Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
As 2024 marches on, the real estate industry continues to face lawsuits in the wake of the Sitzer/Burnett ruling (currently facing appeal) that threatens to upend buyer-broker commission structures. The news never stops flowing out of the courtroom, but what broke this past week indicates we might be entering a slowing period—at least as far as commission-focused litigation is concerned.
Here is a recap of the developments you may have missed:
Keller Williams settles in Sitzer/Burnett
On Thursday, February 1, Keller Williams reached a settlement with the plaintiffs in the Sitzer/Burnett case; the franchisor will pay $70 million as part of the settlement.
Previously, Keller Williams had been trying to appeal the verdict, even hiring former U.S. Solicitor General Paul D. Clement to defend them. The company has withdrawn this appeal as of February 5, 2024.
This settlement constitutes a break with other defendants who continue to seek an overturn of the verdict and industry sentiment that the Sitzer/Burnett case was wrongly decided.
Keller Williams had also previously been opposed to the consolidation of commissions lawsuits championed by the National Association of REALTORS® (NAR).
In a letter to Keller Williams employees shared with RISMedia, co-founder Gary Keller cited a “long and unpredictable” appellate process and a desire to best protect the firm’s agents as the chief motivation for settling.
Keller Williams’ decision echoes RE/MAX, which previously settled the Burnett/Sitzer and Moehrl class-action lawsuits in 2023 to the tune of a $55 million payout to plaintiffs. In a November 2023 quarterly earnings call to shareholders, RE/MAX leadership portrayed the settlement as them biting the bullet rather than risk uncertainty and a potentially worse fine by pressing on.
Commissions lawsuits stayed as motion to transfer is reviewed
March v. Real Estate Board of New York, an antitrust suit alleging anticompetitive practices on commission compensation by the board and brokerages operating under its rules in New York, has been stayed as of January 31, 2024.
A stay is effectively a pause in ongoing litigation.
The motion to stay, filed jointly by the plaintiffs and defendants, was done while the case is reviewed by the Judicial Panel on Multidistrict Litigation for a “Motion to Transfer” the proceedings from the Southern District of New York to the Western District of Missouri. Multidistrict litigation is invoked when similar cases are filed in federal courts and, potentially, consolidated to streamline proceedings.
On February 2, 2024, the plaintiffs and defendants in Masiello v. Arizona Association of REALTORS® (similar allegations as in March v. Real Estate Board of New York, only targeted at Arizona associations and brokerages) also jointly pushed for a stay while the Judicial Panel on Multidistrict Litigation reviews the case for a transfer to Missouri. The stay request has not yet been approved at this time.
If the Panel approves the motion to transfer, these cases will be consolidated, and the verdicts will, like Sitzer/Burnett, be decided in the Western District of Missouri.
New York Comptroller pushes eXp CEO to investigate sexual harassment allegations
Not all lawsuits facing the real estate industry pertain to commissions.
New York State Comptroller Thomas DiNapoli has compelled eXp Realty CEO Glenn Sanford to begin an investigation into charges of sexual assault and coverups thereof brought against the company. DiNapoli is a trustee of the New York State Common Retirement Fund, which holds about 27,000 shares of eXp World Holdings.
This move comes on the heels of an investigation by New York Times journalist Debra Kamin into the conduct of eXp. Former eXp agents Michael Bjorkman and David Golden were named in a 2023 lawsuit against the company, with plaintiffs alleging they drugged and assaulted women at recruiting events from at least a period of 2018 to 2020. Bjorkman had faced similar allegations in 2021, though the case was dismissed.
In January 2024, Nevada REALTOR® Misty Carter filed a lawsuit in Nevada Federal Court against Nevada Real Estate Group team Leader Dan Nevada, alleging sexual harassment, including transactional offers and retaliatory firing. eXp is named in the lawsuit, though Nevada and his team are no longer brokered by the company.
“eXp takes its responsibility to foster a safe and inclusive environment very seriously and has zero tolerance for abuse, harassment or misconduct of any kind,” said eXp Spokesperson Carolyn Merchant.
MLS PIN plaintiffs cite Keller Williams settlement, NAR consolidation
Ripple effects from several recent court maneuvers are already showing up in related cases, with plaintiffs in the MLS PIN case—which was filed in 2020 and has a long and complicated history—pushing for a delay and casting doubt on the potential final approval of recent settlements.
The plaintiffs in this Massachuesttes-based case first asked for a temporary stay last month, and now claim that HomeServices is the last party opposing a pause, with Keller Williams, RE/MAX and Anywhere all supporting the motion.
Even more notably, the plaintiffs in this case are casting doubt on the final approval of the settlements, and describing them as “relatively modest.”
“Plaintiffs expect there may be questions about the fairness of the settlements and the adequacy of the settling plaintiffs. Accordingly, there is no guarantee that these settlements will be approved,” they wrote.
In the same filing, the plaintiffs also cited NAR’s recent support of consolidating the many ongoing commission-related lawsuits, in which the REALTOR® advocacy organization specifically asked to have MLS PIN added to the docket—something plaintiffs in the other cases had not included in their consolidation plans, which HomeServices had noted in their opposition to the stay.
This again puts NAR and brokerage defendants at odds in court. HomeServices has officially opposed any sort of consolidation, taking a different position from most other defendants.