Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
Courts rarely move fast. Although it has been over a month since the National Association of REALTORS® (NAR) announced that it was settling seller lawsuits, and 10 days since a judicial panel issued a key ruling on “centralizing” commission litigation across the country, ripple effects are only just now being felt. Several smaller cases had been paused based on these two larger developments, but now appear to be ramping up again. At least one of those cases remains a focal point of the Department of Justice (DOJ), as the real estate industry anxiously awaits some signal regarding how regulators might push for further rule changes or sanctions.
Here is what you might have missed from the courthouse:
Preliminary approval starts countdown for NAR opt-in
While NAR’s settlement covers most brokerages and agents across the country, larger entities—including many MLSs—are not protected unless they pay an additional fee into the settlement fund. Those organizations now have less than two months to decide whether they want to join the settlement, or navigate future and current lawsuits on their own.
On Friday, plaintiffs in two of the seller suits filed their request for preliminary approval of the agreement, asking a judge to sign off on the $418 million payment and plethora of practice changes. That action triggers a key stipulation in the agreement—a 60-day window for all those companies on the outside to pay up and join the settlement.
Dozens of brokerages, and an unknown number of MLSs, will have to choose one way or another by June 18 what path they will choose. Two large brokerages—namely, Compass and The Real Brokerage—struck separate settlement agreements in the weeks following the NAR agreement, paying much less than they would have if they opted in.
One California-based MLS named in a commission suit wrote in a recent court filing that the organization would have to pay seven figures to join, and is not confident it would recover all the money should NAR’s settlement not receive final approval.
NAR negotiated settlement in spurts, expects membership drop
After years of litigating and negotiation mostly behind closed doors, more and more information about the processes that brought the industry here—and NAR’s role specifically—is coming to light.
In the same filing asking a judge to sign off on the NAR agreement, attorneys for the plaintiffs assert that the $418 million settlement amount represents slightly more than half of NAR’s net assets. They also claim that NAR could not have paid the full Burnett judgment of $1.8 billion—something that sources close to NAR previously told RISMedia, and that was also hinted at in the settlement itself.
“The Settlement captures an amount that represents a majority of NAR’s liquid assets, without completely depleting the working capital the organization requires to operate. This is especially so where NAR anticipates a decline in future membership revenues as a result of this Settlement and current market conditions,” the plaintiffs wrote.
Plaintiffs also lay out a timeline for what they describe as “hotly contested” settlement negotiations, with parties taking “walkaways” and engaging in “heated exchanges” over the course of nearly three years of litigation.
According to the filing, NAR first tried to negotiate a settlement in April 2020, almost exactly a year after Burnett was first filed. After that fizzled, there was roughly three years without another talk, before NAR again attempted to reach an agreement in July 2023, three months before the Burnett trial was scheduled to start.
After losing in court, the final, successful negotiation of a settlement began, spanning roughly four months, the plaintiffs claim.
Plaintiffs, MLS ask for more time to respond to DOJ
Both sides in the MLS PIN lawsuit are saying that the NAR settlement and the denial of consolidation has brought up new legal issues, and they asked for just over 30 days to formulate their response to DOJ regulators, who are seeking to intervene in the case.
Back in February (before the NAR settlement), the DOJ called explicitly for so-called “decoupled” commissions in a rebuke of a proposed settlement in the MLS PIN case—a relatively low-profile commission suit filed back in 2020.
That filing set off alarms across the industry, as many have worried that regulators could push for changes beyond the scope of policy adjustments made in response to class-action lawsuits filed by buyers and sellers.
The Council of Multiple Listing Services and another MLS referenced by the DOJ previously wrote their own responses, advocating for the current structure and rules in real estate and pushing back on several claims made by DOJ lawyers.
According to the MLS PIN and plaintiff attorneys, the May 24 deadline to respond has “the consent of the DOJ.”
HomeServices denied by Supreme Court; presses on in MLS PIN
A somewhat longshot attempt by HomeServices—the last defendant from the original seller lawsuits still fighting in court—was denied last week, as the highest court in the land denied the company’s request for reconsideration of a key ruling that allowed commission lawsuits to go forward.
Originally filed in February, the petition was “narrowly focused” on a decision by a lower court that essentially nullified arbitration clauses in listing agreements, with that court ruling that homesellers could still sue HomeServices even though they had signed those contracts.
In its petition, HomeServices argued that circuit courts all over the country have issued conflicting or contradictory rulings on these types of clauses, and the Supreme Court should intervene to clarify how these clauses are treated not just in real estate, but in a variety of other industries.
HomeServices EVP Chris Kelly previously told RISMedia the company will “continue to aggressively pursue a resolution” to the lawsuits.
REBNY lawsuit poised to restart
A commission case that will be closely watched in the wake of NAR’s settlement is March v. Real Estate Board of New York (REBNY), the first to name the NAR-independent New York City real estate association (and several companies operating in the Big Apple).
That lawsuit was paused pending the consolidation ruling, but appears poised to accelerate. Plaintiffs asked last week for a schedule that would see “dispositive motions”—arguments to have the case thrown out—filed by the middle of May, with a proposed schedule for the rest of the case by the end of that month.
Plaintiffs also noted there have been two copycat lawsuits filed since their litigation, which came in the days following the Burnett verdict.
Because this suit names only entities which have no affiliation with NAR (REBNY separated from the national association decades ago), it could serve as a bellwether for similar cases as plaintiffs have accused other real estate entities of manufacturing the same illegal conspiracy as NAR.
MLS PIN, another lawsuit involving an MLS not associated with NAR, is also likely to resume soon, with HomeServices (a defendant in the case) asking the judge to schedule a conference to begin setting new deadlines.
Plaintiffs file to consolidate their own copycats
While a national consolidation of commission cases has been denied, plaintiffs in two copycat cases are asking to combine their two cases based on legal and procedural similarities.
Gibson v. NAR, the first national copycat filed by the Burnett plaintiffs, and Umpa v. NAR, filed months later, are asking Judge Stephen Bough, who is overseeing both those cases and the Burnett suit, to combine Burnett and Umpa.
Umpa was filed the same day that the Burnett plaintiffs first filed to consolidate all the commission cases, and defendants accused the plaintiffs of filing Umpa as part of an attempt to have the lawsuits centralized in a district of their choice.
Umpa was filed by the same attorneys who represent plaintiffs in Moehrl, the other legacy seller suit that is currently scheduled for a trial in early 2025.
In their filing, the plaintiffs’ attorneys did not characterize Umpa and Gibson as “identical,” despite both suits making very similar arguments and naming several of the same defendants. But they argued that the law allows consolidation for cases that “involved common parties, overlapping legal issues and related factual scenarios.”
