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Sitzer | Plaintiffs in the Burnett case, the first Antitrust Commission lawsuit filed after the jury verdict, expanded the scope of their complaint to include American HomeServices parent Berkshire Hathaway Energy.
Attorneys for home sellers Don Gibson, Lauren Criss and John Meiners filed a Amended complaint On March 4, Berkshire Hathaway Energy was named as a defendant in the case, which owns HomeServices, a subsidiary of Warren Buffett’s Berkshire Hathaway. The plaintiffs’ original complaint did not name HomeServices as a defendant.
Both complaints challenge National Association of Realtors rules that require listing brokers to compensate buyer’s brokers for submitting listings to multiple listing services, which the plaintiffs claim violates the Sherman Antitrust Act. Law”.
“Berkshire Hathaway Energy engaged in price manipulation by using our nation’s MLS system as a tool to fix, increase, increase and stabilize the amount of commissions homeowners were required to pay to sell their homes,” the amended indictment states.
On October 31, Sitzer | Burnett jurors found that NAR, Keller Williams, RE/MAX, Anywhere, HomeServices, and two of its subsidiaries, BHH Affiliates and HSF Affiliates, conspired to enforce the NAR Rule (also known as the Collaborative Compensation Rule or Engagement rules), thus inflating the price home sellers pay at the broker’s commission rate. Juries awarded $1.78 billion in damages to approximately 500,000 Missouri homeowners. If the ruling stands, the amount stipulated in the law will triple to more than $5.3 billion.
Gibson’s case was filed within minutes of the verdict. NAR, Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate and Douglas Elliman are also defendants in the case.
Michael Kagemak
Lead plaintiffs’ attorney Michael Ketchmark said: “Our ongoing investigation into this matter clearly demonstrates that the highest levels of Berkshire Hathaway Energy were involved in this matter, and now we intend to involve them and hold them accountable to the extent of their jurisdiction. responsible for what happened inside,” Kegemark and McCreight told Inman in a phone interview.
“They have long promoted this concept they call the ‘halo effect,’ which is that when they attach the name of Berkshire Hathaway or Warren Buffett to a company or industry, people trust it and Believe it, and that’s exactly what they’re doing with HomeServices. To encourage home sellers in America to use their company.
“This was used as a way to further this conspiracy. We felt it was important to bring this to light and hold them accountable for what they had done.”
HomeServices declined to comment for this story. Ketchmark is also lead counsel for the Sitzer | Burnett plaintiffs.
“We have opened up a new line of attack in this lawsuit that extends further up the chain,” Ketchmark said. “We are holding HomeServices (in Sitzer | Burnett) and HomeServices’ subsidiaries accountable. In this case, we will prove that you can go higher than we initially thought.”
Connection between BHE and HomeServices
The amended indictment alleges numerous ties between Berkshire Hathaway Energy and HomeServices, including shared leadership, common strategy meetings and combined books.
“Berkshire Hathaway Energy plays an active role in controlling the day-to-day operations and oversight of Home Services and Berkshire Hathaway Home Services,” the complaint states.
“Mr. (Greg) Abel oversaw and controlled American HomeServices during his tenure as CEO and Chairman of Berkshire Hathaway Energy and as Vice President and member of the Board of Directors of Berkshire Hathaway The conduct of President and CEO Gino Blefari.”
The complaint alleges that BHE considered itself a joint employer of HomeServices employees, referred to HomeServices employees as its employees in public documents, provided millions of dollars’ worth of administrative services to HomeServices, and that the two companies “commingled its fees and profits. Together”.
“Berkshire Hathaway treats Berkshire Hathaway’s energy and home services revenue as its own,” the complaint states. “Berkshire Hathaway also provides services to Berkshire Hathaway Energy and Home Services Corporation provides credit facilities.
“As a result, the finances of these three entities are commingled and they do not comply with corporate formalities in terms of profits, name, brand, control or otherwise.”
The complaint points out that a BHE brochure stated that the company obtained funds from 305,229 real estate transactions through HomeServices, with sales totaling $168 billion in 2023, of which it “overpaid” an estimated $4.2 billion in commissions. Alleged conspiracy.
“Since 2012, Berkshire Hathaway Energy has derived ill-gotten gains from this scheme and has actively pushed to expand the size and scope of the scheme,” the complaint states.
By seizing Home Services’ profits, “Berkshire Hathaway Energy intentionally reduced Home Services’ capital,” the complaint adds. “Instead of ensuring that HomeServices can return its ill-gotten home equity and/or pay Burnett’s judgment, it accepts the profits of the conspiracy rather than leaving the profits at HomeServices’ level.”
Asked whether his company decided to go after BHE to gain deeper financial resources, Ketchmark said it was important to “follow the money” in litigation.
“The funds for this conspiracy flowed directly into the wallet of Berkshire Hathaway Energy,” Ketchmark said. “That’s what this case is about.” “
Connections between BHE, HomeServices and NAR
According to the complaint, BHE has a code of business conduct that HomeServices and its personnel must abide by and encourages participation in industry associations, including NAR.
“HomeServices followed Berkshire Hathaway Energy’s instructions to participate in the industry association through its officers, employees and agents’ participation in NAR,” the complaint states.
The complaint alleges that BHE required its franchisees and agents to comply with NAR rules and regulations, including the cooperative compensation rule noted above, and, despite being aware of other lawsuits filed against the rule, did not direct HomeServices and its brokerage subsidiaries to cease complying with the rule in order to Continue to “benefit from these activities by collecting cartel profits”.
“For example, the Real Living franchise disclosure document clearly states that franchisees require MLS membership and access, and the agreement requires franchisees to provide Real Living with access to their MLS data,” the complaint states.
“The Long & Foster Policy Manual states that sales associates must agree to abide by NAR’s Code of Ethics and Standards of Practice and incorporate these NAR Rules into the Policy Manual.
“The Berkshire Hathaway HomeServices Texas Realty Policies and Procedures Manual states that the company “supports the Realtor Code of Ethics (and) the Multiple Listing Rules,” requires all employees to belong to local REALTORS associations and MLSs, and notes that the company’s commission expectations will be based on the listing. 3 (percent) for broker and 3 (percent) for seller; Berkshire Hathaway HomeServices Northwest Real Estate Policy Manual also requires employees to agree to maintain membership in local REALTORS associations and MLS.”
The complaint also highlights the relationship between HomeServices and NAR, claiming that HomeServices executives “pushed and succeeded” in getting the trade group to adopt a rule called a “Clear Cooperation Policy” with the explicit goal of curbing pocket listings.
“Berkshire Hathaway Energy’s leadership explains its role as follows: ‘As industry leaders, we have a responsibility to actively participate in shaping our industry and its current and future business models. HomeServices’ executive leadership and our operations The company’s CEO drives these important discussions as a leader at the regional and local levels of the National Association of Realtors … and MLS organizations,” the complaint states.
The complaint was directed to an advisory group called NAR Real Estate Services (RES)The committee is composed of high-level representatives from major brokerage firms, at least 24 of whom also serve on NAR’s executive committee and board of directors. Targets of RES’ 2019 investigation include leaders of the companies named in the case, such as:
- Dottie Herman (Douglas Elliman CEO)
- Jim Imhoff (Chairman of HomeServices subsidiary First Weber)
- Jeff Barnett (Executive Vice President, Compass)
- Robert Revkin (Founder and CEO, Compass)
- Gino Blefari (CEO HomeServices)
- Ron Peltier (Executive Chairman of HomeServices Corporation of America)
- Jeffrey S. Detwiler (President and CEO of Long & Foster Companies, a subsidiary of HomeServices)
- Joan Docktor, President, Berkshire Hathaway HomeServices Fox & Roach (a HomeServices subsidiary)
- Thomas Hosack, President and CEO, Berkshire Hathaway HomeServices The Preferred Realty, a franchise company of BHH Affiliates
- Chris Kelly (President and CEO of Ebby Halliday Companies, a subsidiary of HomeServices)
- Rei Mesa (President and CEO, Berkshire Hathaway HomeServices Florida Realty (a subsidiary of HomeServices))
- Glenn Sanford (Founder and CEO of eXp World Holdings)
- Denise D. Smith (President, Real Estate Services Group, Weichert Companies)
Like Caesar | Mr. Burnett, the Gibson case was filed in the U.S. District Court for the Western District of Missouri. But, in terms of scope, the Gibson promises to be much bigger than either of the Sitzer | Burnett or a larger, similar lawsuit called Moehrl, neither of which are intended to represent an entire country of sellers.
In contrast, the Gibson lawsuit seeks class action status on behalf of “all persons who list properties on the Multiple Listing Service using a listing agent or broker affiliated with the corporate defendants” and pays the buyer’s agent starting in October commission. From March 31, 2019 to present.
While Howard Hanna was named as a defendant in Gibson’s original indictment, the amended indictment removed the brokerage business from the case.
According to Ketchmark, Howard Hanna has not reached a settlement with the Gibson accusers. Instead, because his firm and attorneys on the Moehrl case are working together, and Moehrl attorneys have named Howard Hanna as a defendant in another commission case called Umpa, “we don’t want them involved in both at the same time case,” he said.
Editor’s note: This article has been updated with details from the amended complaint and additional comments from plaintiffs’ attorney Michael Ketchmark.
Read the amended complaint:
Send an email to Andrea V. Brambila.
