Current Antitrust Litigation Summary

This Post summarizes the 4 major cases against NAR, MLSs, Franchises, and Brokerage firms.

Damages for these cases have been estimated in the Billions of dollars, enough to bankrupt the industry as we know it.

Included in this document are links to reputable sources to allow you to do your own research., and to become knowledgeable on this major industry issue.

Many of the comments you read in social media about the current antitrust litigation are misinformed, uninformed, and to be honest, just plain ignorant. The adage, “Not always right, but never in doubt” rings true when you read many of the social media comments around this topic.

Having been involved in major antitrust litigation in the real estate industry 3 times in the past 30 years, I can tell you, without equivocation, that this is serious business.

3 of the cases, Moehlr, Sitzer, and Nosalek are Civil suits and have been Certified for Class Action Status. Potential major damages, times 3 perhaps.

Think there are no legs to the Plaintiff’s claims?

MLS PIN, the large MLS in Boston and New England, settled its involvement in Nosalek for $3M last month. What is transpiring right now is real. $3M is real money. Don’t think that this is years off into the future.

The 4th case is the DOJ case against NAR. The DOJ has been after NAR for decades. NAR reached a settlement on its case with the DOJ, only to have the DOJ renege when the latest administration arrived in 2020.

Part of the problem with MLS is that for the last 100 years, it has depended and relied upon one contract to ensure payment to the listing broker and the broker bringing the buyer to the transaction. That contract is the listing agreement, and most often, the Exclusive Authorization and Right to Sell.

MLS has been built around one contract, and around this contract, created a Compensation Vehicle (my term) to provide for the sharing of commissions by cooperating brokers.

Brokers who brought buyers to the transaction did not have to obtain a contract for compensation as the combination of the listing agreement and the MLS structure, provided compensation to buyer brokers without the need for the buyer broker to obtain a written commission agreement with the buyer.

Until 1996 the Compensation Vehicle for MLS was the “Unilateral Offer of Subagency.”All broker members (and their sales agents), by virtue of belonging to the MLS, had a fiduciary obligation to sellers. This arrangement allowed for commission to flow from the seller to the listing agent, to the broker bringing the buyer to the transaction.

With the birth of agency disclosure laws in the late 1980s, the MLS Compensation Vehicle had to change, and the “Unilateral Offer of Compensation” was born in 1996 (a few years earlier in California) to replace the “unilateral offer of subagency.” The “unilateral offer of compensation”became the Compensation Vehicle of the NAR MLS Model rules.

Once again, the listing agreement and the structure of MLS made it possible for buyer brokers to be compensated, without a contract for compensation from the buyer.

It is the current MLS Compensation Vehicle, the “Broker Compensation Clause” which is the foundation of the NAR Model, that is being challenged.

It is time to seriously consider, and implement into your practice, written buyer broker agreements. They may just become a necessity if you want to ensure payment for your efforts when representing buyers.

MLSs…Are you building your legal defense fund?

Enjoy your research!

Major Antitrust Litigation Facing the Residential Real Estate Industry – July 30, 2023

Cases (Numbered 1-4):

1.      Moehlr v. NAR, et al

2.      Sitzer v. NAR, et al

3.      Nosalek v. MLS PIN, et al

4.      Department of Justice V NAR

Note: Case 1, 2, and 3 have been certified for Class Action Status

Case Text Opinions:

1.      https://casetext.com/case/moehrl-v-na-of-realtors

2.       https://casetext.com/case/sitzer-v-natl-assn-of-realtors

3.      https://casetext.com/case/nosalek-v-mls-prop-info-network-1

4.      https://www.justice.gov/atr/case-document/file/1338661/download (DOJ Site)

Basic Premise in Cases:

Violation of the Sherman Antitrust Act – Buyer Broker Compensation Rule in the MLS Handbook is an antitrust violation the Defendants participated in a conspiracy to over charge, costing consumers billions of dollars in unwarranted commissions, going back to 2015.

Buyer Broker Compensation Cases: https://casetext.com/search?q=nar%20buyer%20broker%20compensation&sort=relevance&p=1&type=case&tab=keyword&jxs=

 History of Cases:

Plaintiffs allege that Defendants’ conspiracy has centered around NAR’s adoption and implementation of a mandatory rule that requires all brokers to make a blanket, non-negotiable offer of buyer broker compensation (the “Buyer Broker Commission Rule”) when listing a property on a MLS. This conspiracy has resulted in millions of dollars in costs to sellers in the sale of their properties.

Buyer Broker Commission Rule:

Buyer-Broker Commission Rule causes commissions to be artificially inflated. Plaintiffs allege that the rule causes listing brokers to price commissions at supercompetitive levels to attract buyer brokers.

Case Descriptions:

1.     Moehlr v.National Association of REALTORS, et al

 The Moehrl antitrust case against the National Association of Realtors (NAR) is an antitrust class action against the NAR and the four largest national real estate broker franchisors, Realogy Holdings Corp., HomeServices of America, Inc., RE/MAX Holdings, Inc., and Keller Williams Realty, Inc. The lawsuit claims that NAR conspired with four major franchisors to inflate commissions through its MLS policy. On March 29, 2023, the Honorable Andrea R. Wood of the United States District Court for the Northern District granted class certification to two classes, specifically the damages and injunctive relief classes in this antitrust class action against the National Association of Realtors and the four largest national real estate broker franchisors for allegedly conspiring to require home sellers to pay the broker representing the buyer of their homes, and to pay at an inflated amount, in violation of federal antitrust law1.

Cohen Milstein Interim Co-Lead Class Counsel was appointed by the court on May 30, 20201. The U.S. Department of Justice filed a statement of interest in this lawsuit on October 10, 20191.

Defendants

The defendants are the National Association of Realtors, Anywhere Real Estate, Keller Williams, RE/MAX, HomeServices of America, and several other real estate brokerage firms.

MLSs covered in this action:

Plaintiff brings this lawsuit as a class action on behalf of home sellers who

paid a broker commission in the last four years in connection with the sale of residential real estate listed on one of the following MLSs (the “Covered MLSs”):

  • The Bright MLS (including the metropolitan areas of Baltimore, Maryland; Philadelphia, Pennsylvania; Richmond, Virginia; Washington, D.C.);
  • My Florida Regional MLS (including the metropolitan areas of Tampa, Orlando, and Sarasota);
  • The five MLSs in the Mid-West that cover the following metropolitan areas: Cleveland, Ohio; Columbus, Ohio; Detroit, Michigan; Milwaukee, Wisconsin; Minneapolis, Minnesota;
  • The six MLSs in the Southwest that cover the following metropolitan areas: Austin, Texas; Dallas, Texas; Houston, Texas; Las Vegas, Nevada; Phoenix, Arizona; San Antonio Texas;
  • The three MLSs in the Mountain West that cover the following metropolitan areas: Colorado Springs, Colorado; Denver, Colorado; Salt Lake City, Utah;
  • The four MLSs in the Southeast that cover the following metropolitan areas: Fort Myers, Florida; Miami, Florida; Charlotte, North Carolina; and Raleigh, North Carolina.

Moehrl v. National Association of Realtors, et al. | Cohen Milstein

https://therealestatesolutionsguy.com/lawsuit-against-nar/

2.     Sitzer v National Association of REALTORS, et al

The Sitzer antitrust lawsuit against the National Association of Realtors (NAR) is a case filed by Joshua Sitzer and Amy Winger, Scott and Rhonda Burnett, and Ryan Hendrickson against the National Association of Realtors, Realogy Holdings Corp., Homeservices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, The Long & Foster Companies, Inc., Re/Max, LLC, and Keller Williams Realty, Inc. The lawsuit claims that NAR rules for the operation of Multiple Listing Services (MLSs) inhibit competition or cause the plaintiffs any harm. The National Association of Realtors moved last week to dismiss the Moehrl v. NAR lawsuit and the copycat Sitzer v. NAR lawsuit because both amended complaints fail to show how NAR rules for the operation of Multiple Listing Services (MLSs) inhibit competition or cause the plaintiffs any harm.

Four Missouri MLSs. Going back to 2014.

Kansas City MLS (“Heartland MLS”), St. Louis MLS (“MARIS MLS”), Springfield, Missouri MLS (“Southern Missouri Regional MLS”), and Columbia, Missouri MLS

3.     Nosalek v. MLS PIN

The lawsuit alleges that the broker-owned MLS Property Information Network (MLS PIN) is not directly required to abide by the National Association of Realtors (NAR) rules. However, it has nonetheless adopted a rule similar to an NAR rule requiring listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing to MLS PIN

MLS PIN. New England’s largest multiple listing service (MLS) signed off on a settlement agreement that would force it to pay $3 million, overhaul its policies and cooperate against the remaining real estate franchisor defendants in the suit. The lawsuit alleges that the broker-owned MLS Property Information Network (MLS PIN) is not directly required to abide by the National Association of Realtors (NAR) rules. However, it has nonetheless adopted a rule similar to an NAR rule requiring listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing to MLS PIN1.

4.     DOJ v. NAR

Complaint : U.S. v. National Association of Realtors (justice.gov)

 

Case Notes of 4 Cases in a nutshell:

1.      Moehlr v. National Association of REALTORS, et al

2.      Sitzer v. National Association of REALTORS, et al

3.      Nosalek v. MLS PIN, et al

4.      DOJ vs NAR

State Filed:

1.     Illinois

2.     Missouri

3.     Massachusetts, New Hampshire, Connecticut, Rhode Island, Maine, Vermont, New York

4.     US

Type: Civil/Class Action/Criminal:

1.      Civil

2.      Civil

3.      Civil

4.      US

Date Filed:

1.      March 6, 2019

2.      April 29, 2019

3.      December 10, 2021

4.      November 19, 2020

Class Action Status

1.      Certified: March 29, 2023

2.      Certified

3.      Certified

4.      NA

Plaintiffs:

1.     Moehlr et al

2.     Joshua Sitzer and Amy Winger, Scott and Rhonda Burnett, and Ryan Hendrickson

3.     Jennifer Nosalek et al

4.     Department of Justice

Defendants:

1 Moehlr

·        National Association of Realtors,

·        Anywhere Real Estate,

·        Keller Williams,

·        RE/MAX,

·        HomeServices of America,

·        Several other real estate brokerage firms.

MLSs

·        The Bright MLS (including the metropolitan areas of Baltimore, Maryland; Philadelphia, Pennsylvania; Richmond, Virginia; Washington, D.C.);

·        My Florida Regional MLS (including the metropolitan areas of Tampa, Orlando, and Sarasota);

·        The five MLSs in the Mid-West that cover the following metropolitan areas: Cleveland, Ohio; Columbus, Ohio; Detroit, Michigan; Milwaukee, Wisconsin; Minneapolis, Minnesota;

·        The six MLSs in the Southwest that cover the following metropolitan areas: Austin, Texas; Dallas, Texas; Houston, Texas; Las Vegas, Nevada; Phoenix, Arizona; San Antonio Texas;

·        The three MLSs in the Mountain West that cover the following metropolitan areas: Colorado Springs, Colorado; Denver, Colorado; Salt Lake City, Utah;

·        The four MLSs in the Southeast that cover the following metropolitan areas: Fort Myers, Florida; Miami, Florida; Charlotte, North Carolina; and Raleigh, North Carolina.

2 Sitzer

·        National Association of Realtors,

·        Realogy Holdings Corp.,

·        Homeservices of America, Inc.,

·        BHH Affiliates, LLC,

·        HSF Affiliates, LLC,

·        The Long & Foster Companies, Inc.,

·        Re/Max, LLC

·        Keller Williams Realty, Inc.

MLSs:

·       Kansas City MLS (“Heartland MLS”),

·       St. Louis MLS (“MARIS MLS”),

·       Springfield, Missouri MLS (“Southern Missouri Regional MLS”),

·       Columbia, Missouri MLS

3 Nosalek

·        MLS PROPERTY INFORMATION NETWORK, INC.,

·        ANYWHERE REAL ESTATE INC. (F/K/A REALOGY HOLDINGS CORP.), CENTURY 21 REAL ESTATE LLC,

·        COLDWELL BANKER REAL ESTATE LLC,

·        SOTHEBY’S INTERNATIONAL REALTY AFFILIATES LLC,

·        BETTER HOMES AND GARDENS REAL ESTATE LLC,

·        ERA FRANCHISE SYSTEMS LLC,

·        HOMESERVICES OF AMERICA, INC.,

·        BHH AFFILIATES, LLC, HSF AFFILIATES, LLC,

·        RE/MAX LLC, POLZLER & SCHNEIDER HOLDINGS CORPORATION, INTEGRA ENTERPRISES CORPORATION,

·        RE/MAX OF NEW ENGLAND, INC.,

·        RE/MAX INTEGRATED REGIONS, LLC

·        KELLER WILLIAMS REALTY, INC.,

4 National Association of REALTORS

Potential Damages:

Tens of Billions, Commissions back to 2014

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