Judges Split on Approach to Independent MLSs, NAR Opt-Ins

For independent MLSs, opting into the National Association of REALTORS®’ (NAR) settlement was a tough decision, and potentially costly. But for those who did, the hope—and expectation—was that they would be free of the uncertainty, cost and stress of commission litigation. 

But that does not appear to be a sure thing at all, at least in the short term, as three different federal judges took very different approaches regarding commission litigation targeting non-NAR MLSs in the days after the opt-in deadline. 

In Pennsylvania last week, West Penn Multi-List Judge William Stickman ruled that West Penn Multi-List—which was hit with a commission copycat suit about a month after the October Burnett verdict—must continue to litigate those claims despite opting into the NAR settlement. At the same time, but on the other side of the country, Judge Haywood Gilliam Jr. paused a commission lawsuit targeting BAREIS, an independent MLS in the San Francisco Bay Area, after the MLS opted into the NAR settlement.

And in Massachusetts yesterday, Judge Patti Saris temporarily suspended a case against MLS PIN, which did not opt into the NAR settlement, and is instead pursuing its own agreement with plaintiffs, despite the fact that the Department of Justice (DOJ) has intervened in the proceedings.

West Penn Multi-List and BAREIS did not respond to inquiries from RISMedia at press time. MLS PIN declined to comment, citing the pending litigation.

The diverging paths of these three lawsuits illustrate the kind of complex and unresolved issues inherent to the disparate commission litigation that popped up in the wake of the Burnett verdict, despite what many hoped would be some sort of conclusion wrought by the NAR settlement. Even as the industry as a whole seeks to move past the uncertainty of class-action suits, for some regions and companies, the battle appears to be far from over.

It also demonstrates what legal experts have previously said—that every lawsuit, even if they appear superficially like identical “copycat” cases, offer unique pitfalls and challenges based on the specific circumstances of the case.

Under the NAR settlement terms, independent MLSs had the option to pay $100 per subscriber in order to join the agreement and earn immunity from seller lawsuits. 

BAREIS claims over 10,000 subscribers, meaning it likely paid at least $1 million to join the settlement. West Penn Multi-List boasts around 8,200 members, so it doled out around $820,000 to join the settlement.

NAR’s agreement included a stipulation where MLSs could claim they did not have the financial means to make these payments, so it is possible West Penn or BAREIS negotiated a different payment structure.

Fact-finding

The decision in the West Penn case by Stickman to deny a pause—meaning the MLS will likely have to continue engaging in costly discovery and paying legal fees—is particularly notable. Stickman did not provide any reasoning for his decision, only that he gave “due consideration” to both sides.

Plaintiffs in this case aggressively opposed West Penn’s request for a pause, citing appeals of settlement agreements struck by big brokerages like Keller Williams and Anywhere, as well as other future and ongoing appeals and the DOJ’s interest in commission cases and settlements.

Specifically, they quoted DOJ attorney Jessica Leal’s comments during a recent hearing in the MLS PIN case, when Leal said that offers of compensation should not be made “anywhere.” Plaintiffs in the West Penn case argued that the DOJ is likely to get involved in the NAR settlement as well, making a pause based on the expectation that it will be approved unhelpful for all parties.

“For how long the case would be unable to meaningfully move forward would depend upon the outcome in (the NAR settlement). But all outcomes mean significant delay. The best case would be a five month standstill until the Western District of Missouri decided to reject or approve the settlement, with no appeals thereafter. That is unlikely,” they wrote.

Conversely, Gilliam Jr. explicitly cited the NAR opt-in as reason to pause proceedings for BAREIS, having previously declined to do so as the MLS weighed its options.

Once BAREIS had opted in, however, Gilliam Jr. promptly added the MLS to a group of “released parties” in the case, which include brokerages that have struck their own settlement agreements like Anywhere and RE/MAX.

Notably, plaintiffs did not oppose the stay in the BAREIS case. All deadlines are paused for the MLS until 30 days after a final ruling on the NAR settlement, giving BAREIS at least a little breathing room. 

In other cases involving non-NAR MLSs, plaintiffs have also taken very different tacts. In a New York City-based commission lawsuit, lawyers representing recent homesellers are arguing that the Real Estate Board of New York (REBNY) is a different entity in a different market and will likely not be covered under the NAR settlement. 

A hearing to potentially decide that issue is scheduled for June 26.

Even after the NAR settlement hearing—assuming it is approved by a judge, and the DOJ does not interfere—some lawsuit plaintiffs might choose to still push forward with claims, based on the facts of their specific cases.

In the West Penn case, plaintiffs made it clear that is their intention.

“West Penn MLS is, as noted above, a key actor in the conspiracy in this case,” they wrote. “A release in the Missouri settlement, if approved, will not change that. Whether in response to interrogatories, requests for production, and deposition notices or in response to subpoenas, eventually West Penn MLS will have to do the work of locating those materials and providing them so that a jury can hear the full evidence in this matter at trial.”

MLS PIN is in a particularly unique position, as the DOJ has used that case as something of a proxy fight over how commission rules should be structured. It also has an agreement with plaintiffs to settle the case, which was on track for approval before the DOJ intervened.

In a hand-written order, Saris stayed the case pending the NAR settlement hearing, and granted the DOJ’s request for 90 days to review the MLS PIN agreement, which can only be submitted and considered after the NAR hearing.

While that means MLS PIN won’t have to actively litigate the case over the next five months, it also creates an even larger period of uncertainty for the organization and its members—especially frustrating, since only recently the case appeared on track for a resolution. 

In a May conference that included plaintiffs, defendants and the DOJ, Saris discussed either keeping the case open in order to push through with a settlement that would (allegedly) benefit consumers, or wait for the NAR settlement to put her case on the same track as other lawsuits, saying she understood how many people were affected by her decisions.

“Frankly, I could just jump into this thing. Instead of the tail wagging the dog, I can be the dog,” Saris said. “But it sounds like all those (MLSs) have already changed (commission policies), so I don’t want this to be the outlier.”

“I don’t even understand, truthfully, the difference structurally between NAR and the MLSs,” Saris added. “So you have a lot of educating to do with me as to why it should be different, or maybe it shouldn’t be different.”