eXp, Weichert settlements looking more dubious
The judge in the Gibson/Umpa case filed an order laying out “plausible evidence” that the brokerages used a reverse auction strategy to find the best deal.
Key points:
- Judge Bough's Jan. 17 order addresses eXp's settlement, which he previously called "questionable," and Weichert's, which he said was reached "under similar unclear circumstances."
- Bough included a timeline of events that suggests the brokerages were shopping around to get a better deal than what the Gibson plaintiffs offered.
- It's not yet clear how these findings will affect approval of the two settlements, which were reached in the Hooper case.
Back in November, a judge called eXp's commissions settlement "questionable."
The remark came after U.S. District Court Judge Stephen Bough reviewed an objection from plaintiffs in the Gibson/Umpa case accusing the brokerage of using a "reverse auction" strategy to find the best deal. He also noted that Weichert may have reached its settlement "under similar unclear circumstances."
There now appears to be evidence supporting the reverse auction claims, and Judge Bough has ordered both companies to turn over more documents to the plaintiffs' attorneys.
In an order filed Jan. 17, Bough said that a private "in camera" review "indicates some evidence that may give rise to plausible evidence of a potential reverse auction."
The settlements in question
At issue are the deals eXp and Weichert made with plaintiffs in the Hooper commissions case in Georgia. In October, eXp announced a $34 million settlement, while Weichert reached an agreement in November. A Jan. 8 filing revealed that Weichert would pay $8.5 million.
Attorneys in the Gibson case protested the deals, specifically calling the eXp settlement "an improper sweetheart deal." Bough refused to pause litigation for eXp and Weichert in the Gibson/Umpa case, instead allowing further discovery by the plaintiffs.
How negotiations transpired
In the Jan. 17 order, Bough laid out timelines and actions that suggest both brokerages may have employed a reverse auction strategy.
eXp courts two sets of plaintiffs? eXp acknowledged that it tried to reach a settlement with the Gibson plaintiffs in April, but mediation was unsuccessful.
According to Bough, the Gibson plaintiffs were looking for a settlement in the $60 million to $90 million range, while eXp was in the $25 million to $35 million range. The mediator, Greg Lindstrom, sought a resolution in the $40 million range.
In May, eXp counsel then began negotiations with the Hooper plaintiffs. Throughout May and into June, Bough said the Gibson mediator and eXp's counsel also exchanged emails and phone calls.
"It seems clear that eXp was negotiating with two groups of plaintiff's counsel simultaneously for the same nation-wide class action," Bough said in the filing.
By October, eXp had reached a $34 settlement agreement with the Hooper attorneys.
In a statement provided to Real Estate News, eXp said, "We remain focused on securing approval of our settlement of the seller-side commission cases and confident the Georgia judge overseeing the Hooper case will find the settlement to be fair, reasonable and adequate."
Weichert quickly makes other arrangements? On Oct. 1, 2024, the Gibson plaintiffs presented Weichert with a $13 million settlement offer. Four business days later, Weichert's counsel reached out to the plaintiffs in the Hooper case to begin negotiations, Bough said.
By Nov. 5, Weichert reached an agreement with the Hooper plaintiffs for $8.5 million.
Attempts to reach Weichert for comment on Jan. 17 were unsuccessful.