COURT REPORT: DOJ Deadlines Loom; Burnett Judge Addresses Campaign Donations

Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.

With time ticking away on several major deadlines—most significantly, the August 17 implementation of mandatory buyer agreements and removal of compensation from the MLS—brokerages and real estate business leaders continue to face tough decisions, and an unsettled legal landscape. And despite a deescalation through settlements, there has been no shortage of drama in the courtroom. The judge overseeing the Burnett case recently faced several vehement objections to settlements—and also chose to address conflict of interest accusations in the case after members of the real estate community pointed out campaign contributions made by plaintiffs to his wife.

Also, a key copycat case that does not involve the National Association of REALTORS® (NAR) is seeking to push on despite those agreements, though a judge is pausing some proceedings in that case. Looking ahead, several key deadlines in a case that has embroiled the Department of Justice (DOJ) are looming this week. And outside of commission cases, lawsuits by former Keller Williams agents may have contributed to the company reversing planned cuts to profit sharing.

Here is the latest real estate news from the courtrooms.

Burnett judge acknowledges campaign donations, but remains on the case

A transcript of the historic final settlement hearing for settlement agreements struck by Keller Williams, Anywhere and RE/MAX started off with some questions about money—but not the millions being paid by the franchisors to end seller-filed commission lawsuits.

Judge Stephen R. Bough, who oversaw the Burnett trial and has presided over the case, acknowledged that his wife—a local politician—received campaign contributions from one of the lawyers representing the plaintiffs. 

Referencing a letter sent by a real estate broker objecting to the settlement (a letter that also threatened to involve the U.S. Attorney’s Office), Bough said he had been unaware of the contributions but offered to excuse himself from the case, asking if lawyers from either the defense or plaintiffs wanted him off.

None of them did, with Bough noting that the local REALTOR® association had also donated to his wife. He also promised to refer the issue himself to the Department of Justice and the FTC, “so (they) can do what law enforcement needs to do for judicial ethics.”

Bough would eventually approve the settlements over several objections.

Facing several lawsuits, Keller Williams reverses course on profit-sharing cuts

Keller Williams announced it is backing down on planned changes to profit sharing that sparked numerous lawsuits by former agents, allowing people who “vested” in the company’s sponsorship and recruiting program to continue receiving their full payments even if they affiliate with a competing brokerage.

The lawsuits, which were filed in multiple federal district courts back in March, alleged the changes constituted a breach of contract, as Keller Williams sought to cut former agents who affiliated with Keller Williams’ competitors out of the program.

Keller Williams CEO Mark Willis said after an “unprecedented” meeting of the company’s agent advisory council this past week, the choice was made to reverse the changes, with “an overwhelming majority” favoring the “status quo.”

Plaintiffs in REBNY lawsuit push back on settlements

As big brokerages seek settlement agreements one by one, a key question has been how much protection they will receive from the numerous copycat cases that have popped up all over the country. While so far it appears that judges are willing to include a nationwide class of homesellers—meaning companies are protected from any suit by recent sellers alleging the antitrust conspiracy of the main lawsuits—there is likely to be some specific disputes arising in those cases.

One somewhat unique Burnett copycat case is focused on New York City, naming the Real Estate Board of New York (REBNY) and companies that operate in that region. REBNY is not affiliated with NAR, and runs its own listing service with its own rules and standards.

In a recent filing, defendants in the case asked a judge to pause all proceedings against two companies who struck settlement agreements—namely, Douglas Elliman and Compass—with the expectation that their settlement would protect them in the REBNY suit.

“Counsel for Compass, Inc. and Douglas Elliman Inc. have met and conferred with counsel for Plaintiffs regarding the impact of the…settlements on this action. Plaintiffs dispute that the…settlements have nationwide or any other impact on this action,” the filing reads.

However, plaintiffs in the case did agree to pause deadlines for Compass and Douglas Elliman until a final ruling is handed down on the applicability of the settlement, though the timing of that was unclear.

Updates, responses to the DOJ expected in MLS PIN this week

As the first commission lawsuit to settle, the MLS PIN litigation has become a central focus of the DOJ, which earlier this year revealed the deeper changes it was seeking to force on the industry.

This week, Judge Patti Saris, who is overseeing the MLS PIN case, will host a status conference with plaintiffs and defendants—many of whom have struck settlements in other cases—to discuss progress in the litigation. That will come only a couple days before the deadline for MLS PIN and plaintiffs in the case to file their official response to the DOJ, which explicitly asked Saris to delay her approval of the settlement.

The DOJ is currently engaged in its own investigation of NAR and the real estate industry, which recently restarted after a split ruling by an appeals court.