KANSAS CITY, MO—Last-minute drama sparked by an 11th-hour intervention from the Department of Justice (DOJ) was not enough to derail final court approval of the National Association of REALTORS®’ (NAR) landmark class-action antitrust settlement—though a DOJ lawyer at the hearing signaled federal law enforcement is preparing to put further pressure on the industry.
After filing a short but pointed “statement of interest” in the case only 48 hours before the long-scheduled hearing, Chris Bauer, a trial attorney for the DOJ Antitrust Division, told Judge Stephen R. Bough that the DOJ would not “waive any right” to file cases in other federal districts.
“NAR itself has made clear that it is only required to follow provisions of the settlement insofar as they are not illegal,” Bauer said, noting that the DOJ has a different responsibility than private plaintiffs and has been “investigating issues in the real estate space for decades.”
When asked by RISMedia to elaborate on the DOJ’s further plans around the case, Bauer declined to comment.
The hearing took place at the Charles E. Whitaker Federal Courthouse in Kansas City, Missouri, in the same courtroom where just over a year ago, a jury handed down an earth-shattering $1.8 billion civil judgment against NAR, Keller Williams and HomeServices of America. RE/MAX and Anywhere were also defendants in that landmark case, known as Burnett, but settled before the trial.
Ethan Glass, a lawyer representing NAR, was fiery in his pushback against Bauer and the DOJ, pointing out that law enforcement waited until only a couple days before the hearing to file objections. He urged Bough to make it clear in his approval order that any disputes over future enforcement should be overseen by Bough himself.
“I understand the confusion of everybody,” Bough said, while also drily commenting that he “heard there is change coming at the DOJ next year.”
Bough would eventually approve the settlement over this (and other) objections, providing some level of closure for the five-year saga of class-action lawsuits by homesellers—whose civil claims regarding mandatory offers of compensation are now barred against NAR, members and most brokerages.
But the explicit pronouncement by the DOJ that real estate practices are still potentially in violation of antitrust law is sure to frustrate and confound agents and brokers, who believed that the settlement would resolve essentially all legal claims against the industry.
“Because the United States did not participate in either the underlying litigation or the proposed settlement, that settlement does not preclude any future enforcement actions by the United States, and compliance with the proposed settlement or new NAR rules implementing that settlement affords no defense to any such enforcement actions,” DOJ lawyers wrote ahead of the hearing.
While the DOJ has previously described what practices it is focused on—namely, the Clear Cooperation policy, offers of compensation and most recently, mandatory buyer agreements—a large focus of the hearing was what the DOJ actually wanted Bough to do, and how they would proceed beyond the settlement approval process.
Notably, the DOJ said in its statement of interest it was taking no position on whether most of the settlement was “fair, reasonable and adequate” as required by federal law. But DOJ lawyers asked Bough to carve out one provision to either “eliminate” from the settlement entirely or “disclaim that the settlement creates any immunity or defense under the antitrust laws” through that policy.
That provision is the requirement that buyer agents sign an agreement with clients before touring a home, something the DOJ argued will actually hamper competition among buyer agents.
“It bears a close resemblance to prior restrictions among competitors that courts have found to violate the antitrust laws in other proceedings and could limit—rather than enhance—competition for buyers among buyer brokers,” the DOJ wrote.
At the hearing, Bauer highlighted this as well, but focused on the overall potential of NAR or other entities using the settlement as “a shield” against further enforcement by the DOJ. Glass again pushed back against this, arguing that the DOJ wanted to essentially allow anyone to continue suing NAR for the same conduct at issue in the settlement.
At the same time, Glass acknowledged that the settlement should not protect against other “past or future antitrust conduct,” only saying that NAR and entities that follow its rules should not be “precluded from defending ourselves” if they are “stuck between a court order and a DOJ investigation.”
The hearing itself was mostly taken up by objectors, who Bough offered significant time to make their arguments but did not question or ask them to elaborate.
But it was the DOJ objection that took center stage, although Bauer only spoke for a few minutes.
It appeared that Bough was planning on including language in his final order that would require future disputes over the settlement to be overseen his court, as he asked plaintiffs attorneys if that language was in their most recent filing detailing the agreement. That order had not been officially entered at press time.
The DOJ, in its filing ahead of the hearing, also reiterated concerns with the fact the settlement only prohibits offers of compensation made on the MLS, reiterating a position taken in a previous settlement intervention.
“(W)hile the Court may ultimately find that the proposed settlement achieves important concessions in the interests of the private actors in this litigation,” DOJ lawyers wrote, “(s)uch determination does not mean that the proposed settlement effectively prevents or restrains ongoing antitrust violations or remedies past violations, or itself contemplates practices that fully comply with the antitrust laws.”
One other unanswered question is how the transition between presidential administrations will affect the DOJ’s decision-making. An antitrust inquiry into NAR seemed to conclude in the waning days of the first Trump administration, but was revived under current president Joe Biden. An appellate court judge, considering NAR’s petition to squash the revived DOJ’s inquiry, previously speculated that a “change in personnel” at the antitrust division resulted in the investigation being re-opened.
Altogether, the five entities would end up paying a total of around $870 million to settle nationwide commission cases (the $1.8 billion verdict was based only on transactions that took place in Missouri) based on Bough’s approval.
