Pushback in eXp, Weichert settlements called ‘self-serving’
Attorneys in the Hooper case defended the deals they reached with the brokerages and accused Gibson lawyers of trying to “line their own pockets.”
Key points:
- Efforts to derail the eXp settlement have been ongoing for nearly six months.
- The Hooper lawyers suggest that the legal campaign is less about the legitimacy of the deals and more about greed.
- The Mar. 6 filing lays out the math, which indicates the Hooper deal is actually better for home sellers.
Did eXp and Weichert shop around for a convenient place to make a "sweetheart deal" to settle commissions lawsuits?
Attorneys representing the Gibson home sellers have questioned the validity of the two brokerage settlements, but the plaintiffs' attorneys in Hooper — a commissions case filed in Georgia in late 2023 — weighed in this week with a lengthy response.
The March 6 filing challenged the "self-serving" accusations and accused the lawyers who made it of trying to "torpedo" legitimate deals to "line their own pockets with yet more attorneys' fees than the millions they have earned already."
That included seeking 60% of the fees obtained by Hooper attorneys, who would have also been obligated to cover all costs of litigation, in return for agreeing not to interfere in the case, the filing states.
6 months of scrutiny
Shortly after eXp announced its $34 million settlement in the Hooper lawsuit last October, plaintiffs in a different commissions case — Gibson/Umpa — objected, calling it "an improper sweetheart deal that is not fair or reasonable."
The Gibson lawyers accused the Hooper attorneys of failing to consider eXp's financials when they made their deal, doubling down in a Feb. 5 filing that claimed eXp and Weichert, which also reached a deal in the Hooper case last fall, settled "a less actively litigated case with weaker plaintiffs and less experienced counsel."
The 'reverse auction' debate
The judge in the Gibson case, who happens to be the same judge who oversaw the landmark Sitzer/Burnett commissions trial, refused to let eXp or Weichert off the hook. Judge Stephen Bough instead invited "further discovery into whether a reverse auction occurred."
In a reverse auction, plaintiffs compete to offer defendants the lowest settlement — which isn't illegal per se, but is considered unethical.
But in their March 6 filing, attorneys for the Hooper plaintiffs argued that multiple class actions would never be able to settle if all deals in related cases were dubbed reverse auctions — an argument supported by a 2002 ruling in a class-action pollution case.
Making the case for the eXp and Weichert settlements
The Hooper filing claims that the deals reached in that case are better for sellers — and they show their math, in addition to providing more details about the negotiations.
More money for the class: The $34 million deal eXp made in Hooper, minus 20% attorneys' fees, would net $27.2 million for the class. The mediator in the Gibson case was hoping for a settlement of $40 million, the filing states, which would net $26.7 — about $500,000 less — because attorneys would get a bigger piece: 33.3%.
A reasonable share of cash on hand: Additionally, the Hooper filing noted, the eXp deal amounted to 31% of the company's cash on hand — roughly equivalent to the share paid out by Compass (34%) and much more than the share paid by Douglas Elliman (14.8%) — yet the Gibson attorneys agreed to those amounts.
Weichert — a private company — settled for $8.5 million, but documents outlining its financials were sealed, so it's not clear what that represents as a percentage of its assets. However, Hooper attorneys said Weichert provided information about its cash on hand, debt, and other factors that influence its ability to pay.
Negotiations were legit: The Hooper lawyers also pointed out that their mediations were carried out with "highly respected former federal judges and a former U.S. ambassador" and that their timetables for settlement were similar in length to some in the Gibson cases.
And once those deals were reached, the Gibson attorneys "sought to hijack not only those settlements, but this entire case, by moving to intervene and transfer the action to their preferred court and judge in Missouri," the filing states.
In the hands of the court
The judge in the Hooper case will decide whether or not to grant preliminary approval to the eXp and Weichert deals, along with settlements made by Mark Spain Real Estate and Atlanta Communities Real Estate Brokerage, which were not challenged by the Gibson attorneys.