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As the real estate industry braces for a verdict on the National Association of Realtors’ proposed settlement of multiple antitrust cases this month, a separate ruling by the judge overseeing the case may offer hints on how he might rule.
Judge Stephen R. Bough of the U.S. District Court for the Western District of Missouri on Monday posted his final approval of nine settlements reached with brokerages and franchisors in a case known as Gibson, which was initially filed almost exactly a year ago, minutes after a jury found in favor of a class of homesellers and awarded them $1.8 billion in damages in a case known as Sitzer | Burnett.
The settlements resolve antitrust claims against Compass, Douglas Elliman, The Real Brokerage, @properties, Redfin, Realty ONE Group, Engel & Völkers, HomeSmart and United Real Estate. Collectively, the companies will pay $110.6 million.
In his order, Bough explained in detail why he granted the Gibson settlements final approval, even after several homesellers filed objections to the deals. Because the objections filed largely mirror those also filed against the NAR settlement, Bough’s thoughts on them may offer clues as to his eventual ruling on that deal, which is set for a fairness hearing on Nov. 26 in Kansas City.
Judge Stephen R. Bough | Photo courtesy of the University of Kansas School of Law
To begin with, Bough noted that the settlement administrator was able to reach more than 97 percent of identified Gibson settlement class members, a result he called “extremely successful,” and that thus far, more than 463,000 claims had been made. Class members will be able to submit claims until May 9, 2025.
“In contrast to the massive scale of the notice program and the large volume of claims, there were only 8 objections (encompassing 11 total objectors) and 46 opt outs from the Settlement Class,” Bough wrote.
Notably, given that the U.S. Department of Justice may decide to weigh in on the proposed NAR settlement, Bough pointed out that state and federal officials were notified of the Gibson settlements, but none had commented or objected to the deals.
In regards to complaints about the scope of the deals, Bough wrote, “A nationwide settlement was a necessary condition of obtaining any settlement for the benefit of the class, a nationwide settlement will conserve judicial and private resources, and Class members were fully apprised of the settlement class definition through the notice process.”
He explained that including all multiple listing services nationwide in the deals, regardless of their affiliation with NAR, was “both justified and necessary to achieve any settlement for the Settlement Class.
“Moreover, the only way that the Settlements were possible was if they provided for a nationwide recovery and release,” Bough wrote.
He opined that the settlement class counsel had “adequately represented the Class and will continue to do so,” noting that they had “obtained over $1 billion in proposed and approved settlements as well as historic practice change relief” despite negotiations that were “contentious and hard fought.”
“In reaching these settlements, Class Counsel, who have extensive antitrust experience and have vigorously litigated similar cases for years, sought to obtain the best possible recovery for the Class,” Bough wrote.
“There is no suggestion here, nor could there be, that Class Counsel were uninformed, lacked experience and expertise, or were somehow prevented from negotiating the best deal possible for the Class.
“To the contrary, Class Counsel negotiated based on their extensive knowledge of the issues, including liability, damages, the risks of continued litigation, and the financial condition of the Settling Defendants.
“Class Counsel also thoroughly analyzed the finances of each of the Settling Defendants, including the risk that each could file for bankruptcy protection, which likely would have resulted in lower recoveries, if any, for the Class than were obtained via the Settlements.”
In response to objectors’ qualms about the potential monetary damages that individual homesellers would receive, Bough pointed out that no settlement would have given class members the full amount of damages claimed.
“The applicable standard is whether the settlements are fair, reasonable, and adequate—not whether they provide complete relief to all Class members,” Bough wrote.
“The Settlements provide a significant financial recovery to the Settlement Class in light of the strengths and weaknesses of the case and the risks and costs of continued litigation, including appeal, and the Settling Defendants’ financial resources,” he added.
“The Settlements also include meaningful changes to the Settling Defendants’ policies. The parties naturally dispute the strength of their claims and defenses. The Settlements reflect a compromise based on the parties’ educated assessments of their best-case and worst-case scenarios, and the likelihood of various potential outcomes.”
“A guaranteed full recovery to every class member would have been untenable, perhaps resulting in no recovery at all,” Bough added.
Bough also granted the plaintiffs’ attorneys’ request for one-third of the settlement funds as their attorneys’ fees.
“This Court and others within the Eighth Circuit confirm that one-third of the common fund is an appropriate amount for class counsels’ fees in complex class actions, including antitrust litigation,” Bough wrote.
“Here, Class Counsel’s time and labor invested was substantial and necessarily precluded other work. In addition to the over 105,000 hours they have dedicated to the litigation through July 31, 2024, Class Counsel were also required to expend over $13 million of their own money toward the combined litigation. That work was undertaken without any guarantee of payment.
“Moreover, the litigation faced low odds of early settlements given the attack on practices that were central to the real estate brokerage industry.”
Regarding the objections, Bough overruled them all.
“[T]he Court finds that none of the objections provides a basis for denying final approval of the Settlements,” Bough wrote.
Bough ordered the objectors and their attorneys to appear in person at the final approval for the Gibson settlements on Oct. 31. Several objectors protested this order and most did not appear, so Bough waived their objections.
“[W]hile objectors may ‘have to spend one thousand ($1,000.00) dollars for a flight, hotel, and other out of town expenses’ if they had to personally travel, this pales in comparison to the $13,147,775.19 in reasonable and necessary expenses exhausted by Plaintiffs’ counsel in curating the current settlement for the Class,” Bough wrote.
“All Objectors who did not appear in person failed to comply with the Court’s order,” he added. “Therefore, all objections filed by the above named Objectors who did not appear in person at the October 31, 2024, Final Settlement Hearing, are waived for failing to comply with the Court’s order.”
Regarding objections from homesellers who filed cases against the Real Estate Board of New York (REBNY) and argued that their cases were unrelated to cases filed over NAR rules, Bough wrote that their assertions are “unequivocally rebutted by the plain language of the Gibson Complaint.”
“Plaintiffs here plead a nationwide conspiracy on behalf of a nationwide class that expressly challenges rules adopted by the Residential Listing Service (‘RLS’) of the Real Estate Board of New York (‘REBNY’),” Bough wrote.
“As the New York Objectors’ own complaints reflect, the challenged NAR and REBNY rules are functionally identical,” he added.
Regarding objectors from cases, notably Batton 1 and Batton 2, in which homebuyers rather than homesellers are pursuing otherwise similar antitrust cases, Bough declined to carve them out of the deals.
“[E]very class member sold a home during the class period, and most also bought homes,” Bough wrote.
“After all, few people sell a home without first buying it. And most home sellers then buy a different home with the proceeds because they need somewhere to live. Thus, most Class members had possible claims both as home sellers and home buyers.
“Yet Settling Defendants quite reasonably balked at paying large amounts in settlement only to have the same people they just paid sue them again for the same alleged antitrust conspiracy.”
The homebuyer plaintiffs should not be able to sue the defendants “twice for the same wrong” and they had the option of opting out of the settlements if they wanted, according to Bough.
“Every Class member was free to weigh their competing claims and make a choice,” he wrote.
“They could have opted out and would be free to pursue buyer claims either individually or in the Batton cases (should a court ever certify those classes). And people with buyer-only claims are completely unaffected because they are not part of the class.
“Such ‘buyer only’ individuals have released nothing and can litigate indirect purchaser buyer claims any way they desire, whether individually or in the Batton cases. Those cases will continue to be litigated.
“The sole limitation imposed is that people who accept settlement benefits here cannot turn around and pursue a second recovery for the same conduct. This is not a case where anyone is releasing claims without compensation.”
Read the final approval order (re-load page if document is not visible):
