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Calls are piling up to overturn a district court’s final approval of nationwide settlements to resolve antitrust claims against major real estate franchisors Anywhere, Keller Williams and RE/MAX.
On July 1, law firm Knie and Shealy, which represents South Carolina homesellers in a commission suit filed in November, filed a notice of appeal in the U.S. District Court for the Western District of Missouri. The notice informed the court that the firm’s clients — homesellers Benny D. Cheatham, Robert Douglass, Douglas Fender, and Dena Fender — would look to the 8th U.S. Circuit Court of Appeals to reverse a decision from Judge Stephen R. Bough granting the approvals on May 9.
The settlements for the three franchisors cover claims from the cases known as Sitzer | Burnett, Moehrl and Nosalek, as well as other, similar homeseller suits nationwide. The suits allege that some NAR rules violate the Sherman Antitrust Act by inflating seller costs.
The homesellers’ legal filings regarding the appeal so far do not contain any arguments, but earlier legal filings offer hints. On April 12, the homesellers objected to final approval of the franchisor settlements on the grounds that the settlements far exceed the scope of the original suits that led to the deals.
“The Moehrl and Sitzer/Burnett classes were originally certified for a total of 24 Multiple Listing Services (MLSs),” the filing reads.
“This settlement attempts to expand that class certification to more than 600 MLSs around the country. This despite the fact that real estate is, at its base, local. Many of those 600 MLSs operate and enforce their rules differently from other MLSs even within the same state, let alone across the country.
“It is also easy to conflate the illegal activity these MLSs engaged in with the means by which it was accomplished. These MLSs may have used many of the same rules, but often enforced them in various ways. The participants in these MLSs took part in fixing prices for commissions, the actual illegal activity, using rules adopted for its particular MLS, though they may have used similar instrumentalities to do it.”
The South Carolina homesellers also objected that the combined settlement amount among the three franchisors, $208.5 million, “is far too low to adequately compensate the massive number of injured parties here.” The filing stresses that the plaintiffs in the Moehrl and Sitzer | Burnett cases should not be able to hinder other absent class members’ ability to try their own cases.
“Plaintiffs in these cases have bargained away rights of the citizens of other states in order to ensure that their own cases were settled, their own clients received cooperation at trial, and their own fees and expenses of trial paid,” the filing reads.
“They did not conduct even the barest of discovery into the conduct of this conspiracy in other states because they could not. Yet it is their contention that $208,500,000 is sufficient to make whole absent class members in radically different circumstances and in radically different conspiratorial environments.”
The homesellers also objected to the deals’ release of franchisees from liability without requiring them to pay anything to the people they allegedly harmed or change anything about their practices.
“In order to be effective, these settlement agreements should make mandatory adoption of these practice changes as a condition of owning a franchise and the failure to follow those provisions a condition exposing the franchisees to revocation of the franchise,” the filing reads.
“Another alternative would be an injunction that forbids the Seller from making an offer of compensation to the buyer broker at all. This alternative is proposed by the Department of Justice in its Statement of Interest of the United States in Nosalek. This would stop the price fixing behavior, the actual illegal activity, from recurring.”
“Antitrust law is designed to deter bad actors,” the filing adds. “Here, by requiring the franchisees to neither pay nor change, it is unclear how these settlements further the purposes of antitrust law.”
Finally, the homesellers protested that the deals will only be in effect for five years.
“Five years is simply inadequate based on these Defendants’ decades long practice of fixing the commissions for both sides of the sale, and their highly profitable results, the surreptitious return to this practice can almost be guaranteed unless clear prohibitions against it are put in place for a substantially longer period of time,” the filing reads.
“The history of this industry shows an incorrigible predilection for the fixing of commissions.”
The objections echo those made by another homeseller, who three weeks ago filed an appeal of the settlements’ final approval. A homebuyer also filed an appeal against the ruling.
“Since entering into the settlement in October 2023, RE/MAX, LLC has been committed to obtaining final court approval releasing all U.S. RE/MAX Broker/Owners and affiliates from claims in the Burnett (formerly Sitzer), Moehrl, and Nosalek cases,” a RE/MAX spokesperson told Inman in a statement.
“RE/MAX, LLC is pleased the district court granted final approval in May. That said, appeals of the order are neither unusual or unexpected, and RE/MAX, LLC will continue to vigorously defend the settlement during the appeal process. Ultimately, the Company believes the settlement is fair and reasonable and that the district court’s order should be upheld.”
Michael Ketchmark of Ketchmark & McCreight, lead plaintiffs’ counsel in Sitzer | Burnett, expressed optimism that the appeals court would reject the challenges to the deals.
“We have reviewed the appeals, and there are no surprises,” Ketchmark told Inman in a statement.
“We expect to win all appeals. The settlements will stand. Change is finally here.”
Keller Williams declined to comment for this story. Anywhere did not respond to requests for comment.
The appeals may delay implementation of the settlements in which Anywhere, RE/MAX and Keller Williams agreed to pay $83.5 million, $55 million and $70 million, respectively. No one in the settlement classes who has made a claim will receive payment until any appeals have been resolved.
The franchisors are also not required to implement the business practice changes they agreed to until after the appeals process, when the settlements will become effective. These changes include no longer requiring franchisees and their affiliated agents to join or be members of the National Association of Realtors or follow the Realtor Code of Ethics or NAR’s multiple listing service policy handbook.
Editor’s note: This story has been updated with comment from Michael Ketchmark.
