COURT REPORT: Smaller Brokerages Targeted; HomeServices Disputes Discovery

Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.

It was a relatively quiet week on the real estate legal front. As newly filed cases ramp up slowly, big decisions in more immediate lawsuits loom in early 2024. Here is a recap of developments you might have missed in the ongoing saga of legal challenges to organized real estate:

Targeting smaller brokerages

Attorneys in three states (Georgia, Pennsylvania and Florida) recently decided to emulate the plaintiffs in Burnett, and bring very similar claims—that REALTOR® associations are conspiring with big brokerages to inflate commissions—to their regions.

Notably, these lawsuits name smaller companies—franchises of big corporate real estate companies, but also independents—as defendants. One suit directly targets an MLS, which the Burnett case did not.

All three were filed in the past month, and make essentially the same accusations as the Burnett case, focusing on the same REALTOR® policies and practices—specifically the “participation rule,” requiring sellers to make an offer of compensation to buyers.

Plaintiffs in the Georgia lawsuit subsequently amended their filing to include even more brokerages, some with as few as a couple dozen employees.

Ketchmark still on media tour 

Mike Ketchmark, the lead attorney for the plaintiffs in the Burnett case, who successfully won a $1.8 billion judgment against Keller Williams, HomeServices and the National Association of REALTORS® (NAR), has never shied away from media appearances. Since the verdict, he has led a larger push against the current structure of organized real estate not just in the courtroom, but on television screens and in newspapers.

Last week, it was an op-ed for USA Today, in which Ketchmark continued to frame his attacks on big real estate structure as a long-needed pro-consumer reform effort. 

Notably, Ketchmark appeared to be explicitly asking NAR to put an end to its continued commitment to fight the lawsuits, and “embrace fee-for-service pricing and variable commissions.”   

HomeServices fights on in MLS PIN

In a smaller lawsuit that has already seen some parties settle, HomeServices seems committed to holding strong. 

In a recent court filing, attorneys for the real estate giant argued that they do not have to produce certain documents demanded by the plaintiffs, claiming recent discovery requests are “overbroad” and include some documents that the company does not even have access to, or that are covered by attorney-client privilege.

The company additionally objected to plaintiffs’ usage or definition of terms that have become ubiquitous across many of the commission lawsuits, including “steering” to describe buyer agents who prevent their clients from viewing lower-commission properties, and “buyer-broker commission rule,” which the Burnett plaintiffs call “the mandatory offer of commission rule.”

The judge in the case is currently considering these objections by HomeServices.

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