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In less than two weeks, a federal court in Massachusetts will hold oral arguments on whether Anywhere Real Estate will be required to turn over documents on its nationwide implementation of a controversial National Association of Realtors’ commission rule.
The case, known as Nosalek, after its lead homeseller plaintiff (formerly, Bauman), was filed in December 2020. Like federal commissions suits Moehrl and Sitzer/Burnett, the case seeks class-action status and alleges that the sharing of commissions between listing and buyer brokers inflates seller costs and is a conspiracy in restraint of trade in violation of the Sherman Antitrust Act.
However, Nosalek differs in one important respect from the other suits: NAR is not named as a defendant, but a large multiple listing service, broker-owned MLS PIN (Property Information Network), is. The other defendants are the same as in Moehrl and Sitzer/Burnett: Realogy, RE/MAX, Keller Williams and HomeServices of America. Although Realogy changed its name to Anywhere earlier this year, the company is still referred to as Realogy in the legal filings including by its own attorneys.
The Nosalek plaintiffs allege that MLS PIN, which has about 46,000 agent and broker subscribers, is not directly required to abide by NAR rules but has nonetheless adopted a rule similar to a NAR rule that requires listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing to MLS PIN. The plaintiffs call the rule the “Buyer Broker Commission Rule.”
Last month, the plaintiffs filed a motion to compel Realogy to produce all documents relating to its implementation of the rule across the country — not just in the MLS PIN service area, which includes Massachusetts, Rhode Island and New Hampshire.
“The similarity between the NAR Rule and MLS PIN’s [rule] is not a coincidence,” attorneys for the plaintiffs wrote in a memo.
“The exact same entities — that is, the Broker Defendants named in this action — control both NAR and MLS PIN. Although discovery is still ongoing in this case, Plaintiffs here allege that all of the Broker Defendants other than Keller Williams directly control MLS PIN’s board, and that all Broker Defendants exert functional control over MLS PIN by virtue of their market dominance, by requiring their respective brokerage operations and franchisees to follow MLS PIN policies, and by the number of brokers they cause to be enrolled in MLS PIN.”
According to the filing, all of the other real estate franchisor defendants, except Realogy, have agreed to produce documents on their implementation of the rule nationwide. Because of the similarity of the NAR rule and the MLS PIN rule and because of the alleged power of the franchisors over both, the motion contends that the defendants’ discussions about the NAR rule may be relevant to their thoughts on the MLS PIN rule.
“The manner in which the Broker Defendants discussed, implemented and enforced buyer-broker commission rules in other MLS service areas can, just like discussions of the NAR Rule, provide important information concerning Defendants’ motives and collusion that is directly relevant to their behavior in the MLS PIN Service Area,” the filing reads.
“If Defendants conspired in another market to maintain that region’s buyer-broker commission rule in order to maximize profit, that is at least circumstantial evidence Defendants may have done so in the MLS PIN Service Area as well.”
However, Realogy opposes the plaintiffs’ efforts to expand discovery in the case beyond MLS PIN’s service area.
“Despite the fact that Plaintiffs made the strategic decision not to sue the National Association of Realtors, presumably in order to avoid having this case transferred to one of the courts presiding over the cases that Plaintiffs claim are related, in which NAR has been named as a defendant, they now seek nationwide discovery about NAR and NAR rules,” attorneys for Realogy wrote in a filing opposing the motion to compel.
“Plaintiffs’ case is about a single multiple listing service, the MLS PIN, and the purported impact of MLS PIN rules in the MLS PIN Covered Area. In seeking unfettered nationwide discovery regarding NAR rules pertaining to other unrelated MLSs, Plaintiffs are asking the Court to disregard the relevant geographic market that they allege in their operative complaint,” they added.
Moreover, Realogy pointed out that it had never objected to turning over documents related to the origins of MLS PIN’s commission rule.
“Realogy has already agreed to produce discovery relating to the origins and development of [the MLS PIN rule], to the extent that it has any such discovery in its possession or control,” the company’s attorneys wrote.
“Furthermore, such discovery would likely be available from Defendant MLS PIN as well.”
The court will hold a hearing on Sept. 26 at 10 a.m. Eastern Time to allow each side to present their arguments on the plaintiffs’ motion to compel.
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