Last week, Judge Stephen Bough of the Western District of Missouri—who oversaw the Burnett case and trial—approved settlements struck by eight large brokerages in the largest Burnett commission copycat case. Those deals bring the total number of settlements that have received a final, court-required sign-off to 11, with the National Association of REALTORS® (NAR) still waiting for Bough to give its much more expansive agreement a final verdict.
Bough approved all the agreements, offering some significant relief to companies who are seeking to put the shadow of the class-action lawsuits behind them. But the specifics also offered insight into how different cases might diverge, and what might transpire at the much more consequential NAR hearing later this month.
At the hearing, several objectors spoke out against the agreements, with various reasons for asking Bough to withhold his approval or modify his interpretation of the deals.
Bough was also forced to address what he described as harassing behavior from another objector, while also laying out more of his reasoning for overruling parties who felt the settlements were unfair or too far-reaching. The final approval also gave insight into how consumers are hearing about the settlements, with millions getting notices or filing claims.
Here are the biggest takeaways from the hearing and settlement approvals:
Buyer cases run up against common sense
In his ruling following the hearing, Bough extensively addressed the objections of lawyers behind the largest cases filed by homebuyers, who argued that seller settlements were being inappropriately interpreted to exclude some homebuyers in an as-yet uncertified class-action based on the same NAR rules and policies.
Before diving deeper into the legal intricacies of class-action claims and precedent, Bough started with a simple fact.
“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,” he wrote.
As interpreted by Bough, those who sold a home and also bought one cannot be part of the potential class of buyers suing damages they allegedly suffered due to mandatory offers of compensation rules. That interpretation was previously appealed by the buyer plaintiffs in other settlements approved by Bough, but if it stands, would significantly limit the size of the class and potential damages on the buy-side.
The buyer plaintiffs have filed similar objections to the NAR settlement.
During the hearing, Bough also asked whether or not the buyer cases have been paused ahead of the NAR settlement hearing in his case, as many seller copycat cases have. One of the lawyers noted that the buyer cases have “derisively” been referred to as Burnett copycats, despite originating years before the verdict in that case.
“I was just trying to generally get a feel of where we’re at,” Bough said.
Lawyers involved in the real estate cases previously told RISMedia they expect the buyer plaintiffs to push forward with their claims regardless of this ruling, as there are still a lot of potential damages to be sought by first-time buyers or others who bought a home without having recently sold one also.
Objectors need to show up in Missouri due to ‘alarming’ correspondence
Bough opened the hearing, according to a transcript obtained by RISMedia, with a little bit of humor.
“As you may recall from the prior settlement approval hearing…I got a somewhat alarming objection that accused me of criminal acts,” he said. “As you can imagine, based upon my presence here today, I’ve not been charged with any particular federal crimes.”
Bough appeared to be referring to Anthony Phillips, a broker in Nevada, who back in May objected to separate settlements in the Burnett case, extensively criticizing the agreements and lawsuit as a whole, as well as legal fees charged by plaintiffs lawyers. Phillips also deviated extensively to talk about alleged corruption in the greater Kansas City area, including from airport contracts and campaign contributions to gubernatorial and mayoral candidates.
At the hearing for those settlements, Bough claimed he discovered one of the lawyers for the plaintiffs had indeed contributed to the election campaign for his wife—a Kansas City councilperson—based on Phillips’ accusations, and offered to recuse himself from the case, noting that REALTOR® organizations had also donated to his wife’s campaign. Lawyers representing both plaintiffs and defendants said they did not think he needed to.
At this latest hearing, Bough claimed correspondence from this unnamed objector had continued “both publicly and privately,” and was also being sent to other judges in Missouri.
In his objection, Phillips named several state-court judges as having indirectly received some monetary contributions from plaintiffs’ lawyers—although those judges have nothing to do with the federal-level commission cases.
“So I’m now at a point that I have to turn (communications from the objector) over to the United States Marshals. So as you can imagine, I’m somewhat suspect about objectors in this case given the fact that now I have to have the U.S. Marshals monitoring that correspondence,” Bough said.
Bough said this situation was the “basis” for requiring objectors attend the hearing in person, a requirement he subsequently applied to the NAR settlement as well.
“So I’m not lumping everybody into that category, but forgive me if I’m a little bit suspect in this particular matter given when I got to turn over information to the U.S. Attorney’s Office because of accusations of federal crimes,” he said.
Information about the lawsuits and settlements still going out
Just over a year after the Burnett verdict, the process of notifying class members about the settlement is ensuring that consumers are reminded of the legal issues and challenges to real estate.
According to the order and the hearing transcript, the campaign to notify people about the copycat claims—which are in addition to notifications regarding the Burnett settlements negotiated late last year or early this year—have reached hundreds of millions of people.
In total, 40 million mail or emailed notices have gone out to class members. A digital campaign had received 300 million impressions, according to court filings, and 470 news stories have been written about the settlements. As of late last month, 463,000 people had made claims.
While each of the eight settlements in the copycat cases differed slightly as far as classes and states, people who sold on an MLS and paid commission as early as 2017 (and up until the date of the notice going out) are eligible.
This contrasts with 11 objectors and 46 opt-outs, according to the filing, which Bough and lawyers on both sides characterized as a strong endorsement of the fairness of the settlements.
New York City copycat bid to ‘carve out’ shot down
Lawyers behind two New York City Burnett copycats, who have previously argued that their market and claims are distinct from the main cases, seem ready to push all the way through the process to protect their claims and “carve out” the Real Estate Board of New York (REBNY) from immunity.
Bough was skeptical that he should exclude these cases despite the long separation between REBNY, which governs Manhattan real estate, and NAR, which goes back to the 1990s. Lawyers behind those cases also noted that REBNY was not named in the case where the eight brokerages in question struck settlement agreements—including companies like Douglas Elliman, which have a significant presence in New York City.
When asked by Bough what kind of conspiracy and enforcement mechanism was involved in the New York City cases, Matthew Van Tine, a lawyer representing the plaintiffs, said the “conspiracy” was formed at a different time and never involved the NAR Code of Ethics. He also questioned the assertion that expert witnesses in Burnett had grouped REBNY in with other MLSs.
Bough said he was “worried about the facts” due to similarities in the allegations and the REBNY rules and codes. In his order following the hearing, he wrote plainly that the “basis behind the New York objection is unequivocally rebutted by the plain language” in the larger copycat case. He also cited New York plaintiffs’ own arguments in their case equating the REBNY rules to NAR rules.
“As the New York Objectors’ own complaints reflect, the challenged NAR and REBNY rules are functionally identical,” Bough wrote.
