rules are not material or sufficient to create a distinct factual predicate.” This was a judgment that the Eighth Circuit upheld in its filing.
Objectors also argued that, due to the differences in transactions between buying and selling, claims from buyers and sellers could not be brought together under the settlements. The Eighth Circuit also rejected this challenge, specifically naming Mullis in its argument.
“The claims nevertheless arise from the same nucleus: the conspiratorial MLS rules that drove up the prices for all home transactions,” the filing stated.
