Real estate firms ask for new trial in commissions case

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Real estate players facing a billion dollar payout to home sellers are asking a federal judge to toss the jury verdict, or order a new trial, in a class action suit over broker commissions.

The National Association of Realtors, HomeServices of America and Keller Williams this week all filed similar motions seeking relief in the case commonly referred to as Sitzer/Burnett. A Kansas City jury last year delivered $1.78 billion in damages to a class of home sellers who suggested the payment structure for buy-side and sell-side Realtors is anti-competitive. 

Attorneys for NAR and each brokerage took aim at numerous aspects of the case, including legal standard arguments and criticisms of an expert witness' testimony regarding damages. One filing suggested plaintiffs' "irrelevant and prejudicial evidence" inflamed the passions of jurors. 

"These motions are part of the post-trial process and detail NAR's arguments that the verdict was wrong and defied precedent, logic and the evidence," the association wrote in a statement Friday.

Counsel for the firms also alleged the court's acknowledgement to jurors of settlement agreements by co-defendants Anywhere Real Estate and RE/MAX prejudiced their case. Those companies agreed to rule changes and multimillion dollar settlements ahead of the Sitzer/Burnett trial. They won't participate in an upcoming trial in Minnesota based on similar issues that names the other three aforementioned companies as defendants.

Michael Ketchmark, the lead attorney for Sitzer/Burnett plaintiffs, told National Mortgage News the defendants' arguments were already properly overruled by the court at trial. 

"We are confident that the court will deny this desperate attempt to avoid justice and ultimately we will win on appeal and bring an end to this price fixing one and for all," Ketchmark wrote in an email. 

The real estate firms' post-trial motions are most likely a procedural necessity for the plaintiffs and unlikely to lead immediately to a significant change in the course of the case, Keefe, Bruyette & Woods reported in an analysis of the development earlier this week.

"There was nothing very surprising in these motions, which mainly included 'kitchen sink' arguments that the court already ruled upon, but defendants must file to preserve for a potential appeal," the note from KBW read.

The analysts point to other looming deadlines that could advance any commission rule changes, such as the fate of the Department of Justice's probe into NAR. A ruling by the U.S. Circuit Court of Appeals for the D.C. Circuit on whether the DOJ can reopen a prior investigation into NAR is expected between early February and early March. 

Despite recent legal developments, current rules mandating seller brokers offer compensation to prospective buyer agents to access multiple listing services, even if it's $0, remain unchanged. Mortgage experts have been largely neutral on the developments, although some have warned of counterparty risk to loan officers with Realtor relationships, among other impacts. 

NAR meanwhile faces its own crises, as its former president Tracy Kasper recently stepped down after a blackmail threat. The trade group, also reeling from sexual harassment allegations, has also seen major partners drop NAR membership requirements, impacting its 1.5 million nationwide member base. The association has pledged to address these issues in moving forward with Kevin Sears, its new president.


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