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HomeServices will no longer have to contend with antitrust commission lawsuits filed by homebuyers against the National Association of Realtors and major real estate franchises.
Judge Andrea R. Wood
Tuesday. On February 20, Judge Andrea Wood of the U.S. District Court for the Northern District of Illinois, Eastern District, dismissed the buyer plaintiff’s claims under federal antitrust law but declined to dismiss nearly all of the plaintiff’s claims under state antitrust law. Claim.
The lawsuit, which seeks a class action lawsuit known as Batton 1, was originally filed in January 2021 by New Jersey homebuyer Judah Leeder, alleging that NAR rules inflated broker commissions, causing buyers to pay higher home prices. In May 2022, Wood dismissed the lawsuit, agreeing with the defendants that homebuyers were indirect purchasers of the buyer’s broker’s services because those services were procured for them by the home seller, which made those buyers ineligible to file an antitrust complaint. Offenders recover losses.
Wood also pointed out at the time that the homebuyers she was talking about were direct purchasers of the buyer’s brokerage services and that they were filing similar cases in her jurisdiction that would be detrimental to the homebuyers’ lawsuits. The case, known as “Moehrl,” alleged that commission sharing increased seller costs rather than buyer costs. Wood was also the judge in the Moore case. Nonetheless, she allowed the homebuyer plaintiff to amend his complaint.
In July 2022, eight homebuyers submitted applications Amended complaint Against NAR, Realogy, Keller Williams, RE/MAX, HomeServices of America and three of the latter’s subsidiaries: BHH Affiliates, HSF Affiliates and The Long & Foster Companies. The amended complaint terminates Lead’s role as lead plaintiff and replaces it with eight new plaintiffs led by Mya Batton in Tennessee, Florida, Kansas, North Carolina, Nevada , Massachusetts and New Mexico purchased homes.
In addition to the Sherman antitrust claims and unjust enrichment claims in the original lawsuit, the revised lawsuit also alleges that the defendants violated antitrust regulations and consumer protection laws in 35 states, including Arizona, California, Connecticut , Washington, D.C., Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Virginia, Vermont, West Virginia and Wisconsin.
Defendants responded to the amended complaint with a motion to dismiss.in wood Order on February 20th In ruling on the motions, she said the allegations in the amended complaint regarding the federal claims seeking “injunctive relief” – an order forcing the defendants to cease their alleged unlawful conduct – still “substantially reflect those in the original complaint.” allegations,” she still believes home sellers rather than buyers are “in a better position” to seek injunctive relief.
Wood noted that the recent decision in Caesar/Burnett supports this view. In this case, the jury found that KW, RE/MAX, Anywhere, NAR, HomeServices, BHH Affiliates and HSF Affiliates conspired to inflate the rates of broker commissions paid by home sellers. 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.
“If putative class members face a substantial threat of harm as buyers from defendants’ alleged antitrust violations, they may also be harmed as sellers at the same time—that is, they will be subject to the same threat of harm as Moore and Burnett That’s what happened to the certified home seller class,” Wood wrote.
“This situation further demonstrates that home sellers are most likely to seek injunctive relief.”
She dismissed the federal claim “without prejudice,” meaning the plaintiffs can choose to resubmit the claim with different arguments.
At least for now, Wood also dismissed without prejudice HomeServices and its three subsidiaries — BHH Affiliates, HSF Affiliates and Long & Foster Companies — as defendants in the case because the federal claims are not valid.
“The HomeServices defendants argue that they are not subject to Illinois personal jurisdiction because none of the constituent entities are corporations headquartered in Illinois and the (complaint) does not contain any connection between them and the state of Illinois,” Wood’s order reads. Charges linked to the State of Illinois.”
Wood said that if the court does not assert nationwide authority, then the court does not have personal jurisdiction over the HomeServices defendants.
Inman has requested comment from HomeServices and the plaintiffs’ attorneys and will update this report when a response is received.
The Batton 1 case had sought class certification on behalf of two proposed classes: a nationwide injunctive relief class and a damages class. Since the federal claim was dismissed, only the latter proposed category remained. This category consists of “all persons who purchased residential real estate listed on the NAR MLS in an indirect purchaser state between December 1, 1996 and the present.” For such cases, the plaintiffs seek compensation for losses based on “antitrust, unfair competition, consumer protection and unjust enrichment laws”.
Wood allowed claims under nearly all state laws to proceed, noting that the U.S. Supreme Court has ruled that states can allow indirect purchasers to recover losses under their own antitrust laws.
She dismissed only the amended complaint’s claims under Tennessee’s antitrust and consumer protection laws (which the plaintiffs had voluntarily dismissed) and claims under the Kansas Consumer Protection Act (KCPA). Wood dismissed the latter because the plaintiffs claimed that “buyers’ agents deceptively advertise their services as free, when in fact their commissions are passed on to buyers because the commissions are included in the home price,” but failed to do so. Be able to assert that a false statement was actually made to any of the plaintiffs.
Still, Wood accepted the plaintiffs’ argument that commissions were built into house prices, one of the reasons she allowed the state law claim to proceed.
“The court finds plaintiff’s theory of injury relatively simple,” Wood wrote.
“The total commission paid by the home seller is to compensate the buyer’s agent and the seller’s agent. The MLS listing for the seller’s home then notifies the potential buyer’s agent and if they find a buyer for the home, they will be compensated for the set-up fee rate. While home sellers may be willing to bear the costs associated with the services provided to them by their own seller’s agent, they are less willing to pay for the services of a buyer’s agent whose services are, of course, provided to buyers than the seller.
“It is therefore economically reasonable for a seller to attempt to offset the costs of servicing a buyer by increasing the price of the home sold by an amount equal to that portion of the total commission assigned to the buyer. – Broker. So, as claimed, the commission is passed through a single straight path to the home buyer.
“Accordingly, the court cannot conclude that the (amended complaint) fails to allege proximate cause on any state law claim.”
Read the court order:
Send an email to Andrea V. Brambila.
