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Looks like there won’t be another bombshell commission trial until at least the end of next year. After homeseller plaintiffs won a crucial victory against the National Association of Realtors and major real estate franchisors in Kansas City last month, the judge in a similar, but exponentially bigger, case signaled that attorneys in that case won’t face off in front of a jury until “likely” the fourth quarter of 2024.
Judge Andrea R. Wood
In a telephonic status hearing Wed., Nov. 29, Judge Andrea R. Wood in Chicago, where NAR is based, said she would be able to “try the case likely in the fourth quarter of 2024,” despite objections from NAR’s counsel urging her not to set a date.
Wood, of the U.S. District Court for the Northern District of Illinois Eastern Division, had previously indicated in May that the trial would likely be in the first half of 2024, so it’s possible the date could be pushed further.
The suit, known as Moehrl after the lead plaintiff, alleges that some NAR rules — including one, known as the Cooperative Compensation Rule or 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 (MLS) — violate the Sherman Antitrust Act by inflating seller costs.
On Oct. 31, in a similar, smaller case known as Sitzer | Burnett, a Kansas City jury found NAR, Keller Williams, Anywhere (formerly, Realogy), RE/MAX, HomeServices of America and two of its subsidiaries, BHH Affiliates and HSF Affiliates, conspired to follow and enforce that rule to inflate broker commission rates paid by a class of about 500,000 homesellers, awarding the plaintiffs nearly $1.8 billion in damages, which will be tripled by law to nearly $5.4 billion.
The defendants in Moehrl are the same as in Sitzer/Burnett except Moehrl has an additional defendant, HomeServices-owned The Long & Foster Companies.
The court has certified Moehrl as a class action, meaning that potentially millions of homesellers in 20 MLS markets nationwide can ask to be reimbursed for an estimated $13.7 billion in damages. With treble damages — or three times the actual damages — that figure could go up to $41.1 billion.
Robert Braun
At the hearing Wednesday, plaintiffs’ attorney Robert Braun of Cohen Milstein Sellers & Toll asked Wood to set a trial date, potentially for third-quarter 2024, in order to allow the parties to prepare, saying his firm had been getting questions from the named homeseller plaintiffs and their experts about the date for scheduling purposes.
“This case has now been pending for more than four and a half years, and we’re ready to move forward and towards trial,” Braun said.
Ethan Glass
But NAR attorney Ethan Glass of Cooley said the court should “definitely” avoid setting a trial date, saying “it’s way premature” because the court hadn’t even taken requests to decide the case without a full trial (known as motions for summary judgment) yet, “let alone decided them.”
“And we found ourselves in Kansas City preparing for trial multiple times, which was a very big resource drain,” Glass said. (The Sitzer | Burnett trial was rescheduled several times before ultimately occurring in October.)
Glass also asked Wood for a week or so to let the court know if NAR wanted the court to extend its deadline for submitting requests to dispose of the case, such as summary judgment motions. The deadline is Dec. 19.
“We are still analyzing what the consequences of the [Sitzer | Burnett] jury verdict are,” Glass said.
“There are legal questions that, at least the National Association of Realtors believes, that the court in Kansas City got wrong and it seems a waste of resources to go through and have this court make legal determinations when there may be an appellate court … that may be weighing in,” Glass added, acknowledging that he knew that the appellate court in Sitzer | Burnett is in a different circuit than Moehrl. Sitzer | Burnett is in the Eighth Circuit while Moehrl is in the Seventh Circuit.
Glass also pointed to the damages award in Sitzer | Burnett, which he characterized as “very large.”
“I want to make sure that we are being efficient with the court’s resources and transparent with the court and candidly with the plaintiffs and other defendants on what the consequence of that is,” Glass said.
He added that there may or may not be reasons to extend the briefing schedule, “but we still have a little more homework to do.”
Wood asked Braun for his thoughts on Glass’s request and Braun said he didn’t see any basis for moving the schedules in Moehrl due to legal challenges in Sitzer | Burnett that may not be resolved for “a year or more.”
“We’re talking about setting a trial date potentially nine months out or a year out,” Braun said.
“The parties know the issues at stake here quite well” because of the Sitzer | Burnett case, he added. “We just don’t think that there is any basis for further delay.”
Timothy Ray
At this, Keller Williams attorney Timothy Ray of Holland & Knight jumped in and said that KW believes there were “serious errors” in the Sitzer | Burnett trial and that that trial should not be held up as a “standard for how we should go forward in Moehrl.”
Ray listed particular errors that KW thought the court in the Sitzer | Burnett case made.
“First of all, no multiple listing service case has ever been evaluated under a per se standard,” Ray said. That standard meant that the Kansas City jury was told not to consider any alleged pro-competitive benefits of the conspiracy.
The court also “accepted hearsay evidence that had nothing to do with the conspiracy,” Ray added.
What Ray said was “most perplexing” was that the court, “for reasons that we still don’t understand,” did not allow the jury to know that a Missouri statute specifically allowed for offers of compensation.
“The court allowed the jury to believe that no homeseller would ever pay a buyer’s agent absent a conspiracy, once again, without sharing with the jury that this very practice is allowed by Missouri statute,” Ray said.
Therefore, Keller Williams “would like for the Moehrl case to stand on its own consistent with the law” in its district and circuit, Ray finished.
Wood agreed with Ray, saying she saw no reason to change the current briefing schedule.
“I don’t think the fact that the other case has proceeded to trial and there are certain legal issues that will be challenged post-trial … affects what I need to do to keep the case moving here,” Wood said.
“It is a different case with some different issues, some overlapping issues, in a different circuit. So I tend to agree with Mr. Ray’s point that this case should stand on its own.”
Wood said that the parties’ experience in Sitzer | Burnett could maybe help them streamline their work in Moehrl.
“But there’s certainly no reason that I would move to be bound or influenced by anything that happened in the other case that would be inconsistent with the law here or my own considered judgment on how to proceed,” Wood said.
In regards to the trial date, Wood said she thought setting a date as soon as “it’s reasonable to do so makes sense.”
Wood asked for the parties to submit a joint status report by Jan. 22 in which they estimate the number of trial days and testimony hours that they anticipate needing, taking into account that Anywhere and RE/MAX are unlikely to participate in the trial if their preliminarily-approved settlements in the case receive final court approval.
