Judge Approves Seller Settlements, With Limited Buyer Protections

Judge Stephen R. Bough gave his final approval today to settlement agreements struck by big brokerages in class-action commission lawsuits, granting broad immunity from claims by sellers that these companies conspired on rules that inflated real estate compensation at the expense of consumers.

The ruling does not include a settlement struck by the National Association of REALTORS® (NAR), which will receive a separate hearing in front of Bough in November before being finalized.

Today’s decision marks an important milestone for the industry and the many, many brokerages and MLSs targeted in class-action suits in the wake of a $1.8 billion verdict handed down in the same Kansas City courthouse last October.  

While not every settlement has been approved, the brokerages who did get the sign-off on their settlements—namely Anywhere, RE/MAX and Keller Williams, each agreeing to pay $83.5 million, $55 million and $70 million, respectively—will be able to move forward at least some certainty regarding their protection from litigation. 

Notably, the brokerages also appeared to have won a major victory in gaining some limited immunity from buyer-side commission lawsuits. According to a release from Anywhere, Bough’s approval does, in fact, “reduce the size of the potential, as yet uncertified, class” of homebuyers, because it covers sellers who also bought a home.

The firms agreed to policy changes, such as no longer requiring agents to be members of the National Association of REALTORS®, or follow their code of ethics or MLS Handbook. Also moving forward, each brokerage will mandate, or strongly encourage agents to remain utterly transparent in relaying that commissions are, in fact, negotiable, while having the ability to set commissions, or negotiate as they deem appropriate. Agents will not be required to make or accept offers of compensation from transaction-associated brokers.

“RE/MAX, LLC is pleased the court has granted final approval for our settlement in the Burnett (formerly Sitzer), Moehrl, and Nosalek cases,” reads a statement to RISMedia from RE/MAX. “We thank the court for its careful consideration and decision. Since entering into the settlement in October 2023, RE/MAX has been committed to obtaining final approval and providing releases for all U.S. RE/MAX Broker/Owners and affiliates. We are thrilled to be moving forward, maintaining our focus on supporting RE/MAX affiliates and continuing to foster greater transparency in the industry on behalf of homebuyers and sellers.”

“We are pleased to hear of the court’s final approval of our settlement,” said Darryl Frost, spokesman for Keller Williams in a statement. “We will continue to focus on what we do best: empowering real estate entrepreneurs so they can deliver exceptional value to their clients.”

But at the same time, plenty of uncertainty remains. Most notably and immediately, lawsuits filed by recent homebuyers making similar accusations are not explicitly covered by the settlements—though the limited buyer immunity came despite a last-minute attempt by lawyers in a separate buyer lawsuit to block the inclusion of buyers.

Just yesterday, plaintiffs in the largest buyer case (known as Batton) petitioned another federal judge to pause approval of the settlements, claiming that lawyers for RE/MAX and Keller Williams used “clandestine” tactics in an attempt to garner immunity from buyer claims.

In a same-day ruling, that judge—Judge Andrea R. Wood—denied the request. In the roughly two page order, Wood sharply rebuffed the buyer plaintiffs, noting that her intervention in the separate seller lawsuits would be “extraordinary,” and citing appeals court precedent that having one federal court enjoin another is “particularly rare.”

“The very purpose of a final approval hearing, however, is for the district court to consider and address challenges to the fairness of the proposed class action settlement,” Wood wrote. “(A)lthough Plaintiffs characterize their requested injunction as enjoining action by the specified Defendants, Plaintiffs’ goal is to prevent the fairness hearing duly set by the Burnett court from going forward according to that court’s orders. Such extraordinary action would be inappropriate.”

Wood also noted that the plaintiffs were always allowed to make their case during the approval hearing, and address Bough as he conducts a final review of the settlements.

It is unclear what other ways the settlements might affect the still ongoing buyer litigation, as plaintiffs in that case argued that allowing Bough to certify an overlapping class of homebuyers would violate the rights of those buyers to independently seek damages. It was also unclear how many potential buyers would be eventually excluded  from the parallel litigation, if and when a judge certifies a class.

At least four other entities, including an independent Pennsylvania-based MLS named in a separate seller lawsuit and a Georgia-based homebuilder, have also objected to the settlement.