COURT UPDATE: Judge Again Denies Defendants in Burnett Trial

Today marks the start of the second week of the Burnett trial focused on buyer commission, with plaintiffs expected to wrap up their case in front of a jury today, as the defense brings in their witnesses to counter accusations of price fixing, conspiracy and other anti-competitive behavior in the landmark class action suit.

The plaintiffs’ case hinges on convincing a jury that the major corporate brokerages conspired with the National Association of REALTORS® (NAR) on rules that limited competition and harmed consumers, focused specifically on buyer agent compensation and the fact that sellers pay both agents. Along with NAR, HomeServices and Keller Williams are also defendants in the case, with RE/MAX and Anywhere settling before the trial.

But before this week’s proceedings kicked off, lawyers for HomeServices took another stab at the legal foundation of some of the plaintiff’s arguments—again, unsuccessfully, as Judge Stephen R. Bough denied their request to introduce new evidence. 

Robert MacGill, lead counsel for HomeServices, had requested to bring up the plaintiffs’ own arguments during an earlier proceeding of the case, describing it as “contradictory” to the case they are now making before the jury.

According to MacGill, plaintiffs previously characterized the relationship between HomeServices and the brokerages it owns as distant and disconnected while fighting an attempt by the defendants to move the case to arbitration.

But at the trial last week they argued the opposite, MacGill asserted, as they have painted a very different picture seeking to prove that HomeServices is responsible for alleged price-fixing carried out by “low level brokers.” 

“Plaintiffs have repeatedly repudiated their judicial admissions and the law of this case, instead preferring to confuse the jury by arguing that HomeServices and its brokerage subsidiaries are one and the same,” MacGill wrote.

In a response filed for the plaintiffs, Scott McCreight wrote that MacGill’s request to introduce these previous statements was “extraordinary.” He argued that previous statements were confined to a specific legal issue—whether HomeServices had the right to petition for arbitration before the case went to trial.

“None of this has any bearing on Plaintiffs’ (antitrust) claims. Plaintiffs make no claim that the three HomeServices corporate defendants had any direct contractual dealings with any class member,” McCreight wrote. “Nor do they need to. As the Court has recognized, ‘wrongful conduct may occur at the parent level resulting in anticompetitive effects reverberating at the subsidiary level.’”

Bough agreed, writing that the arbitration proceedings required a “different legal analysis” than the current antitrust claims. 

A broader attack

After a week of testimony and cross-examination, the legal relationship between a big corporate entity like HomeServices and the brokerages it owns or affiliates with appears to be a key dispute. Bough previously ruled against HomeServices when it objected to how the plaintiffs have sought to highlight executives setting or suggesting commission rates for its agents and brokerages.

While the case is ostensibly about the “participation rule,” which requires seller agents to make an offer of compensation to buyer agents in order to list on the MLS, plaintiffs have made their arguments broadly, targeting the whole structure of a real estate transaction, including other MLS rules, listing agreements and brokerage policies. 

A lawyer familiar with the case, who was granted anonymity in order to speak candidly, told RISMedia they expect the judge to continue giving plaintiffs the ability to explore the context of the participation rule, especially in a jury trial. All the context, from the plaintiffs’ backgrounds to the motivation of those involved in creating rules, are important for the jury to understand, and the judge is likely to appreciate their need for a full picture, the lawyer said.

Key moments from last week included testimony from Gary Keller, co-founder of Keller Williams (another defendant brokerage in the case) and Gino Blefari, president and CEO of HomeServices.

In pre-recorded video deposition, Belfari was grilled on a training video where he advocated for a 6% commission rate, and Keller was pressed on whether buyer commission is mandatory. 

Another lawyer familiar with the case, who also spoke to RISMedia on the condition of anonymity, said Keller’s answer to one particular question, in which he stated he “never thought about” the fact that a seller who didn’t want to pay a buyer agent couldn’t list on the MLS, damaged his credibility.

Lawyers for the defense have argued these types of questions are irrelevant and should be disallowed, and that Keller and Blefari are being asked to provide legal opinions as laypeople. The lawyer who spoke to RISMedia said it was valid to ask people like Blefari if they thought setting or training for a specific commission level is “appropriate.” 

While the lawyer affirmed that laypeople cannot provide legal opinions in testimony, this kind of question is not likely to qualify as a legal opinion.

This lawyer said that they expect the plaintiffs to continue bringing evidence around the 6% number as well. Highlighting the specific price, and how real estate agents or leadership referred to it is relevant to the case, the lawyer said, even when the evidence or testimony does not specifically refer to the buyer compensation rule.

Stay tuned for more updates on the trial including ongoing reporting from the courtroom in Kansas City.