Judge Denies Stay Order After Plaintiffs Argue Against NAR Deal

Judge Denies Stay Order After Plaintiffs Argue Against NAR Deal

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A federal court judge has rejected a request to pause legal proceedings against a broker-owned multiple listing service after plaintiffs argued that a settlement deal with the National Association of Realtors would not stop “a key element of the antitrust conspiracy”: offers of compensation from listing brokers to buyer brokers.

On June 20, Judge William S. Stickman of the U.S. District Court for the Western District of Pennsylvania denied a motion to stay from West Penn MLS, which is not Realtor-affiliated but is paying nearly $1 million to be covered under a provision in a proposed settlement with NAR to be released from commission-related antitrust claims.

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The stay would have temporarily stopped West Penn MLS’s obligation to respond to a class-action lawsuit filed by homesellers in December. That case is now known as Moratis after its lead plaintiffs (formerly, Spring Way Center).

The suit alleges a West Penn MLS commissions-related rule violates the federal Sherman Antitrust Act and is part of “nation-wide collusion within the real estate industry to maintain inflated commissions.” The rule is similar to NAR’s Participation Rule, which requires listing brokers to offer buyer brokers compensation to submit a listing to the MLS.

On June 19, West Penn MLS submitted a motion to stay the case “to conserve judicial and party resources” until after a Nov. 26 hearing for final approval of NAR’s settlement in the U.S. District Court for the Western District of Missouri. That court is handling settlements reached in Sitzer | Burnett, a major commission suit whose trial resulted in a jury verdict against NAR and major real estate franchisors that, when trebled, would have added up to $5.4 billion in damages.

“If the motion for final approval of the Burnett settlement is granted following the fairness hearing in November of 2024, all individual and putative class claims against WPML in the instant case will be released unless plaintiffs and class members timely opt out of the Burnett settlement,” the motion reads.

However, that same day, attorneys for the plaintiffs filed a response objecting to the motion, arguing against the scope of NAR’s proposed settlement. They pointed out that the NAR settlement was for $418 million and expanded the settlement class from Missouri homesellers “to substantially all home sellers nationwide.”

“Thus, they would purport to settle all claims of all parties who were harmed by their antitrust conspiracy nationwide for 13 [percent] of what a jury found the harm to have been from that conspiracy in a single state,” the filing reads.

“What is more, the settlement would also allow other parties who had engaged in the same or similar antitrust conspiracies nationwide to opt in to the settlement and be released in that action from any liability, some for free, and some for a similarly low dollar contribution.”

West Penn MLS, which had 9,203 subscribers at the end of 2023, is paying $920,300 to opt in to the NAR deal, which contains a formula to allow non-Realtor MLSs to be covered if they pay 100 times their subscriber count last year.

Plaintiffs’ counsel also criticized the deal’s practice changes, the biggest of which prohibits offers of compensation from listing brokers to buyer brokers to be made via MLSs.

“This would not, however, prevent those offers being made in other places, however (and possibly not even on independent MLSs that opt into the settlement, like West Penn MLS),” the filing reads.

“As a result, a key element of the antitrust conspiracy will not be halted, but simply driven underground where it will be harder to document and harder to stop through the antitrust laws in the future. The United States Department of Justice, for one, finds that insufficient.”

In a major commission case known as Nosalek in Massachusetts, DOJ attorney Jessica Leal told the court that the DOJ had not yet taken a position on the NAR deal, but thought the removal of buyer broker compensation offers off the MLS was “an improvement.” Still, she added, “We believe offers of compensation should not be made anywhere but certainly not on the MLS.”

Given the DOJ’s attention and the likelihood of other objectors, attorneys for the Moratis plaintiffs stressed that the NAR settlement’s final approval was far from a sure thing.

“Ms. Leal also, while indicating that the Department would not commit one way or another to whether it would oppose the Missouri settlement, certainly indicated that the Department would be keeping an eye on it with particular interest in what parties opt in,” the filing reads.

“There will doubtless be multiple objectors, possibly including the United States of America, given the concerns expressed by Ms. Leal,” the filing adds.

“Now West Penn MLS seeks to opt in to that settlement and asks this Court to stay the matter as to them for an indefinite period pending approval or rejection of the Missouri settlement.”

Granting West Penn MLS’s motion to stay “would cripple the ability of this case to move forward,” particularly if the litigation drags on for years, according to the filing.

“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,” the filing reads.

“That is unlikely. More likely, this matter will be tied up while the 8th Circuit [Court of Appeals] decides whether the Western District of Missouri’s decision, whatever it is, should be affirmed or reversed.

“In a case of this size, it would not be unexpected for one or more parties to seek a writ of certiorari [from the U.S. Supreme Court]. The delay could be years, during which evidence will grow stale, witnesses will forget key events, and members of the plaintiff class will pass away waiting for relief. The prejudice would be extreme.”

Judge Stickman denied West Penn’s motion to stay without comment.

Inman has reached out to West Penn MLS for comment and will update this story if and when a response is received.

Email Andrea V. Brambila.

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