In the courts: What’s new, and what’s next
There's more than $110 million at stake in a nine-brokerage commissions settlement hearing next week, while eXp has come under fire for its recent deal.
Home sales may be slowing down, but settlement season is about to ramp up.
Next Thursday — on the one-year anniversary of the industry-shaking Sitzer/Burnett verdict — Missouri U.S. District Court Judge Stephen Bough will hear final arguments regarding the settlements reached by nine defendants in the Gibson/Umpa commissions case: Compass, The Real Brokerage, Realty ONE Group, Douglas Elliman, @properties, Redfin, Engel & Volkers, HomeSmart and United Real Estate.
In total, the nine brokerage companies have agreed to pay just over $110 million, though that amount could grow if contingent payments are added. Compass' $57.5 million payout accounted for more than half of the settlement fund in the case.
A possible complication? While settlement hearings are largely procedural, several interested parties are hoping to delay final approval. At least three objections were filed from plaintiffs in other cases, and several more came in from individual home sellers. At issue are the monetary damages, which some objectors say are too low, and the possible impact of the settlements on lawsuits brought by buyers, such as the Batton cases.
Judge Bough has ordered the objectors and their attorneys to be present for the final hearing — a requirement that has received some pushback. Some objectors have said it would be difficult to attend due to schedule conflicts, and at least one questioned why they should spend money on airfare and accommodations in Kansas City that will cost far more than any share of the settlement they might hope to receive.
Other settlements: Final hearings for the biggest settlements to date — those reached by the National Association of Realtors and HomeServices of America — are scheduled for Tuesday, Nov. 26. Combined, the two deals total $668 million.
The RE/MAX, Anywhere Real Estate and Keller Williams settlements received final approval in May, with the three brokerage companies paying $208.5 million altogether, but that is under appeal.
While settlements have been filed in various cases, they all stem from the Sitzer/Burnett verdict, where jurors decided that NAR and the brokerage defendants participated in anticompetitive practices to keep commissions inflated through a system where sellers pay buyer-agent compensation.
Speaking of objections… eXp's $34 million settlement, which was reached with plaintiffs in the Hooper case in Georgia, has also come under fire. An objection was filed by plaintiffs in the Gibson case on Oct. 22, who said that eXp used a "reverse auction" to get the best deal, and that the Gibson plaintiffs should be the ones to negotiate the settlement.
Attorneys for the Gibson plaintiffs say they engaged in settlement negotiations with eXp, but were rejected, leading eXp to reach a deal with the Hooper plaintiffs.
"Based on publicly available information about eXp's financial condition, the settlement in the Hooper case does not provide adequate and fair value for the class given eXp's financial resources, which equal or exceed those of Anywhere, RE/MAX, Keller Williams, and Compass — defendants in Burnett and Gibson that all agreed to materially larger settlements than eXp," the filing stated.
Prior to the Sitzer/Burnett verdict, Anywhere settled for $82.5 million and RE/MAX settled for $55 million. Keller Williams settled later for $70 million.
According to the filing, the Hooper attorneys did not consider eXp's financials when negotiating a settlement.
"That is a stunning admission and explains why, at least in part, eXp was able to secure an improper sweetheart deal that is not fair or reasonable to the class," according to the filing.