Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
As the summer heats up and real estate markets cool down, the pace and intensity of court drama affecting the industry appears to be hovering somewhere in between. On the one hand, the Department of Justice (DOJ) continues to press on with its intervention into commission rules despite the National Association of REALTORS® striking a settlement back in March. On the other hand, most of the dozens of Burnett copycat cases appear to be winding down—with some key exceptions.
Here is the biggest news from the courtroom affecting the real estate industry:
MLS PIN derides DOJ vision of real estate transactions
In what has essentially become a proxy battle over larger regulatory changes in real estate, the MLS PIN class-action lawsuit saw defendants firing back at an earlier intervention by the DOJ which has so far delayed a settlement in the case.
As regulators have sharply criticized the long-standing method of “cooperative compensation” by which most residential real estate agents get paid, lawyers representing Massachusetts-based MLS PIN argued that both the scope and substance of the DOJ’s interest in real estate constitutes a major overreach.
“The hallmark of the MLS system is transparency. MLSs correct for market imperfections by allowing for maximum information to be exchanged between buyers and sellers,” MLS PIN wrote, adding that the federal government “cannot coerce a private party to punish or suppress speech” by homesellers, who may want to make offers of compensation to buyer agents.
The DOJ is expected to release a joint statement with both plaintiffs and defendants in the case later this month, outlining a path forward for the case.
Douglas Elliman gets (temporary?) reprieve from buyer lawsuits
New York-based mega-brokerage Douglas Elliman was dropped last week from the largest lawsuits filed by homebuyers (which are mostly not affected by recent settlements), granting the company at least a little breathing room—though it is possible it will be short-lived.
Plaintiffs in the Batton buyer case allowed Elliman to be dismissed as a defendant “without prejudice,” meaning they or someone else can sue the company again anytime with the same accusations and evidence. HomeServices was notably dropped from the same lawsuit without prejudice based on a jurisdictional technicality, but then was added to a new, mostly identical lawsuit in another federal court district days later.
Lawsuit details new accusations of misconduct at eXp
A woman suing eXp and several top agents added a cascade of new accusations and evidence to her lawsuit last week, alleging that the company went to great lengths in order to cover for recruiters who she claims drugged and raped her and several other women at company events.
After a judge dismissed the mega-brokerage and founder Glenn Sanford from the lawsuit, lawyers for Anya Roberts filed an amended complaint last week which details how the company and its most successful “Alpha Agents” broke internal rules, ignored whistleblower reports and paid huge sums of money to one of the accused recruiters.
Roberts is seeking to have Sanford and the company readded to the lawsuit based on federal sex trafficking laws, arguing they benefited from the behavior of two recruiters—David Golden and Michael Bjorkman—and had previous knowledge of sexual assaults committed by them over many years.
Sanford and eXp are facing another lawsuit brought by four other women who have made largely similar allegations, which is expected to go to trial next year.
NYC lawsuit hearing set for next week
A judge denied a request by one of the defendants in a key commission lawsuit, and will hold a hearing next Wednesday that could have major implications for the many Burnett copycat suits that fall in the margins of NAR’s settlement.
The lawsuit, March v. Real Estate Board of New York (REBNY) et al, is notable in that it mostly involves non-NAR entities and brokerages, as the Manhattan real estate market has long operated independently from the national association. Plaintiffs and defendants are currently sparring over whether proceedings should be paused in the case while the NAR settlement goes through a court approval process.
An attorney for celebrity agent Ryan Serhant’s company, which is a defendant in the suit, had requested a delay in the hearing due to a “personal family matter.” The judge noted that Serhant’s counsel could join the hearing remotely.
The hearing will take place at 10 a.m. eastern time on Wednesday, June 26.
