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The plaintiffs and the multiple listing service defendant in a major antitrust commission suit are asking a federal court for additional time to respond to a U.S. Department of Justice filing in the case due to a proposed nationwide commission settlement reached by the National Association of Realtors.
On March 20, plaintiffs Jennifer Nosalek, Randy Hirschorn and Tracey Hirschorn and defendant MLS Property Information Network (MLS PIN) asked the U.S. District Court for the District of Massachusetts to change its deadline for them to respond to a statement of interest the DOJ filed in the case on Feb. 15.
In that filing, the federal agency rejected rule changes in a proposed settlement between the plaintiffs and MLS PIN and instead called for “an injunction that would prohibit sellers from making commission offers to buyer brokers at all,” thereby promoting competition and innovation between buyer-brokers because buyers would be empowered to negotiate directly with their own brokers.
The DOJ emphasized that that change would not necessarily force buyers to pay commissions out of pocket because buyers could, in their home purchase offer, request that the seller pay the buyer’s broker from the proceeds of the home sale.
On Feb. 22, a week after the DOJ’s filing, NAR broke its silence on the agency’s proposal, stating it would harm consumers by making it more costly for homebuyers to get capable representation and by reducing access to fair housing. Three weeks later, NAR settled a case known as Sitzer | Burnett as well as others, agreeing to create a new rule prohibiting offers of compensation from listing brokers to buyer brokers from appearing in the MLS, which will take effect in mid-July.
In Wednesday’s filing, the plaintiffs and MLS PIN acknowledged that the court had, on March 11, granted their request to file separate responses to the DOJ’s filing by March 28, the date of oral arguments before a multi-district litigation (MDL) panel.
On Dec. 27, attorneys for the plaintiffs in other, similar suits called Gibson and Umpa requested that the United States Judicial Panel on Multidistrict Litigation consolidate any cases nationwide asserting similar claims — which would include this Nosalek case — in the U.S. District Court for the Western District of Missouri. That court was the first to hold a trial for one of the commission suits, Sitzer | Burnett, which ended in a multibillion-dollar verdict for the homeseller plaintiffs.
However, in Wednesday’s filing, MLS PIN and the plaintiffs said that in light of the March 15 NAR settlement they needed more time and proposed filing a status update with the court seven days after the MDL panel makes its ruling, which they anticipate will happen in April. That status update would include a proposed deadline for filing their responses to the DOJ’s filing.
“The NAR Settlement … contains a rule change concerning the ability of MLS entities to list seller offers of commissions to buyer-brokers,” attorneys for MLS PIN and the plaintiffs wrote.
“That rule change is different from the rule change negotiated between Plaintiffs and MLS PIN in this action. Because many Massachusetts real estate brokers are members of NAR and, therefore, could be affected by different rules, the parties need to consider the impact of the proposed NAR rule change on this settlement.”
They said they also needed time to:
• discuss among themselves “whether, and to what extent, any changes to their settlement may be appropriate,”
• discuss with the DOJ “to ascertain whether any additional changes would resolve the issues raised” in its statement of interest,
• discuss with the parties to the NAR settlement “to resolve the outstanding actions in a coordinated fashion;” and
• receive approvals from MLS PIN’s board of directors “for any contemplated changes.”
Under the original proposed settlement, MLS PIN would have removed a requirement that homesellers must offer compensation to buyer brokers; would have required listing brokers to notify sellers that they’re not required to offer compensation to buyer brokers and that they can decline if a buyer broker requests compensation; and would have clarified that if the seller makes an offer to a buyer broker and the buyer makes a counteroffer, commissions would be negotiated among the seller, the buyer, the seller broker, and the buyer broker.
Like federal commission suits Moehrl and Sitzer | Burnett, Nosalek 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, a violation of the Sherman Antitrust Act.
However, Nosalek differs in one important respect from many of the other suits: NAR is not named as a defendant, while MLS PIN is. The MLS, which has a full-time staff of 60 employees, boasts approximately 46,000 subscribers in six New England states and New York.
The Nosalek case, like ever-multiplying antitrust lawsuits across the country, challenges a rule that requires listing brokers to make blanket, unilateral offers of compensation to buyer brokers in order to submit a listing in an MLS. Most of the suits target NAR’s version of this rule, known as the cooperative compensation rule or the Participation Rule, which is in effect for all Realtor-affiliated MLSs nationwide and has thus attracted the attention of the DOJ.
Read Wednesday’s motion:
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