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One of two bombshell class-action antitrust lawsuits heads to trial Monday with the commission structure of the real estate industry at stake.
This FAQ will serve as a guide to the suit known as Sitzer | Burnett, including the suit’s allegations, the parties involved, the evidence the trial jury will and will not see, the high-profile witnesses who may testify, the settlement terms that could impact the case’s outcome, and what comes next after the verdict.
Who are the plaintiffs?
Missouri homesellers Rhonda Burnett, Jerod Breit, Jeremy Keel, Frances Harvey and Hollee Ellis. Their case was originally filed in April 2019 and won class-action status in April 2022, granting them permission to represent hundreds of thousands of homesellers who paid a buyer broker commission in connection with the sale of residential real estate in Missouri listed on one of four multiple listing services — MARIS, Heartland MLS, Southern Missouri MLS and the Columbia Board of Realtors MLS — starting Apr. 29, 2015.
The plaintiffs’ attorneys are Benjamin H. Fadler, Michael S. Ketchmark and Scott A. McCreight of Ketchmark & McCreight; Eric L. Dirks and Matthew Lee Dameron of Williams Dirks Dameron; Erin D Lawrence, Jeremy M. Suhr and Brandon J.B. Boulware of Boulware Law.
Who are the defendants?
The National Association of Realtors and real estate franchisors Keller Williams, Anywhere (formerly, Realogy), RE/MAX, HomeServices of America, and HomeServices subsidiaries BHH Affiliates and HSF Affiliates. The plaintiffs have filed proposed settlements with Anywhere and RE/MAX in the case and the court has stayed the claims against them, so the companies will not have to defend themselves at trial.
NAR’s attorneys are Alexander Barrett and Charles W. Hatfield of Stinson; David R. Buchanan of Brown & James; Ethan Glass, Anne Bigler, Beatriz Mejia, Deepti Bansal, Elizabeth Wright, Georgina Inglis, Samantha Strauss and Sarah M. Topol of Cooley; and Jack R. Bierig, Jacob K. Danziger, John S. Purcell, Molly L. Wiltshire, Robert J. Wierenga and Suzanne L. Wahl of ArentFox Schiff.
Attorneys for HomeServices, BHH Affiliates and HSF Affiliates are Brian C. Fries and Jean Paul Bradshaw II of Lathrop GPM; Jay N. Varon and Jennifer M. Keas of Foley & Lardner; Matthew T. Ciulla, Robert D. MacGill, Scott E. Murray and Patrick Sanders of MacGill.
Keller Williams’s attorneys are Anna P. Hayes, David C. Kully, Jennifer Lada, Martin G. Durkin, Jr., Timothy Ray, William F. Farley, Barack S. Echols, and Dina McKenney of Holland & Knight; Danne Wayne Webb of Horn, Aylward & Bandy; David R. Buchanan and Taylor L. Connolly of Brown & James.
What are the allegations?
The plaintiffs allege that NAR’s Participation Rule, which requires listing brokers to offer buyer brokers a commission in order to list a property in a Realtor-affiliated MLS, violates the Sherman Antitrust Act by inflating seller costs. The model rule applies to all 500 or so MLSs owned by Realtor associations nationally.
The rule underpins the MLS system that virtually all U.S. real estate agents and brokers rely on to do their jobs. NAR’s MLS policy handbook defines an MLS, in part, as “a means by which authorized participants make blanket unilateral offers of compensation to other participants.”
The Participation Rule, also known as NAR Policy Statement 7.23, says, “In filing property with the multiple listing service, participants make blanket unilateral offers of compensation to the other MLS participants and shall therefore specify on each listing filed with the service the compensation being offered by the listing broker to the other MLS participants. This is necessary because cooperating participants have the right to know what their compensation will be prior to commencing their efforts to sell.”
NAR’s MLS policy handbook goes on to say that “Multiple listing services shall not publish listings that do not include an offer of compensation expressed as a percentage of the gross selling price or as a definite dollar amount, nor shall they include general invitations by listing brokers to other participants to discuss terms and conditions of possible cooperative relationships.”
NAR has consistently said in legal filings and public statements that the Participation Rule stipulates that listing brokers can offer buyer brokers “as little as” one cent or one dollar in order to list a property in a Realtor-affiliated MLS, but the 1.5 million-member trade group has recently changed its interpretation of the rule to allow listing brokers to offer buyer brokers nothing.
The plaintiffs also allege that certain NAR rules restrain the negotiation of offers of compensation to buyer brokers, deny buyers information on offered buyer broker commissions, allow buyer agents to represent that their services are free, and incentivize and facilitate steering by brokers toward listings that offer at least a typical commission for the market and away from listings that offer less than the typical commission. The defendants deny the plaintiffs’ allegations.
What are the damages alleged?
The plaintiffs are asking for reimbursement of $1.3 billion in commissions they and their fellow class members paid to buyer agents over the course of more than seven years — plus potential treble damages that could raise that total to around $4 billion.
According to the plaintiffs’ proposed jury verdict form, jurors will have to decide whether they believe a conspiracy existed and, if they do, whether that conspiracy raised, inflated or stabilized broker commission rates paid by homesellers. If the jurors answer “yes” to that latter question, they must then say whether they believe each of the defendants knowingly and voluntarily joined the conspiracy with the purpose of furthering its goals.
The jurors must then say whether they believe the conspiracy caused the plaintiffs to pay more for real estate brokerage services than they would have without the conspiracy. If the answer is “yes,” they must then state the amount of damages proved by the class plaintiffs.
Who is the judge?
Judge Stephen R. Bough
Judge Stephen R. Bough specializes in multidistrict litigation and class actions in the U.S. District Court in Western Missouri. An Obama appointee, he was sworn in to his current position in December 2014.
What’s the trial schedule?
The trial will start on Oct. 16 and is scheduled to last for three weeks. The jury selection process will begin on Oct. 13 and the jury will likely be impaneled on Oct. 16. Then, each side will give their opening statements and the plaintiffs will present their case. The defendants will subsequently present their case and each side will end with closing statements. The judge will instruct the jury and the jury will then head into deliberations that could last hours or days. The parties expect a verdict either by Nov. 3 or the following week, Nov. 6-10.
Who are the witnesses?
Each side has submitted a list of potential witnesses to the court. These are witnesses who may be called to testify but whom neither side has committed to calling. They may appear either live or through video deposition. The lists include many names of notables in the industry, including NAR CEO Bob Goldberg, Keller Williams co-founder Gary Keller, HomeServices CEO Gino Blefari, RE/MAX co-founder Dave Liniger and former Coldwell Banker CEO Ryan Gorman.
Here is the plaintiffs’ proposed witness list:
A. Witnesses To Be Called Live At Trial
1. Roger Alford
2. Jerod Breit
3. Rhonda Burnett
4. Hollee Ellis
5. Frances Harvey
6. Jeremy Keel
7. Todd Reynolds
8. Craig Schulman
B. Witnesses To Be Called By Videotaped Deposition
9. Nick Bailey (August 9, 2022)
10. Gino Blefari (February 8, 2022)
11. Michelle Figgs (February 4, 2022)
12. Rene Galicia (March 4, 2022)
13. Rodney Gansho (August 3, 2022)
14. Kevin Goffstein (October 5, 2023)
15. Bob Goldberg (November 22, 2021)
16. Ryan Gorman (August 22, 2022)
17. Gary Keller (January 19, 2022)
18. Darrell King (February 2, 2022)
19. David Liniger (April 4, 2022)
20. Meredith Maples (June 17, 2022)
21. Cliff Niersbach (January 26, 2021)
22. Jay Papasan (April 14, 2022)
23. Dana Strandmo (May 25, 2022)
24. Stefan Swanepoel (February 23, 2023)
25. Rosalie Warner (October 19, 2022)
26. Records custodian for each Defendant (if necessary)
Here is the defendants’ proposed witness list:
1. Gino Blefari
2. Jerod Breit
3. Rhonda Burnett
4. Sarah Butler
5. Brian Cannan
6. Jon Coile
7. Jen Davis
8. Hollee Ellis
9. Michelle Figgs
10. Mike Frazier
11. Rodney Gansho
12. Kevin Goffstein
13. Bob Goldberg
14. Frances Harvey
15. William Fried
16. Jeremy Keel
17. Gary Keller
18. Ashley Kelm
19. Marc King
20. Darrel King
21. Meredith Maples
22. Sharon Millett
23. Linda O’Connor (deposition)
24. Ron Peltier
25. David Stevens
26. Dana Strandmo
27. Scott Trupiano (deposition)
28. Rosalie Warner
29. Krista Wilson
30. Lawrence Wu
31. Stefan Swanepoel (deposition)
32. Sarah Young (deposition)
33. Cary Sylvester (deposition)
34. Any witness listed by plaintiffs
35. Any witness necessary for rebuttal or impeachment
What evidence will the jury not see?
The jury will not be made up of real estate professionals. They will not know what Inman readers know, in part by design. In advance of the trial, parties on both sides of the dispute filed dozens of requests with the court (known as “motions in limine”) to suppress certain evidence from the jury because it might be unfairly prejudicial to one side or the other. Most were granted, at least in part.
Per the judge’s orders, this means the trial will exclude, as requested by the defendants:
- evidence related to discrimination in the real estate industry
- references to government investigations of NAR
- irrelevant judicial decisions
- evidence of unrelated litigation
- recordings from discount brokerage REX Real Estate purportedly showing agents steering buyers away from listings that didn’t offer a pre-set buyer agent commission
- evidence of policy changes made by Anywhere after this lawsuit was filed
- references to the proposed settlement in Nosalek v. MLS Property Information Network, Inc.
- reference to a deposition question about prior, unrelated illegal conduct and its response
- evidence of unrelated alleged prior conduct by Re/MAX executives
- evidence or arguments that a defendant should not be responsible for the commissions charged by Anywhere
- references or testimony from withdrawn experts Walter Clements, Dan Sight, and Stephen McWilliam
- all evidence and testimony related to defendants’ financials
- references to the amounts of the Anywhere and RE/MAX settlements in the case
The trial will also exclude the following evidence, as requested by the plaintiffs:
- references to “lawyer-driven” litigation or the circumstances in which class representatives decided to engage counsel to represent them
- reference to plaintiffs’ attorneys’ fees
- reference to plaintiffs’ litigation history
- reference to named plaintiffs’ attendance or nonattendance at trial
- evidence, inference, or argument regarding “offsets,” such as buyer broker services provided to plaintiffs and class members, or regarding plaintiffs’ sales profits or proceeds
- testimony from named plaintiffs regarding the law, the pleadings, and legal conclusions
- reference to prior class representatives or to class representatives in other cases or their alleged damages
- reference to the opinions or conclusions about this case from “experts” who were not disclosed in this litigation
- reference to the compensation of experts
- reference to the number of documents produced or the expense of defending this case
- argument or reference to the impact of a verdict on defendants or their customers or that a verdict may be trebled
- reference to the wealth, income, success, travel, or politics of plaintiffs’ counsel
- references to withdrawn plaintiffs’ experts Doug Minor and Jeffrey Rothbart
- reference to the case as frivolous or the supposed ease of filing lawsuits
- reference to “innocent until proven guilty” or similar sentiment
- references to pleadings or motions in limine
- reference to any absence of the DOJ “decision” not to prosecute defendants or to “bless” or “approve” any NAR or MLS rules
What evidence will the jury see that the parties didn’t want them to see?
Some of the parties’ requests to withhold evidence from the jury were not successful. This is what will be fair game at trial, over the defendants’ objections:
- evidence of changes to NAR rules that occurred after plaintiffs filed this lawsuit
- hearsay statements in government reports
- references to the notes of former Keller Williams industry analyst Michelle Figgs, specifically the statement in those notes that “Gary [Keller] believes strongly in collusion theory for why commissions are stable. ‘co-opetition.’”
- references to economic models published or presented by Keller Williams or its employees identifying agent business metrics, including average commissions, and how those metrics relate to agents’ incomes; and national average commission rates collectively earned by independent contractor agents affiliated with KW franchisee brokerages across the U.S. that were reported during KW events
- deposition testimony for witnesses appearing live at trial
- evidence relating to RE/MAX’s educational materials that were allegedly not made available to brokers or agents in the United States
- evidence and testimony regarding statements made by non-party real estate broker Linda O’Connor concerning U.S. antitrust laws
- evidence and argument relating to Anywhere, RE/MAX and their respective brands, including the Anywhere and RE/MAX deposition testimony previously designated by plaintiffs
- testimony from named defendants regarding the law, the pleadings and legal conclusions
- evidence relating to NAR’s Clear Cooperation Policy
- reference to Anywhere’s and RE/MAX’s proposed settlements, except for the amount of the deals
Defendants will also be free to bring this evidence at trial, despite plaintiffs’ objections:
- reference to alleged procompetitive benefits of the challenged rules
- reference to amounts retained by defendants compared to other co-conspirators
- reference to plaintiffs’ satisfaction with their agent service or that they agreed to the commission rate
- evidence or argument that a defendant was not involved with the initial decision to adopt the challenged rules
- depositions taken in a similar, larger case known as Moehrl
- reference or argument that plaintiffs have the sole burden of proof
What are the terms of the proposed Anywhere and RE/MAX settlements?
The jury will likely hear references to the terms of the Anywhere and RE/MAX settlements (except for their amounts) which may inform how they decide the case.
In their request for preliminary approval of the deals, the Sitzer | Burnett plaintiffs noted that Anywhere had agreed to pay $83.5 million, RE/MAX had agreed to pay $55 million, and both had agreed to change their business practices and “to provide cooperation to Plaintiffs in the litigation against the remaining Defendants.” The settlements apply to both Sitzer | Burnett and Moehrl.
Per that filing, the business practice changes Anywhere and RE/MAX agreed to make include:
- not to require company-owned brokerages, franchisees or their agents to belong to NAR or follow NAR’s Code of Ethics or MLS handbook. That particular provision of the deals automatically terminates if NAR reaches a settlement with the plaintiffs or if a court orders injunctive relief in either case. Injunctive relief restricts a party’s behavior, often through injunctions or requirements.
- advise and periodically remind company-owned brokerages, franchisees and their agents that there is no requirement that they must make offers to or must accept offers of compensation from cooperating brokers or that, if made, such offers must be blanket, unconditional or unilateral
- require that company-owned brokerages and their agents (and recommend and encourage that any franchisees and their agents) disclose to prospective homesellers and buyers and state in conspicuous language that broker commissions are not set by law and are fully negotiable
- prohibit company-owned brokerages and their agents acting as buyer representatives (and recommend and encourage that franchisees and their agents acting as buyer representatives refrain) from advertising or otherwise representing that their services are free
- require that Anywhere company-owned brokerages and their agents include, at the earliest possible moment, the listing broker’s offer of compensation in each active listing shared with prospective buyers through IDX or VOW displays, or through any other form or format
- display offers of compensation made by listing brokers or agents, where such data is available and/or provided to RE/MAX for all active listings shared on REMAX.com and recommend and encourage that franchisees and agents include cooperative compensation offers (if any) on any listings that they publicly display or share with prospective buyers through IDX or VOW displays, or through any other form or format
- prohibit the company-owned brokerages and their agents (and recommend and encourage that any franchisees and their agents refrain) from utilizing any technology or taking manual actions to filter out or restrict MLS listings that are searchable by and displayed to consumers based on the level of compensation offered to any cooperating broker unless directed to do so by the client (and eliminate any internal systems or technological processes that may currently facilitate such practices)
- advise and periodically remind RE/MAX franchisees and their affiliated agents and the Anywhere company-owned brokerages and their agents of their obligation to (and recommend and encourage that any Anywhere franchisees and their agents) show properties regardless of the existence or amount of cooperative compensation offered provided that each such property meets the buyer’s articulated purchasing priorities
- for Anywhere company-owned brokerages eliminate any minimum client commission requirements and not express or imply a minimum commission requirement in RE/MAX franchise agreements, training materials or other policies
- for company-owned brokerages, franchisees and their agents, develop training materials consistent with the above relief and eliminate any contrary training materials currently used
How will the settling franchisors cooperate against the remaining defendants?
The proposed settlements obligate Anywhere and RE/MAX to cooperate with the plaintiffs in the further prosecution of their claims against the remaining defendants. The plaintiffs allege those non-settling defendants — NAR, KW, HomeServices and its subsidiaries — are still “jointly and severally liable” for all damages caused by all the members of the alleged conspiracy, meaning that the jury can find the remaining defendants responsible for any damages they decide Anywhere, RE/MAX and their fellow defendants allegedly caused.
In the proposed settlements, Anywhere and RE/MAX agreed to:
- provide up to three current officers or employees of the settling defendant or its subsidiaries to participate as witnesses at trial in Moehrl and provide access via counsel to those witnesses prior to trial for up to two hours (if requested by plaintiffs)
- withdraw expert designations and obtain agreement with any separately retained experts that they will not testify at trial as a retained expert for any other defendant in the actions
- use reasonable efforts to authenticate documents produced by the settling defendants and establish that those documents are admissible
- use reasonable efforts to provide relevant class member data and answer questions about the data to support the provision of class notice
What happens next after the trial is over?
In a webinar on Wednesday, NAR laid out four scenarios for a jury decision:
1. A hung jury, meaning the jurors are unable to come to an agreement and therefore there must be a new trial.
2. The jury finds the defendants not liable, meaning the defendants win.
3. The jury finds the defendants liable, meaning the plaintiffs win, but awards no actual damages or monetary penalties.
4. The jury finds the defendants liable and awards monetary damages and/or injunctive relief.
No matter who wins at trial, the losing party or parties will almost certainly appeal. That means it may be years before there is a final decision in the case. How soon the effects of the trial will be felt across the industry depends on who wins and whether the court chooses to require changes while a final decision is pending.
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