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The National Association of Realtors is seeking to suppress evidence regarding its own history from the jury when one of two bombshell commission cases heads to trial in federal court this October, according to motions filed Thursday.
Attorneys for NAR and a quartet of real estate franchisors filed four requests in the U.S. District Court in Western Missouri involving commission rule changes, government investigations and discrimination. The requests, known as “motions in limine,” ask the judge to not allow the jury in a trial to be exposed to certain evidence because it might be unfairly prejudicial to one side or the other.
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NAR, Keller Williams, Anywhere, RE/MAX, and HomeServices of America filed the motions as defendants in the antitrust class action known as Sitzer/Burnett, which is scheduled for a three-week trial beginning Oct. 16 in Kansas City, Missouri. The suit was filed in 2019 and won class-action status in April 2022.
The suit alleges that some NAR rules — including one known as the Participation Rule that requires listing brokers to offer buyer brokers a commission in order to list a property in a Realtor-affiliated multiple listing service — violate the Sherman Antitrust Act by inflating seller costs.
Hundreds of thousands of sellers in four multiple listing service markets in Missouri are asking for reimbursement of $1.3 billion in commissions they paid to buyer agents over eight years — plus potential treble damages that could raise that total to around $4 billion.
Here are the four topics the defendants do not want the jury to know about:
NAR rule changes
In November 2021, the NAR board of directors passed three policies that were inspired by a now-scuttled antitrust settlement between NAR and the U.S. Department of Justice.
Two of the policies prohibit agents and brokers from advertising their services as free unless they will not actually receive any compensation from anyone for them and ban them from filtering out listings from website displays based on buyer broker commissions or the name of the brokerage or agent. The third policy requires MLSs to display buyer broker commissions on their listing sites and to include buyer broker commissions in the data feeds they provide to agents and brokers.
On Thursday, the defendants asked the court to exclude from the trial all references to rule changes that happened after the Sitzer complaint was filed in April 2019 because “this evidence is highly prejudicial to NAR as Plaintiffs offer it for no other purpose than to suggest a consciousness of guilt.”
“Testimony and evidence regarding NAR’s rule changes after the suit was filed should be excluded as Plaintiffs offer this evidence solely to establish culpable conduct, that NAR changed its rules because they were anticompetitive,” attorneys for the defendants wrote in the motion.
“Like any company, there are many reasons why NAR may have updated its policies — to address organizational, regulatory, or technological changes to name just a few — none of which are proof of an admission of fault. Here, NAR changed its rules as part of an effort to reach a settlement with the DOJ, which as outlined in the accompanying motion in limine, is likewise inadmissible.”
The attorneys added that the rule changes were not mandated by law, but rather “NAR undertook these rule changes completely of its own volition.”
Asked whether NAR was considering the rule changes before being approached by the DOJ, NAR spokesperson Mantill Williams told Inman that that part of the filing was “not about when NAR started considering the rule changes.”
“Grounded in NAR’s commitment to act in the best interests of buyers and sellers, we have always regularly updated guidance for local broker marketplaces to ensure they advance pro-consumer, equitable and transparent practices,” Williams said in an emailed statement.
“After lengthy review and consideration from members that serve on NAR committees, we felt those changes more explicitly stated what is already the spirit and intent of the NAR Code of Ethics and local broker marketplace guidance regarding consumer transparency and broker participation and formally adopted them in November 2021.
“We will always continue to regularly update our rules and policies to protect and enhance the best interests of consumers.”
Discrimination in the real estate industry
In a second motion, the defendants asked the court to exclude “all evidence or reference to discriminatory practices, policies, or actions in the real estate industry, including any effects of such actions and any apologies for such actions, such as the November 19, 2020 apology issued by NAR President Charlie Oppler.”
The filing refers to NAR’s first formal apology for past policies in the 20th century that contributed to segregation and racial inequality nationwide — a move that prompted backlash from some members and support from others. During a deposition, plaintiffs’ attorneys questioned one of the defendants’ expert witnesses, David Stevens, extensively about such past policies, according to the filing. Stevens is a former CEO of the Mortgage Bankers Association and a former Federal Housing Administration (FHA) commissioner.
“Indeed, Plaintiffs’ questioning on this topic continued for nearly ten pages of testimony, with Plaintiffs’ counsel referring to the apology with inflammatory language including ‘the sins of . . . the National Association of Realtor’s past,'” the second motion said.
“Plaintiffs should be prohibited from any further attempt to bring this prejudicial topic into this case, to which it has no possible rational relation.”
“Even if this material were potentially relevant, which it is not, it is highly prejudicial to NAR as Plaintiffs can offer it for no purpose other than to paint NAR to the jury as a generally bad actor in the real estate industry,” the motion added.
Government investigations of NAR
In a third motion, the defendants asked the court “to exclude any evidence, testimony, or arguments related to any governmental investigations” of NAR, particularly by the U.S. Department of Justice (DOJ).
After withdrawing from a settlement (also known as a consent decree) with NAR in July 2021, the DOJ resumed its investigation into two of NAR’s rules that were not included in the consent decree, the Clear Cooperation Policy on pocket listings and the Participation Rule on commissions. The latter rule is the subject of Sitzer/Burnett as well as a larger, similar antitrust class action known as Moehrl.
NAR and the DOJ are currently battling in an appeals court with the DOJ asking the court to allow the CCP and Participation Rule to be evaluated on their merits and NAR seeking to stop that probe, arguing that the DOJ agreed to close an investigation into the rules.
The Sitzer/Burnett defendants asked that the jury not hear either about the now-defunct consent decree or the “ongoing DOJ investigation” — including, presumably, NAR’s attempts to stop it — arguing that “[t]he decree did not involve the rules at the heart of this case” and “[t]he decree ‘has little or no probative value’ even with respect to the rules it did address because NAR did not admit liability.”
The defendants also asked that the fact that the DOJ has asked NAR for information about “certain NAR policies” should also be kept from the jury.
“Court after court has held … that the risk of prejudice from telling jurors about ongoing investigations substantially outweighs any probative value the existence of an investigation might have,” the third motion said.
“The most that evidence of the investigation could establish is that there is an investigation. That sheds no light on any fact relevant to the issues in this action. It merely serves as impermissible character evidence.
“Letting Plaintiffs argue that NAR is ‘under investigation’ or elicit testimony or other evidence about an investigation risks giving jurors the opposite impression, misleading them into believing that the government has somehow determined that NAR is culpable.”
Past court decisions regarding NAR
In a fourth motion, the defendants asked the court to prohibit the plaintiffs “from referring to all judicial decisions involving the National Association of Realtors and all related conduct prior to that decision at trial.”
Attorneys for the defendants said that the plaintiffs had cited past cases that they claimed “successfully sued” NAR over non-mandatory commissions, but that characterizing those cases in that manner was inaccurate.
“The fact is that the past cases against NAR have nothing to do with the rules at issue in this case,” the fourth motion said.
“Their introduction into the current case could only mislead the jury, require lengthy digressions to explain what the cases really say, and prejudice Defendants.
“Moreover, letting Plaintiffs tell the jury that the government has ‘successfully sued NAR’ over commission rates or that the Supreme Court has held that ‘non-mandatory’ commissions are illegal would permit Plaintiffs to introduce impermissible character evidence against NAR.”
Inman has reached out to plaintiffs’ attorney Michael Ketchmark of Ketchmark & McCreight PC for comment and will update this story if and when a response is received.
Editor’s note: This story has been updated with a comment from NAR.
