Despite being victorious in the Department of Justice’s renewed antitrust probe earlier this year, the National Association of Realtors (NAR) just lost a key appeal in a civil case that threatens the traditional real estate commission structure.
On Wednesday the U.S. Court of Appeals for the Seventh Circuit denied a request from NAR, Anywhere, Keller Williams, RE/MAX and HomeServices to overturn class certification in the “Moehrl agent commission case,” named after its lead plaintiff.
This ruling, which comes a month after NAR and the other defendants filed their petition, prevents the defendants from appealing the class certification decision and it allows the case to proceed as a class action lawsuit. In addition, this decision also means that the Moehrl suit is likely headed to trial, however no date has been set and there is still a pending request from the HomeServices defendants that some class members’ claims be resolved through arbitration.
Originally filed in 2019, the plaintiffs in the Moehrl case allege that commission sharing inflates the costs for sellers, in violation of the Sherman Act. The lawsuit was granted class action status in March.
“While it’s not common for an appeal court to grant an early appeal on class certification, the National Association of REALTORS® is disappointed by the ruling,” Wes Shaw, a spokesperson for NAR, wrote in an email. “This decision is non-substantive and does not go to the merits of the case. We look forward to making our case at trial and are confident we will prevail because pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers.”
Similar to the smaller Burnett lawsuit filed in Missouri, the Moehrl lawsuit is looking to have homebuyers pay their agents directly instead of having the listing agent pay the buyer’s agent. The Burnett suit, which was also granted class action status, is set to go to trial in mid-October of this year.
If the court rules in favor of the plaintiffs in the Moehrl case, millions of home sellers in 20 MLS markets could ask to be reimbursed for an estimated $13.7 billion in damages. If the court awards treble damages, that figure could exceed $40 billion.
In their petition seeking to appeal the class certification, the defendants stated that this is “far more than the defendants’ combined market capitalization” and therefore pressures them to settle out of court to avoid “a catastrophic multibillion-dollar damages award.”
In a response filing to the defendants’ petition, the plaintiffs noted that the defendants have not told the court exactly what their assets are “which is required to show undue settlement pressure.”
In a response to a request for comment, a RE/MAX spokesperson said the firm does not comment on ongoing litigation.
HomeServices and Keller Williams did not wish to comment on the ruling, and a comment request sent to Anywhere had not been returned at the time of publication.
This story was updated to include a response from RE/MAX.
