Sitzer Judge Indicates His Support For Proposed NAR Settlement
Bough also granted the plaintiffs’ attorneys request for one-third of the settlement payout plus cost reimbursement, adding up to $82.4 million.
Settlements heading toward $1 billion
Not only will the three settlements bring in a total of $208.5 million, but the Anywhere and RE/MAX settlements — inked before Sitzer | Burnett went to trial in October — served as an “icebreaker” for further settlements, which so far are adding up to nearly $1 billion, according to Bough.
“Specifically, following the Anywhere, RE/MAX, and Keller Williams Settlements, this Court preliminary approved settlements by the National Association of Realtors (‘NAR’), Compass, The Real Brokerage, At World Properties, Realty ONE Group, and Douglas Elliman,” the order reads.
“Collectively, together with the Anywhere, RE/MAX and Keller Williams settlements, these settlements provide a total settlement fund of over $600 million with other settlements announced bringing the total to over $900 million.
“The NAR settlement also provides opportunities for various multiple listing services and brokerages to opt-in to the settlement, which may provide still further financial compensation to the Settlement Class.”
Franchisor settlements plus NAR deal = ‘substantial benefits’
In addition, Bough pointed to business practice changes in the settlements as “substantial benefits” to the settlement class, including advising brokers, franchisees, and agents that “there is no requirement that they must make offers to or must accept offers of compensation from cooperating brokers or that, if made, such offers must be blanket, unconditional, or unilateral” and disclosing to prospective homesellers and buyers that “broker commissions are not set by law and are fully negotiable.”
Bough noted that additional practice changes in the NAR settlement will impact “the broader industry” and “provide a substantial additional benefit to the Settlement Class.”
“The NAR practice changes prohibit the communication of any offer of compensation to a cooperating brokerage on an MLS,” the order reads.
“As a further example, the NAR settlement prohibits efforts to circumvent the prohibition on conveying offers of compensation on MLS by prohibiting the aggregation of MLS data with offers of compensation on public websites. Nothing set forth in the Settlements requires Anywhere, RE/MAX, or Keller Williams to violate the NAR practice changes.”
The settlement classes
To resolve the claims against Anywhere and RE/MAX, the settlement classes are “All persons who sold a home that was listed on a multiple listing service anywhere in the United States where a commission was paid to any brokerage in connection with the sale of the home in the following date ranges:
i. Moehrl MLSs: March 6, 2015 to date of notice;
ii. Burnett MLSs: April 29, 2014 to date of notice;
iii. MLS PIN: December 17, 2016 to date of notice;
iv. All other MLSs: February 1, 2020 to the date of notice.”
To resolve the claims against Keller Williams, the settlement class is the same, except the dates for the “All Other MLSs” category are “October 31, 2019 to date of notice.”
Nearly 200,000 claims so far
Bough stressed that more than 95 percent of potential settlement class members received direct notice of the settlements and that, as of May 2, nearly 200,000 claims had been made but only a dozen objections to the deals were filed.
“This is only the beginning of the claims, because the claims period extends until May 9, 2025,” Bough wrote. “This extended claims period is valuable because additional settlements covering the same Settlement Class (with minor variations on the length of the class periods) have been reached with other defendants, and the notice process for those settlements will provide additional opportunities to submit claims.
“In contrast to the massive scale of the notice program and the large volume of claims, there were only 12 objectors and 61 opt outs from the Settlement Classes.”
Court doesn’t expect ‘perfection’
Regarding those objections, Bough overruled them all.
“The standard the Court applies is whether the settlement is fair, reasonable, and adequate — not perfection,” he wrote. “Class counsel, having strenuously litigated the case for years, were in the best position to determine the extent of the best relief that reasonably could be obtained for the class.”
Unwinding the settlements, “would result in protracted and costly piecemeal litigation, the risk of inconsistent results, and a redo of the last five years of litigation on a state-by-state basis,” he adds.
While some objectors argued that the amount the franchisor defendants had to pay was not enough or that the settlement classes shouldn’t be larger than the classes originally put forth in the suits, Bough disagreed, noting that courts “regularly certify broader settlement classes than litigation classes.”
“The record supports the view that the Settling Defendants would not have settled on anything less than a nationwide basis, because doing so would have left them exposed to potentially crippling liability,” Bough adds.
“They therefore insisted that the Settlement Class include all ‘multiple listing services,’ regardless of whether they were affiliated with NAR. To get the benefits of the Settlements, Plaintiffs therefore agreed to settle on a nationwide basis.
“Thus, the Settlements are in the best interest of the Burnett and Moehrl classes, in addition to the nationwide class as a whole, because, among other things, Settlement was not possible on a piecemeal basis, and enforcement of the Burnett verdict alone would have bankrupted the Settling Defendants.”
Bough also emphasized that the deals got as much money from the defendants as “reasonably” possible without putting them out of business, while the plaintiffs were able to obtain relief now, rather than risking a reversal on appeal or bankruptcy by the defendants.
“Before settling, Plaintiffs used a forensic accountant to confirm each defendant’s ability to pay while still maintaining a viable business,” the order reads.
“This analysis was complicated by the recent and prolonged downturn in the real estate market. The Settlements each capture a significant portion of the Settling Defendants’ available assets while still allowing them to continue operations.
“In contrast, the joint and several liability that would have resulted from a judgment would have been disastrous for any of the defendants.”
Judge rejects Pulte objection
Regarding an objection filed by Pulte Group, Bough said the plan to distribute claims that the homebuilder was demanding was not needed for final settlement approval and that the approval of such a plan would be a separate matter.
“It is particularly appropriate to defer creation of an allocation plan when, as here, there are multiple defendants, only some have settled, and additional settlements may add to the fund to be distributed,” Bough wrote.
Moreover, Bough noted that class members could get more information on the allocation process by contacting the plaintiffs’ attorneys or the settlement fund’s administrator.
“For those class members who did email and/or call and inquire about allocation, class counsel explained that class members are unlikely to receive the full value of their claims, but that settlement proceeds will be distributed equitably and reduced on a pro rata basis,” the order reads.
“Class counsel further explained that—subsequent to notice going out—there were additional settlements benefitting the class, and others expected, making it premature to set a detailed allocation formula or provide estimates of how much each class member would recover.”
Bough also deemed Pulte’s complaint that there was no way to submit bulk claims as “meritless,” noting that class counsel had worked with other homesellers who wished to submit multiple claims.
Homebuyers who were also homesellers rebuffed
Bough also overruled an objection brought on behalf of homebuyers from a case known as Batton 1 seeking to preserve the ability to pursue their own claims.
“The record in this case shows that a nationwide settlement class and release of all potential claims arising out of the same alleged antitrust conspiracy was necessary to enable the settlements to occur,” Bough wrote.
“Releases in antitrust direct-purchaser settlements commonly cover all claims the settlement class members could raise against the Settling Defendant arising out of the same conspiracy, including indirect-purchaser claims.”
While Bough’s order will not end litigation brought by homebuyers, it does reduce the size of the potential class in those cases because it will not allow people who both bought and sold a property to pursue claims for either buy-side damages or sell-side damages.
Named plaintiffs and their attorneys will get paid
The plaintiffs who lent their names to the commission suits will receive either $15,000 for their service or $25,000 if they also appeared at the Sitzer | Burnett trial.
“The Settlement Class Representatives performed important work on the case, including time-consuming gathering of facts and documents, assisting Class Counsel with the specifics of their transactions, preparing for and sitting for depositions, reviewing the Settlement Agreements, and for some, attending and testifying at trial,” Bough wrote.
“That work materially advanced the litigation and protected the Settlement Class’s interests. Indeed, without their time and effort, these Settlements would have been impossible.”
Bough also granted the plaintiffs’ attorneys motion for attorneys’ fees and costs equal to one-third of the settlement fund plus reimbursement of almost $13 million in costs.
“Class Counsel’s time and labor invested was substantial and necessarily precluded other work,” Bough wrote. “In addition to the substantial number of hours it took to reach the Settlements, Class Counsel were also required to expend $12,923,266.48 of their own money toward the litigation through the date of the initial settlements.
“That work was undertaken without any guarantee of payment. Moreover, this case faced low odds of early settlements given the attack on practices that were central to the real estate brokerage industry.”
Bough said the quality of the plaintiffs’ attorneys’ adversaries weighed “heavily in favor” of the amount requested.
“Here, Class Counsel faced off against no fewer than twenty highly-respected law firms over the course of the litigation,” Bough wrote. “Although Class Counsel’s team included some of the country’s most accomplished class action and trial lawyers, Defendants also hired some of the country’s most prominent and respected defense attorneys.”
Bough ended his order by directing the attorneys to prepare a plan of allocation for the settlement fund and submit it for court approval.
“The proposed plan of allocation must be posted to https://www.realestatecommissionlitigation.com and emailed to all individuals who submit a claim in order to provide those individuals an opportunity to comment on the plan,” the order reads.
Read Bough’s order: