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A federal judge has denied a request to stay proceedings against several brokerage services owned by real estate brokers after the plaintiffs argued that a settlement with the National Association of Realtors failed to prevent brokers from offering fees to buyers’ agents, a “key element of the antitrust conspiracy.”
On June 20, Judge William S. Stickman of the United States District Court for the Western District of Pennsylvania Motion to Suspend West Penn MLS is not affiliated with any real estate agents, but it paid about $1 million to Proposed Settlement with NAR Freed from fee-related antitrust lawsuits.
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The injunction temporarily halts West Penn MLS’ obligation to respond to a class action lawsuit filed in December by home sellers, now called Moratis, after the plaintiffs in the lawsuit (the former Spring Way Center).
The lawsuit alleges that West Penn MLS’s fee-related rules violate the federal Sherman Antitrust Act and are part of a “nationwide conspiracy to maintain inflated commissions within the real estate industry.” The rules are similar to NAR’s participation rules, which require listing agents to provide compensation to buyer’s agents for submitting properties to the MLS.
On June 19, West Penn MLS filed a motion to stay the case “to conserve judicial and party resources” until final approval of NAR’s proposed settlement is considered on November 26 in the U.S. District Court for the Western District of Missouri. The court is handling the settlement agreed to in the Sitzer-Barnett litigation, a massive fee lawsuit in which a jury found against NAR and a major real estate franchisor, resulting in damages that could reach $5.4 billion if tripled.
“If the motion for final approval of the Barnett Settlement is granted following the Fairness Hearing in November 2024, all individual and putative class claims against WPML in this matter will be waived, unless Plaintiffs and Class Members timely opt out of the Barnett Settlement,” the motion states.
However, on the same day, the plaintiff’s lawyer Reply against the motionThey objected to the scope of NAR’s proposed settlement, noting that NAR’s settlement was for $418 million and that it expanded from Missouri home sellers to “substantially all home sellers across the nation.”
“So they’re purporting to settle all claims of all parties injured by the antitrust conspiracy nationwide for 13 years. [percent] “There is simply no dispute as to what damages the jury found to have been caused by the conspiracy in a given state,” the complaint states.
“Further, this settlement will allow other parties involved in the same or similar antitrust conspiracies throughout the country to join the settlement and be released from all liability in their cases — some at no cost and some for a similarly small contribution.”
West Penn MLS, which had 9,203 subscribers at the end of 2023, will pay $920,300 to opt in to the NAR agreement, which includes a formula that says non-Realtor MLSs will be covered if they pay 100 times the number of subscribers they had last year.
Plaintiffs’ lawyers also criticized changes in transaction practice, the biggest of which is the prohibition on selling brokers making commission offers to buyer’s brokers via the MLS.
“However, this would not preclude offers elsewhere (even an independent MLS that chooses to settle, such as West Penn MLS),” the filing states.
“As a result, key elements of antitrust conspiracies are not thwarted, but simply go underground, making them harder to document and harder to thwart through antitrust law in the future. The Department of Justice believes it has fallen short on that front.”
In the massive Massachusetts brokerage fee litigation known as Nosalek, DOJ lawyer Jessica Leal told the court that while the DOJ has not yet taken a position on the NAR deal, it believes removing buyer broker compensation offers from the MLS is an “improvement.” Still, she added, “we believe that compensation offers should not be made anywhere, but certainly not on the MLS.”
Given the Department of Justice’s interest and the possibility of other objections, Moratis plaintiffs’ lawyers stressed that final approval of the NAR settlement is by no means certain.
“Mr. Leal also declined to state whether the Department of State would oppose the Missouri settlement, but indicated that the Department would certainly be watching closely with particular interest to see which parties participate,” the filing said.
“Given the concerns expressed by Mr. Leal, there will likely be multiple objections, including from the United States,” the filing adds.
“West Penn MLS is now seeking to join that settlement and is asking the court to stay the matter indefinitely until the Missouri settlement is approved or rejected.”
Granting West Penn MLS’ request for an injunction to block the lawsuit would “impair our ability to move this litigation forward,” especially if the case drags on for years, according to the filing.
“The best case scenario would be a five-month stay until the Western District of Missouri decides whether to reject or approve the settlement, after which there would be no appeal,” the complaint states.
“That is unlikely. Rather, the issue will likely be resolved while the Eighth Circuit is considering the case. [Court of Appeals] Whatever the decision of the Western District of Missouri, it will decide whether it should be upheld or overturned.
“In a case of this magnitude, it is not unexpected that one or more parties will seek leave to appeal. [from the U.S. Supreme Court]Delays could last years, during which time evidence would become stale, witnesses would forget important events, and members of the plaintiffs’ class would die while awaiting relief. Prejudice would be extreme.”
Judge Stickman denied West Penn’s request for a stay of hearing without comment.
Inman has reached out to West Penn MLS for comment and will update this article if we hear back.
Email Andrea V. Brambila at
