United Real Estate and HomeSmart yesterday became the latest companies to settle seller lawsuits, according to a filing in federal court, while several other companies simultaneously chose to push forward and continue fighting seller commission cases, potentially indicating there is still some appetite to contest claims by recent homesellers.
According to a release from United obtained by RISMedia, the company will pay $3.7 million and make many of the same business practice changes agreed to by other companies who have struck settlements, while continuing to deny any wrongdoing.
“We are a 10-plus year positive disruptor in the real estate space,” said Dan Duffy, CEO of United Real Estate Group, in a statement. “We have always been committed to providing the best support and value for our brokers and agents. This settlement allows us to focus on empowering agents with the tools and resources they need to compete and serve their clients with excellence, without the burden of prolonged litigation.”
A HomeSmart representative did not respond to requests for comment or more information.
A July 15 deadline for defendants in the consolidated Gibson/Umpa case—filed in Missouri by the same lawyers behind Burnett and Moehrl, the legacy commission class-actions that have both effectively concluded—demonstrated that a significant number of mostly mid-sized brokerages are prepared to fight on in court, even as United chose to bow out.
The K Company, Real Estate One (REO), NextHome, William Raveis, Howard Hanna, Weichert, Crye-Leike Realty, John L. Scott, eXp, Baird & Warner and Keyes Illustrated Properties all filed motions to contest the case against them, pushing back on jurisdictional, procedural or more factual legal grounds.
On the other hand, United Real Estate and HomeSmart join Douglas Elliman, EXIT Realty, Engel & Völkers, @properties Christie’s International Real Estate, Redfin and Compass as companies named in copycat suits in the wake of the Burnett verdict who have chosen to settle litigation.
The companies who are choosing to fight on had until yesterday to answer the complaint against them, and earlier had also allowed the June 18 deadline to opt into the NAR settlement to pass. In their filings, these mostly independent companies appear to be focusing on jurisdiction as a reason to throw out the lawsuit (something the big national brokerages were less able to do), although they also pushed back based on other alleged shortcomings in the lawsuit.
“John L. Scott Real Estate has never acted as a listing broker or buying broker in connection with a real estate transaction occurring in the State of Missouri,” wrote Lennox Scott, owner of John L. Scott, in an affidavit also filed in court yesterday. “In my entire tenure as an agent or officer of John L. Scott Real Estate, I have never believed that it would be possible or reasonable to be subject to jurisdiction in a Missouri court.”
In its filing, Real Estate One repeated arguments that have mostly proven unsuccessful so far—namely, that there is not enough evidence that the company participated in an alleged conspiracy to move forward with the lawsuit.
“As to REO, the only allegation is that REO’s President of Brokerage Services was a member of NAR’s Real Estate Services Advisory Group in 2019,” the filing said. “This is not enough to plausibly infer that REO knowingly joined any anticompetitive conspiracy around the challenged rules.”
While it is unclear how successful the arguments will be in court, the filings constitute somewhat of a reversal from how brokerages were approaching the seller lawsuits since the National Association of REALTORS® (NAR) chose to bow out and strike its own settlement agreement in March. Several bigger brokerages forged their own settlements during that time, while many others paid and opted into the NAR deal.
But some of these mid-sized brokerages, which operate at a more regional level, appeared willing to try their own arguments in front of judges, focused on more granular aspects of their business and local real estate markets.
In its filing, William Raveis asked Judge Stephen R. Bough to dismiss the company from the case based on a lack of jurisdiction, but also argued that many sellers who worked with Raveis agents signed arbitration agreements that should exclude them from the lawsuit regardless.
“The listing agreements are designed to be understandable to the everyday person,” the filing claims. “They are only a few pages in length, use a readable font, and generally avoid the use of jargon or complicated legal language. The class action waiver is in the same font as the majority of the listing agreement and is found as part of a series of numbered paragraphs containing important terms….(t)hese provisions are enforceable and doom the class as pled.”
The Keyes Company and Crye-Leike made similar arguments, although so far judges all the way to the Supreme Court have not agreed with real estate companies who contended these types of clauses prevent homesellers from joining class-action lawsuits.
Plaintiffs in other, unrelated cases have also proven willing to file identical lawsuits in new districts when judges have dismissed claims on jurisdictional grounds.
Also notable was Berkshire Hathaway Energy (BHE), the multi-billion dollar holding company that controls HomeServices of America (along with a large number of other businesses in unrelated industries), which made its first substantial arguments in the case. Plaintiffs had earlier named BHE as a defendant despite it not being a real estate brokerage of any kind, alleging that that parent company exerted direct control over HomeServices policy through executives.
“Plaintiffs do not allege, nor could they, that any single home seller entered into a transaction directly with BHE, which is a holding company, not a real-estate brokerage,” BHE wrote. “Plaintiffs allege that home sellers transacted with HSA subsidiaries and affiliates, and that BHE, which owns HSA, purportedly ‘ratified’ HSA’s conduct. This fails.”
BHE also noted that plaintiffs already agreed to a settlement with HomeServices, making the claims against BHE “duplicative.” The company, interestingly, also asked Bough to address the issue of arbitration clauses despite HomeServices leading the unsuccessful push to have commission cases thrown out based on these agreements.
Editor’s note: this story was updated at 11:19 am eastern time with details of United Real Estate’s settlement agreement, and again at 12:56 p.m. with information about HomeSmart’s settlement.
