CMLS looks to weigh in on the DOJ’s statement of interest

The Council of Multiple Listing Services is joining Northwest MLS in filing a motion to request that it can file an amicus curiae brief in the Nosalek commission lawsuit.

In its motion filed on Wednesday, CMLS said its amicus curiae brief is in repsonse to the Department of Justice’s statement of interest which was filed in early February in relation to the proposed settlement agreement reached by the Nosalek plaintiffs and defendant MLS Property Information Network in July 2023.

Judge Patti Saris, who is overseeing the Nosalek suit, would have to reopen the lawsuit in order for NWMLS to file its brief. The judge stayed the case pending action by a multidistrict litigation panel, which is set to decide this spring if nine of the commission lawsuits can consolidate.

In its statement of interest, the DOJ advocated for the prohibition of cooperative compensation, meaning that “sellers would be responsible for determining only the compensation of their own broker in the listing contract … [and] buyers would be responsible for determining the compensation of their own broker in a buyer-broker representation contract.”

The DOJ argued that changes similar to those proposed in the settlement agreement — including the lowering of the required compensation amount to $0, or abandoning the requirement for listing brokers to make a blanket offer of compensation to the buyer’s broker in order to list on the MLS, which was a change NWMLS made in 2019 — have done nothing to decrease agent commissions.

In its proposed brief, CMLS writes that in its statement of interest, the DOJ is looking for “an injunction that prohibits offers of buyer broker compensation by MLS PIN participants.”

The MLS trade group, which represented 225 MLSs, including MLS PIN, wrote that it opposes the effort of the DOJ to “impose a policy preference on the U.S. residential real estate market that lacks empirical support, conflicts with principles of the Sherman Act, and has negative practical implications for consumers which DOJ has not taken into account.”

The association notes in the draft of its proposed brief that its interest in the “proposed settlement stems from the fact, as DOJ highlights, that “several pending cases” are adjudicating MLSs’ adoption of the mandatory-compensation rule of the National Association of Realtors or similar policies.”

CMLS goes on to argue that the court should evaluate the settlement agreement proposed by the plaintiffs and MLS PIN without any reference to the DOJ’s statement of interest. According to CMLS’ reading of the proposed agreement, two main policy changes are proposed. The first change is that MLS PIN is agreeing to obtain certificates from their seller clients saying that they understand that MLS PIN does not require sellers to offer compensation to buyer brokers and that sellers are not required to compensate the buyer’s broker even when asked to by the buyer. The second change is that MLS PIN has agreed to get rid of its rule requiring the listing broker to make a blanket offer of compensation to the buyer’s broker in order to list a property on the MLS.

The brief states that the court should ignore the DOJ’s objections to these rule changes for a variety of reasons. First, CMLS argues that data from NWMLS, which made a similar rule change in 2019, shows that commission offers decreased “faster than they had in the prior two decades” after the 2019 rule change.

Second, the trade group points out that the practice of sellers and listing brokers paying buyer brokers is lawful throughout MLS PIN’s service area.

Third, it argues that the DOJ is ignoring the major disruption a transition to its preferred policies will cause consumers and “the many thousands of third-party businesses and entities involved in real estate in transactions.”

“DOJ incorrectly predicts a glitchless transition without accounting for the complexity of the real estate transaction (and without citing any sources),” the proposed brief states.

Additionally, CMLS argues that the DOJ’s policy preferences “would require MLSs to impose restraints on brokers not necessary to advance the MLSs’ procompetitive purposes.”

“Prohibiting offers of compensation from brokers and sellers is a drastic imposition of MLS regulation on legal activities of listing brokers and sellers. DOJ offers no evidence that such a change is necessary to achieve procompetitive purposes,” the brief states. “Furthermore, the SOI does not consider ways (perhaps today unimagined by DOJ, MLSs, and even brokers) that listing brokers might use offers of compensation to buyer brokers to spur greater price competition.”

Saris has yet to rule on either CMLS’ or NWMLS’ motions, but she has ruled that MLS PIN and the Nosalek plaintiffs can file separate responses to the DOJ’s statement of interest. Responses from the parties were due on Thursday.

In an emailed statement, a spokesperson from CMLS noted that the trade group has spent the last several years stressing the value and importance of the MLS.

“Last fall, CMLS published a white paper on the Value of MLS and submitted it to the DOJ. We then met with key staff from the antitrust division of the DOJ to further explain key components of the MLS and better understand their concerns. The discussion was robust, and we left knowing there was more work to be done,” the spokesperson wrote.

“Weeks later, on February 15, the DOJ published its statement of interest (SOI) in the Nosalek case. By this time, the initial results of our economic analysis were complete and did not back the DOJ’s position. As the trade organization for MLSs, it was our responsibility to weigh in and balance the record. CMLS has long championed the MLS as an efficient, transparent, competitive marketplace that benefits consumers. The brief validates that position.”

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