Editor’s Note: This story was originally published on Thursday, Oct. 19, 2023.
With the bombshell Burnett class-action lawsuit trial in its fourth day in federal court in Kansas City, Missouri, lawyers for the defendants (specifically representing HomeServices of America) continue to contest some of the more dramatic portions of plaintiffs’ testimony and arguments about how real estate commissions are decided—so far unsuccessfully.
Pre-taped depositions from major real estate players, including HomeServices President and CEO Gino Blefari and National Association of REALTORS®CEO Bob Goldberg, have already been played, as plaintiffs seek to convince a jury that the major corporate brokerages conspired with NAR on rules that limited competition and harmed consumers, focused specifically on buyer agent compensation
As Mike Ketchmark, lead counsel for the plaintiffs, has used these video excerpts to highlight alleged commission-fixing by everyday agents as well as major industry executives, HomeServices’ lawyers are saying this approach is intended to prejudice the jury while ignoring the substance of the case.
“If Plaintiffs are not prohibited from continuing down this path, there is a substantial risk the jury would find the HomeServices Defendants liable based not on a conspiracy between them and the other Defendants in this case, but an unactionable conspiracy between the (HomeServices) subsidiaries and their agents, or the subsidiaries’ unilateral conduct,” wrote Robert MacGill in a court filing.
MacGill specifically highlighted a moment when Ketchmark asked HomeServices President and CEO Gino Blefari if it was “perfectly fine” for affiliated companies to set commissions or train agents on a 6% commission standard.
“Whatever the answer these non-attorney witnesses may give, the question alone leaves the impression to the jury that something illegal has occurred, when none has,” asserted MacGill.
Justice Stephen R. Bough, who is presiding over the case, denied the request without comment, meaning that for now, Ketchmark will be allowed to continue these lines of questioning.
The dispute over this kind of testimony, which appears to be a key factor in the landmark case, has its roots in the intricacies of antitrust law, where conspiracies between two fully separate entities (like the National Association of REALTORS® and HomeServices) are treated very differently from conspiracies between an entity and its “wholly owned” subsidiary.
Bough previously disallowed the plaintiffs from attempting to allege a so-called “intra-corporate conspiracy”—that is, that HomeServices was conspiring with its “sister subsidiaries” on commissions or rules.
But he did allow plaintiffs to “present evidence regarding whether the HomeServices Defendants are truly independent centers of decisionmaking.”
Ketchmark has so far leaned into the broader push against the current commission structure, which is centered on but transcends the issues taken up in the Burnett case. Other lawsuits, as well as a dormant Department of Justice investigation, have broadened to directly implicate large MLSs and take aim at the “coupling” of commission itself.
Ketchmark claimed in a separate court filing that none of the plaintiffs’ evidence or argument has touched on these intra-corporate conspiracies. Instead, he noted that some of the testimony MacGill had objected to, including portions of Ketchmark’s opening argument, did not even deal with HomeServices.
Ketchmark also highlighted some of his own opening argument, in which he stated that the plaintiffs “aren’t suggesting that HomeServices is liable because it’s conspiring with two subsidiaries. We’re not suggesting that or with the agents.”
“We’re going to prove to you, and the evidence will be this is a single entity carrying it out from the top down, following, enforcing this rule, along with Keller Williams,” Ketchmark said.
MacGill was adamant that Ketchmark’s questions, and the testimony of Belfari and others constitutes “distortions of the law.”
“None of this alleged conduct is relevant to the alleged conspiracy at issue in this case,” MacGill wrote. “Evidence that HomeSerivces (sic) subsidiaries and franchisees set commission policies for their agents is not relevant in any way to that alleged conspiracy (with NAR and Keller Williams).”
No matter what side of the closing statement commission is on, the buyer pays it, has always paid it. Who pays for the house with mortgage and/or cash, the buyer? Without the buyer there is no sale, there is no seller. Whether bought cash + closing costs or with a mortgage + closing costs over 10, 15, 20, 30 years who pays the mortgage including the purchase price, the Buyer!
So many other points can be made
Similarly as an appraiser cannot adjust the value up or down because of seller concessions, an appraiser cannot adjust the price up or down based on who pays the commission or how much the commission is.
Would an attorney represent both sides in a case/dispute, or would the consumer want to be represented by the opposing counsel? No. Or would you want to go an IRS Audit and be represented by the IRS? Or would you want you taxman to represent you?
Similarly in selling real estate you want a sellers agent to represent you. When buying real estate wouldn’t you want your buyers agent to represent you? And ultimately the price agreed upon includes the commission, right?
The idea of a buyer only wanting to deal with the listing agent is solely to try to negotiate that agents commission down for that buyers benefit and the price down agaunsy the Seller. A weak agent or one who doesn’t value their own worth will “cave” in to such a proposal and still do the double work, one for each transaction side.
Ad infinitum. Wake up colleagues, wake up associations, from local to regional to statewide to national. Raise your standards. Blessings, Steven Epstein