Judge Stephen R. Bough, presiding over the landmark Burnett class-action lawsuit, denied a petition by defendant HomeServices of America for a mistrial, saying that alleged misconduct and prejudicial actions by the plaintiffs did not warrant starting over in front of a new jury.
“The Court finds that mistrial is too drastic a remedy under the current circumstances,” Bough wrote.
The trial has at times grown contentious and has featured plenty of sparring and posturing—particularly from the plaintiffs.
On Tuesday, however, a video shown by plaintiffs’ lead attorney Mike Ketchmark in his cross examination of HomeServices of America Founder and Chairman Ron Peltier caused consternation among the defendants—though notably, they were slow to object to its use.
“(T)he Court finds that Defendants failed to timely object to the video,” Bough continued in his order.
That apparent blunder could prove costly. The video, which showed Berkshire Hathaway HomeServices executive Allan Dalton on a podcast broadcast in September 2019, describing a vulgar and aggressive strategy for refusing to negotiate commissions, was “properly used for impeachment purposes,” Bough wrote, though yesterday in court, he directed Ketchmark not to mention it any more as the trial proceeds.
Peltier had claimed that HomeServices of America has never done anything without the “highest of integrity, honesty and sincerity,” and also claimed that the company doesn’t “train people to intimidate people,” with Ketchmark saying the video proved otherwise.
Bough also struck from the record mentions of an Inman article Ketchmark attempted to use as evidence, as well as mentions of the salaries of National Association of REALTORS® (NAR) executives.
The plaintiffs’ case hinges on convincing a jury that the major corporate brokerages conspired with NAR on rules that limited competition and harmed consumers, focused specifically on buyer agent compensation.
This latest judgment comes on the heels of another defeat for HomeServices of America, which had previously petitioned Bough to rule immediately in their favor in the case, claiming plaintiffs had provided no evidence of their claims of conspiracy and antitrust violations.
Bough denied that motion yesterday afternoon, along with a similar petition from NAR asking for the same immediate judgment. Keller Williams, the third named defendant in the case, has a petition for immediate judgment still pending.
NAR’s petition for an immediate judgment in their favor, which was filed yesterday, also focused on the legal foundations of the lawsuit, with lead attorney Ethan Glass arguing that Bough is applying too narrow a lens on the antitrust issues being examined.
Legal sources previously told RISMedia that the plaintiffs have likely already been arguing and introducing evidence against this eventuality, which would also come up if NAR loses the case and then appeals.
Glass also reiterated many of the arguments that NAR has made in front of the jury—that evidence introduced by the plaintiffs of NAR membership requirements, or use of so-called “model rules,” are not a conspiracy, and that commissions are much more flexible than plaintiffs have alleged.
“NAR Rules are not an unreasonable restraint. Offers of compensation from listing brokers to cooperating brokers benefit home sellers because an offer incentivizes brokers to find buyers for the listing,” he wrote.
David Kully, writing for Keller Williams, also characterized plaintiffs’ claims as legally and substantively without merit in asking for an immediately favorable ruling.
“Plaintiffs’ evidence that Keller Williams participated in a conspiracy is based on three things: a book, a speech and a rule. But Plaintiffs have offered no evidence whatsoever that these materials constitute anything other than unilateral conduct consistent with Keller Williams’ independent business interests,” he wrote.
The book (written by Gary Keller) and the speech (made by Keller at an event that included representatives from other brokerages, and talked about commission rates) figured prominently in the plaintiffs’ arguments at the opening of the trial, with Keller appearing on pre-recorded video.
The rule is in reference to a requirement that agents join their local REALTOR® association and the MLS. Kully wrote that plaintiffs didn’t prove that this requirement caused agents to join the MLS, and also claimed they didn’t prove agents used Keller Williams training on commission negotiations when working with sellers.
Testimony in the case could wrap up by the end of this week, with the jury beginning deliberations early next week.
Stay tuned to RISMedia for more updates from the courtroom.
William Schmidt contributed to this reporting.
