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EXp Realty got too good of a deal.
That’s the latest argument filed in a Missouri class action lawsuit known as Gibson by homeseller plaintiffs, who on Tuesday moved to intervene in a separate lawsuit to force the brokerage back to the negotiating table.
Attorneys for the plaintiffs filed motions arguing eXp’s agreement to pay $34 million to settle litigation on a nationwide basis wasn’t fair, and that the brokerage should be required to mediate with attorneys in the Gibson case.
“Both the law and the facts strongly support transferring that later-filed action to this Court, which should evaluate the adequacy and fairness of eXp’s proposed settlement,” the attorneys wrote.
The Gibson attorneys wrote that there were extensive negotiations over a possible settlement, but that eXp later withdrew from those negotiations and reached a proposed settlement in Hooper.
The group specifically asked the court to deny eXp’s request to stay the Gibson case. In a separate filing made in a case known as Hooper, which was filed in Georgia last November, the Gibson plaintiffs are seeking to transfer the case to their court in Missouri.
They said eXp reached its settlement through a “reverse auction,” a practice whereby a defendant selects attorneys among competing classes and negotiates the lowest possible settlement amount.
That practice, the Gibson plaintiffs argue, allowed eXp to reach a settlement agreement that was lower than it otherwise would have been if they were required to negotiate with Gibson attorneys.
“Based on publicly available information about eXp’s financial condition, the settlement in the Hooper case does not provide adequate and fair value for the class given eXp’s financial resources, which equal or exceed those of Anywhere, RE/MAX, Keller Williams, and Compass — defendants in Burnett and Gibson that all agreed to materially larger settlements than eXp,” the attorneys wrote.
Anywhere and RE/MAX agreed to pay $83.5 million and $55 million, respectively, to settle cases known as Sitzer and Moehrl. Those settlement agreements were reached before Sitzer went to trial and the jury issued a verdict against the industry.
Meanwhile, eXp’s market capitalization is far higher than those companies, and it has more cash on hand and less debt, the attorneys wrote.
A plaintiff attorney for Hooper said that they hadn’t taken financial health into consideration when negotiating the settlement with eXp, the Gibson attorneys wrote.
“That is a stunning admission and explains why, at least in part, eXp was able to secure an improper sweetheart deal that is not fair or reasonable to the class,” the attorneys wrote.
In a statement, eXp acknowledged the filing and said that it expects the court to agree that its settlement was fair.
“EXp is confident its settlement will be found to be fair, reasonable and adequate,” the company said in a statement.
In its filing with the Gibson court, the plaintiffs’ attorneys disagreed.
“This Court should decline eXp’s invitation to break new ground and refuse to aid eXp in using a reverse-auction process to reach a premature and cheap settlement that is inadequate and unfair to the class,” they wrote.
