Law360: Broker Commission Practices Change In Antitrust Settlements

Oct 11, 2023

By Lauraann Wood

Law360 (October 10, 2023, 7:24 PM EDT) -- The $138.5 million in antitrust settlements that home sellers reached with Realogy Holdings Corp. and Re/Max will also include injunctive relief requiring business-practice changes that aim to add more transparency around the existence and offering of broker commissions, according to the docket and a statement from one of the parties.

Among the business practice changes in the sellers' $83.5 million deal with Realogy, which now operates as Anywhere Real Estate Inc., and their $55 million deal with Re/Max are requirements that the companies and their affiliated agents refrain from setting any minimum commission requirements and remove software that allows the companies to filter home listings by a broker's compensation, according to court documents entered last week and a Friday announcement by Anywhere Real Estate.

Anywhere and Re/Max have also agreed to make clear that broker commissions are negotiable and not set by law, advise and remind franchises and affiliated agents of their obligation to show and market properties regardless of the existence or amount of a broker commission, and not to require their franchisees and affiliated agents to join the National Association of Realtors or follow its code of ethics or multiple listing service handbook.

Anywhere's settlement terms will sunset after five years, while Re/Max's terms are not subject to a sunset, according to settlement documents.

The details of the real estate companies' settlements came just weeks after they'd struck a deal in the home sellers' antitrust cases claiming the NAR, Anywhere, Re/Max and several other real estate companies violated federal antitrust laws by conspiring to get higher broker fees by requiring sellers to pay buyer broker commissions.

Anywhere CEO and president Ryan Schneider said in a written statement that the company's nationwide settlement, which resolves claims of anticompetitive broker commissions in Illinois and Missouri, said the company believes its settlement "is the right course of action to remove future uncertainty and ongoing legal expense, serving the best interests of the company, our affiliated agents and franchisees and shareholders, and enabling Anywhere to focus on moving real estate to what's next."

Representatives for Re/Max and the home sellers didn't immediately respond Tuesday to a request for comment.

The plaintiffs signaled their settlement with Re/Max on Sept. 18, and they settled with Anywhere earlier that month. Both settlements came as parties had been preparing for a jury trial in the Missouri case brought by Scott and Rhonda Burnett and several other homeowners, which is set to begin Monday against the NAR and other remaining defendants, according to court records.

The settlements resolve claims in both Burnett's Missouri suit and homeowner Christopher Moehrl's Illinois suit because they raise substantially similar claims against many of the same defendants, according to settlement documents filed in the Burnett case.

Moehrl filed his suit about a month before the Missouri plaintiffs launched their claims, with both suits targeting companies including BHH Affiliates LLC, HSF Affiliates LLC and Keller Williams Realty Inc. Both suits claim the NAR and the broker franchisors kept broker fees artificially high through the national association's industrywide commission rules requiring sellers to pay the commissions of brokers representing buyers.

U.S. District Judge Stephen R. Bough in Missouri certified three classes of home sellers in April 2022, which include hundreds of thousands of class members in Missouri and portions of Kansas and Illinois. The classes differ based on whether class members asserted claims under the Sherman Act, Missouri's antitrust statute or the Missouri Merchandising Practices Act.

The NAR sought an early win in the case in 2022, claiming the homeowners did not purchase services directly from the realtor companies and therefore have no standing to allege injuries, but Judge Bough shot the argument down, ruling hundreds of home sellers presented a genuine dispute in their grievances.

In April, the NAR, Re/Max, Realogy and Keller Williams attempted to stay and arbitrate the claims in the Moehrl case, arguing members of the class had arbitration agreements in their contracts. However, the court hadn't ruled on the motion by the time Realogy and Re/Max settled with the plaintiffs.

In Moehrl, the classes are represented by Susman Godfrey LLP, Hagens Berman Sobol Shapiro LLP, Handley Farah & Anderson PLLC, Cohen Milstein Sellers & Toll PLLC, Justice Catalyst Law and Teske Katz PLLP.

In Burnett, the classes are represented by Brandon J.B. Boulware, Jeremy M. Suhr and Erin D. Lawrence of Boulware Law LLC, Michael S. Ketchmark and Scott A. McVeigh of Ketchmark & McCreight PC, and Matthew L. Dameron and Eric L. Dirks of Williams Dirks Dameron LLC.

Anywhere Real Estate is represented by Morgan Lewis & Bockius LLP.

Re/Max is represented by JonesDay.

The cases are Moehrl et al. v. the National Association of Realtors et al., case number 1:19-cv-01610, in the U.S. District Court for the Northern District of Illinois, Eastern Division, and Burnett v. the National Association of Realtors et al., case number 4:19-cv-00332, in the U.S. District Court for the Western District of Missouri.

--Additional reporting by Faith Williams, Bryan Koenig and Dorothy Atkins. Editing by John C. Davenport.

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