In a concerted push, defendants in the Burnett case are seeking to overturn the jury verdict delivered back in October that found them liable for $1.8 billion for conspiring to inflate commissions, demanding the judge throw out the judgment, order a new trial or de-certify the class.
Keller Williams, HomeServices of America and the National Association of REALTORS® (NAR) filed seven separate post-trial motions late yesterday in federal court, officially contesting foundational elements of the case and arguing that “procedural and factual errors” should nullify the verdict.
“Correcting these legal and factual inaccuracies is paramount to show that the ongoing litigation against the real estate industry is misguided,” said HomeServices Executive Vice President Chris Kelly in a statement.
The filings reflect what has appeared to be an overall commitment by big real estate players to directly confront what has turned into a cascade of lawsuits following the Burnett verdict. NAR in particular has vehemently defended the practice of “cooperative compensation,” where seller agents split commission with buyer agents, even as more litigants—and regulators in the Department of Justice—line up to challenge this structure.
“These motions are an important step toward reversing this misguided and excessive verdict, which if left to stand would condemn a century-old practice that provides proven benefits to home buyers, home sellers, and the American real-estate industry,” said Theodore J. Boutrous Jr., a lawyer representing HomeServices in the case. “We welcome the Court’s review of our motions.”
Mike Ketchmark, lead attorney for the Burnett plaintiffs, told RISMedia that the motions “are nothing more than rehashing the same arguments defendants lost over and over again during the trial.”
“There is zero concern on our side of the table. We will win the expected appeal and bring an end to all this price fixing once and for all,” he says.
It is unclear when Judge Stephen R. Bough, who is overseeing the case, will rule on the motions. Bough has yet to issue his final ruling after the jury verdict, in which he could potentially increase the $1.8 billion award.
The motions themselves reiterate many of the arguments defendants made during the trial and have highlighted publicly. NAR, in its motion for a new trial, focused on the antitrust analysis that Judge Stephen R. Bough applied to the case, which specifically disallowed defendants from arguing that their conduct or rules—namely, the “participation rule,” requiring offers of compensation to buyer agents—had pro-competitive effects.
“Although Defendants were prevented from developing a more complete record on the procompetitive benefits of the (participation rule) by the Court’s pretrial rulings, even the record that exists demonstrates that the (participation rule) enhances consumer welfare by reducing transaction costs and promotes the most basic competitive goal of Plaintiffs—to sell their houses faster and at higher prices,” NAR lawyers wrote.
Whether or not Bough is convinced by these arguments—seemingly unlikely, as he already considered many of them during and before the trial—defendants will almost certainly rely on them as they appeal the case to the 8th circuit.
Kelly, in his statement, characterized the ongoing legal battle as a fight for the fundamental, pro-consumer structure of organized real estate—again, arguments that defendants have been making since these lawsuits were filed almost five years ago, which have so far failed in the courtroom.
“In the face of this verdict’s potential far-reaching consequences for the real estate industry and, more critically, for the consumers we serve, our actions today are a resolute attempt to rectify certain trial issues, rulings, and conclusions that starkly contradict the actual dynamics of real estate transactions,” Kelly said.
Covering old ground
In its motion to have the verdict thrown out, HomeServices focused on the conspiracy elements of the case, arguing that plaintiffs used circumstantial evidence and failed to prove that the defendants illegally worked in tandem to create the rules that harmed consumers. Specifically, the HomeServices lawyers alleged plaintiffs equated a “mishmash” of evidence regarding internal policy and routine trade organization collaboration with a conspiracy.
Again, these arguments previously failed to convince Bough or a jury, but some or all of them will likely find their way in front of the appellate court.
In their motion for a new trial, Keller Williams offered many of the same assertions regarding the conspiracy, and also reiterated other arguments the company made during and after the Burnett trial.
Specifically, Keller Williams’ lawyers decried Bough’s ruling disallowing evidence regarding state laws in Missouri endorsing elements of “cooperative compensation,” and claimed that evidence showing discussion of commission rates by Keller Williams co-founder Gary Keller should not have been admitted.
“Lacking evidence of any involvement by Keller Williams in any activities relating in any way to the (participation rule), Plaintiffs further sought to distract the jury with evidence of completely irrelevant subjects, which Keller Williams sought unsuccessfully to have excluded before trial,” the filing reads.
All three defendants also reiterated arguments disputing whether sellers are “direct purchasers” of real estate services under antitrust laws—a technical legal question that seems like it will play a huge part in many of the ongoing commission lawsuits, with one judge already ruling that sellers are, in fact, direct purchasers.
NAR had argued in that case that sellers were closer to direct purchasers than buyers, attempting to get another lawsuit filed by recent buyers dismissed.
In a more novel maneuver, HomeServices is also seeking to decertify the class in Burnett, which right now includes homesellers who used five specific MLSs over a four-year period.
The HomeServices lawyers asked Bough to decertify this class, claiming that damages were not broadly applicable to everyone in the class, and that “highly individualized facts” were incorrectly applied to the entire cohort of sellers.
Specifically, HomeServices argued that each seller had different preferences and a different propensity to adjust their sales price. Many also benefited from the participation rule if they were simultaneously buying a house, the lawyers claimed.
Though again, Bough previously rejected much of this argument, the HomeServices lawyers also leveraged on testimony presented at trial by plaintiffs, who all expressed different priorities and attitudes about their home sales, all of which could affect their willingness to participate in “cooperative compensation.”
“The desire for a quick sale that motivated some class members undoubtedly impacts the amount of cooperative compensation those class members would be willing to authorize in the ‘but-for’ world, as offers of competitive cooperative compensation incentivize buyer brokers to locate qualified buyers and successfully close the sale,” HomeServices argued.
While Bough and likely more jurists will weigh in on these arguments, NAR and the other big brokerages are also seeking more broadly to defend themselves in the court of public opinion. How consumers view the practice of organized real estate, and the power players in the industry, could be just as important in the long run as the outcome of the Burnett case, and the dozens of other similar lawsuits filed since.
“We are concerned that the rendered verdict, along with the surge of similar lawsuits in recent months in other geographies, risks undermining the interests of the very consumers it aims to protect,” said Kelly. “This concern is particularly acute for first-time and lower-income buyers, who often encounter heightened challenges in achieving homeownership. If left unchallenged, the recent verdict could have a chilling effect on the ability of these consumers to purchase a home.”
Editor’s note: This story was updated to include comments from plaintiff’s lead attorney Mike Ketchmark.
