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Now that most defendants have agreed to settle the bombshell Sitzer | Burnett case, HomeServices of America may be left holding the bag for the remaining damages, to the tune of $4.7 billion.
On March 18, attorneys for the Sitzer | Burnett plaintiffs filed a motion for entry of judgment in which they asked the court to order HomeServices to pay the vast majority of the damages awarded in a jury verdict this fall.
Judge Stephen R. Bough
On Oct. 31, jurors found that the National Association of Realtors, Keller Williams, RE/MAX, Anywhere, HomeServices and two of its subsidiaries, BHH Affiliates and HSF Affiliates, conspired to inflate broker commission rates paid by homesellers. The jury awarded $1.78 billion in damages to a class of approximately 500,000 Missouri homeowners. The trial took place in the U.S. District Court for the Western District of Missouri before Judge Stephen R. Bough.
Anywhere and RE/MAX settled before the Sitzer | Burnett trial, for $83.5 million and $55 million, respectively. Keller Williams settled on Feb. 1 for $70 million and NAR settled on March 15 for $418 million. Added up, the deals come to $626.5 million. None of the settlements have received final approval from the court.
As part of NAR’s settlement, the 1.5 million-member trade group agreed to eliminate an NAR rule at the center of the case. Known as the cooperative compensation rule or the Participation Rule, it requires listing brokers to make blanket, unilateral offers of compensation to buyer brokers in order to submit a listing in a Realtor-affiliated multiple listing service. If the proposed settlement is approved, NAR would implement rule changes in July.
In Monday’s filing, attorneys for the homeseller plaintiffs formally asked Bough to treble the Sitzer | Burnett damages award, as required under federal antitrust law, to $5.36 billion, and to hold the HomeServices defendants liable for the full amount after subtracting the amount from the other settlements: $4,729,432,616. That would be 88 percent of the trebled award.
The plaintiffs also seek an award of attorneys’ fees and costs of the suit and interest on the damages amount, starting the day after the verdict, Nov. 1, at the rate of 5.4 percent per year, compounded annually.
“The jury found that all Defendants ‘knowingly and voluntarily joined the conspiracy,'” the plaintiffs’ attorneys wrote. “Defendants who are found to conspire are jointly and severally liable for all damages flowing from the conspiracy.”
They added that the settlements with KW, Anywhere and RE/MAX won’t be finalized for at least two months and the settlement with NAR “will take several more months. But there is no just reason to delay final judgment as to the HomeServices Defendants while the settlement process moves forward with respect to NAR, Keller Williams, Anywhere and RE/MAX.”
Chris Kelly
Asked for comment on the motion and whether HomeServices plans to settle, HomeServices executive vice president Chris Kelly told Inman, “Damages from an antitrust verdict are trebled as a matter of law and the motion filed by the plaintiffs yesterday, while premature, was expected.
“HomeServices continues to aggressively pursue all options to resolve our involvement in the outstanding litigation.”
Michael Ketchmark of Ketchmark & McCreight, lead counsel for the Sitzer | Burnett plaintiffs, told Inman the motion was “standard procedure under the law.”
Michael Ketchmark
“HomeServices is the only holdout from the trial,” Ketchmark said. “The rest of the industry is changing the way they’re doing [business], but HomeServices continues to fight and argue for a rule that everyone else’s abandoning, so I think it’s time for them to realize where the future’s headed and get on board.”
HomeServices, a Berkshire Hathaway affiliate owned by Warren Buffett, has proven tenacious in defending itself in this case. Most recently, on Feb. 2, HomeServices filed a petition to the U.S. Supreme Court for a “writ of certiorari,” asking the court to review an August ruling by the U.S. Court of Appeals for the Eighth Circuit affirming the district court’s ruling that HomeServices can’t enforce arbitration agreements signed by seller clients of its franchisees because the contracts the sellers signed were not directly with HomeServices.
That ruling cleared the way for HomeServices and its subsidiaries to be tried as defendants in the Sitzer | Burnett trial in October — a trial HomeServices says should never have happened because the homeseller plaintiffs signed arbitration agreements waiving their right to pursue class action litigation.
Editor’s note: This story has been updated with a comment from plaintiffs’ attorney Michael Ketchmark.
Read the motion:
