Berkshire Hathaway Home Services Affiliates, HomeServices Franchise Affiliates, HomeServices of America, and The Long & Foster Companies filed a motion to compel arbitration on Friday in the “Moehrl agent commission case,” named after its lead plaintiff.
The plaintiffs in the case, which was filed in 2019, allege that the National Association of Realtors and brokerages such as RE/MAX, Keller Williams, Anywhere, and HomeServices have engaged in a conspiracy by mandating the NAR’s “buyer broker commission rule” when listing a property on a MLS. Attorneys for Cohen Milstein argue that the conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market.
“Moreover, because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission,” the plaintiffs argued.
In late March, Judge Andrea R. Wood of the U.S. District Court for the North District of Illinois ruled that the case had achieved class certification. This ruling opened the door for HomeServices attorneys to file a motion to compel arbitration.
According to HomeServices’ motion to compel, “certain unnamed class member executed arbitration agreements to this motion in connection with the sale of their home. Each agreement delegates “gateway” or “threshold” issues of arbitrability to the arbitrator through a specific delegation clause.
“The unnamed class members who signed a form of listing agreement identified in Appendix A are now subject to the jurisdiction of the court as a result of the order certifying this action as a class action.”
In other words, due to the language used in HomeServices’ listing agreements, every homeowner who sold their home through the brokerage between March 6, 2015 and December 31, 2020, is entitled to independently arbitrate their own case.
“HomeServices does a ton of business and it would be about 800,000 people they would have to arbitrate individually if this is allowed,” Steve Murray, the president of RealTrends Consulting, said. “If any of the other large national firms has similar language in their agreements, that would throw into question the whole class action because not every listing agreement is the same.”
In 2020, HomeServices moved to strike the arbitrating unnamed class member from the class but because they were not subject to the court’s jurisdiction, HomeServices was unable to file a motion to compel them to arbitration at that time. The court denied the motion to strike.
“With this, HomeServices is telling the judge in Chicago that they ignored the fact that they certified this massive class, when for years the firm has been trying to tell them that each agreement between a homeowner and a brokerage is different,” Murray said.
According to a minute entry filed on Monday by Judge Wood, plaintiffs have until May 1 to file their response.
“We support Home Services of America’s effort to file a Motion to Compel Arbitration in the Moehrl case and are hopeful they prevail,” Mantill Williams, NAR‘s vice president of communications, wrote in an email.
Attorneys for the plaintiffs did not return a request for comment by the time of publication.
This story was updated to include commentary from NAR.
