DOJ still unhappy with Nosalek settlement 

The U.S. Department of Justice is still not happy with a proposed deal in a longtime commissions class-action lawsuit. The DOJ filed a supplemental Statement of Interest in the Nosalek case in Massachusetts this week, a sign that the agency is still actively watching the real estate industry.

The lawsuit was brought by home sellers in 2020 and involves MLS PIN along with several major brokerage companies that have since settled in other cases. 

MLS PIN also settled — or at least it tried to — in 2023, agreeing to pay $3 million in damages and change rules related to buyer-broker compensation. In revised statements, the settling parties replaced specific rule changes with a broader proposal prohibiting sellers from being compelled to offer compensation, and the amount of damages was raised to $3.95 million.

The DOJ's latest argument: The Justice Department took issue with the original deal, and just over a year ago, filed a scathing Statement of Interest in the case, arguing that the settlement didn't go far enough. On March 17, the agency filed a supplemental statement saying the revised proposal still only makes cosmetic changes to MLS PIN's rules around offers of compensation.

"The current proposed settlement would not change the dynamic according to which sellers would continue to offer 'customary' commissions out of fear that buyer brokers will direct buyers away from listings with lower commissions, a well-documented phenomenon known as steering," the filing stated.

The DOJ also argued that the monetary amount was insufficient to cover the expanded class, which the agency said includes an unspecified number of land and mobile home sellers.

Another wrench in the works: The filing comes at a key time for the case. After being paused for several months, Nosalak appeared to be getting back on track in January when U.S. District Court Judge Patti Saris set a date of April 1 to consider preliminary approval of the MLS PIN settlement.

The DOJ under Trump: The Justice Department's renewed involvement in Nosalak is also significant for the industry as a whole, which has been waiting to see how the agency would handle real estate-related litigation under a new administration. 

Along with this latest filing, the DOJ recently weighed in on an appeals case involving Real Estate Exchange, the National Association of Realtors and Zillow over NAR's no-commingling policy. The Ninth Circuit upheld a ruling in favor of NAR and Zillow — and against REX and the DOJ — in that case.

Not giving up: The DOJ's current arguments in Nosalek are similar to those laid out in its original statement filed in February 2024, although the agency was more aggressive in that filing, suggesting that the court consider an injunction to prohibit sellers from making any offer of compensation to buyer brokers.

In the supplement filed this week, the DOJ focused more on what it sees as a lack of competitiveness among brokers, noting that commission rates have remained between 5-6% for decades despite advances in technology.

"The United States has a strong interest in protecting American home sellers and buyers and ensuring the private class-action settlement agreements do not perpetuate serious competitive concerns," the agency wrote.