Objections abound as NAR settlement approaches final approval date

There’s less than a month until the final approval hearing for the commission lawsuit settlement agreements reached by the National Association of Realtors, HomeServices of America, and other brokerages and non-Realtor-affiliated MLSs that opted in to NAR’s settlement. Ahead of that date, the objections have started to roll in.

In addition to the objection filed by law professor Tanya Monestier on Monday, objections were recently filed by attorneys at Knie & Shealy, who represent the Burton suit plaintiffs; Hao Zhe Wang, who has filed his own commission lawsuit; Robert Friedman, who filed and later dismissed a commission suit against the Real Estate Board of New York (REBNY); Monty March, who also has a suit pending in New York; and James Mullis, a plaintiff in the Batton homebuyer commission lawsuits.

Burton plaintiffs

Attorneys for the Burton plaintiffs filed two objections on Monday, one against the NAR settlement and a second against HomeServices’ settlement.

Burton plaintiffs, who represent a proposed class of “individuals who sold homes on an MLS Listing Service servicing the District of South Carolina,” claim that NAR’s settlement “endeavors to insulate comprehensively the entire real estate industry from the punishment due it for its long, storied history of commission fixing.”

“It further fails to address the ultimate issue, price fixing within the real estate business and adequate compensation for the millions of harmed home owners,” the objection states. 

According to the filing, only one brokerage in South Carolina was not automatically grandfathered into the NAR settlement.

“In other states, it is certain that there were no such brokerages,” the objection states. “This settlement leaves those States with wrongdoers who will not be punished, despite having made substantial profits at the expense of residents of those States, all because Co-Lead Counsel are personally uninterested in pursuing suit against them, deeming them too small.”

The Burton plaintiffs also claim that the brokerages and MLSs that opted in to NAR’s settlement failed to do so by the opt-in deadline. They noted that many parties opted in but did not execute their supplemental settlement agreements until well after the deadline. Additionally, they feel the selection of the $2 billion-per-year transaction volume threshold — and 2022 as the year to base the settlement amounts on — was arbitrary.

In their objection against HomeServices, the Burton plaintiffs claim that the traditional reasons for class action do not support the certification of a national class for this settlement.

“While there may be some common questions of law, the questions of fact vary widely by state. Further, the claims at issue would generally be economical for plaintiffs to pursue, at least on a state class basis. Each claim is worth at least several thousand dollars,” the objection states.

Additionally, the Burton plaintiffs take issues with the fact that HomeServices’ settlement releases the firm’s franchisees, despite not requiring them to pay anything.

“It is uncontroverted that the franchisees of the Defendant in this case will pay no money toward the total monetary settlement,” the filing states. “This settlement agreement does not bind the franchisees at all because there is no exchange between the parties, despite the fact that the complaint is replete with examples of franchisees taking active part in the price fixing activities complained of and the formulation of the rules by which much of price fixing was accomplished.”

Wang weighs in

Plaintiff Hao Zhe Wang filed his commission lawsuit in New York in March. He is not seeking class-action status, and he is representing himself pro se.

In his objection to NAR’s settlement, Wang notes that he has bought and sold real estate in recent years. He claims his experience working with “hundreds, if not thousands” of brokers contradicts “key factual elements in the home-seller plaintiffs’ complaint in this case, including their central allegation that NAR self-servingly and collusively chose not to contest: that home sellers, not homebuyers, paid for buyer brokers’ commission and offered them to homebuyers as a ‘seller concession.’”

Wang claims that he has paid hundreds of thousands of dollars to buyer brokers and listing brokers in the past few years. According to Wang, sellers who have also been buyers in recent years — barring them from filing claims against the settling parties as buyers if they are part of the settlement class — would be better off if they could bring claims under state consumer protection statutes or false advertising statutes.

“In our adversary legal system, my potential claims must not be precluded when direct purchaser homebuyers have facts that were never alleged, investigated, or litigated in this case,” Wang wrote.

Wang also claims that the settlement is racially discriminatory, which he attributes to racial minorities being less likely to inherit homes and having to pay more in buyer broker fees than in listing broker fees. Additionally, he feels that the business practice changes outlined in NAR’s settlement codify “NAR’s most abusive, oppressive, and anticompetitive conduct against homebuyers.”

“Over the summer I have experienced first-hand the result of the ‘practice changes’ that home-seller plaintiffs have negotiated with some of NAR’s co-defendants that required the same type of ‘practice changes’ and won final approval from this Court,” Wang wrote.

“These changes merely lend moral legitimacy and legal mandate to unlawful monopolistic practices that the brokers continue to inflict upon homebuyers. The NAR settlement is facially unreasonable for incorporating the same harmful ‘practice changes.’”

Two more objections in New York

Monty March and Robert Friedman each filed copycat commission lawsuits against REBNY and New York-based brokerage firms after the Sitzer/Burnett verdict in October 2023. Friedman voluntarily dismissed his suit in January.

In their filings, March and Friedman object to the nationwide applicability of the NAR settlement. They say this prevents home sellers in New York City from filing their own suits as REBNY is not a NAR-affiliated MLS.

“The alleged REBNY and NAR agreements to fix, raise, maintain, or stabilize residential real estate commissions are distinct and factually unrelated. REBNY separated from NAR in 1994. NAR’s Mandatory Offer of Compensation Rule was adopted in 1996. REBNY RLS rules, including its broker commission sharing rule were instituted in 2004,” March’s objection states.

“REBNY – an entirely distinct and separate real estate association – could not have played a part in NAR’s creation and implementation of the Mandatory Offer of Compensation Rule in 1996 because REBNY left NAR two years earlier.“

Similarly to the Burton plaintiffs, Friedman takes issue with allowing firms that have not contributed anything to the NAR settlement being covered by it. His attorneys claim that by allowing brokerages that operate solely in New York City under REBNY to be covered by the settlement, these firms “escape liability with zero consideration paid in exchange for their release.”

Building off the claim that allegations against REBNY and NAR are completely separate, Friedman claims that “nothing in the record of proceedings of any action involving the NAR conspiracy supports the release of claims involving REBNY and the RLS.”

Batton plaintiffs are back

Yet another objection was filed by James Mullis, a named plaintiff in the Batton homebuyer commission lawsuits. Mullis is no stranger to objecting to commission lawsuit settlements. Earlier this year, he and the other Batton plaintiffs unsuccessfully attempted to block the final approval of the RE/MAX, Anywhere and Keller Williams settlements.

Mullis’ latest objection pertains to settlement class members who also bought homes listed on an MLS in which the seller paid the buyer broker’s commission. He claims that the settlement as it currently stands allows room for the settling defendants to claim that the agreement also covers the homebuyer plaintiffs, such as those in the Batton suit.

“The buyer and seller cases have been litigated as separate suits on behalf of separate classes of victims in separate courts asserting separate sets of claims,” the filing states. “Sellers never sought to consolidate, coordinate, or intervene in the buyer cases and never engaged buyer plaintiffs in the discussions that resulted in the current settlements.”

Due to what Mullis believes is a vagueness in the settlement, he is asking the court to clarify the language to ensure that the settlements cannot be purported to also release the Batton and Lutz homebuyer claims.

“If the settling parties oppose such clarification, then the settlements should be rejected because: (1) they are not equitable to class members who both bought and sold a home (especially those who purchased multiple homes or a more expensive home than they sold); and (2) sellers and buyers here have divergent interests that create inherent conflicts the settlements fail to address,” Mullis’ objection states.