The franchisors are not required to implement the business practice changes they agreed to until after the appeals process.
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After trying — and failing — to stop the final approval of nationwide settlements to resolve antitrust claims against major real estate franchisors Anywhere, Keller Williams and RE/MAX, a homebuyer is appealing to a higher court.
The appeal may delay implementation of the settlements in which Anywhere, RE/MAX and Keller Williams agreed to pay $83.5 million, $55 million and $70 million, respectively. No one in the settlement classes who has made a claim will receive payment until any appeals have been resolved.
The franchisors are also not required to implement the business practice changes they agreed to until after the appeals process, when the settlements will become effective. These changes include no longer requiring franchisees and their affiliated agents to join or be members of the National Association of Realtors or follow the Realtor Code of Ethics or NAR’s multiple listing service policy handbook.
“An appeal of this kind is neither unusual nor unexpected,” a spokesperson for Anywhere told Inman in a statement. “We have full confidence that our settlement is fair, reasonable, and enforceable, and that the trial court’s order to grant it final approval was absolutely correct.”
Anywhere did not respond when asked whether the appeal will delay the business practice changes that Anywhere agreed to in the settlement until after the appeal has resolved.
The settlements for the three franchisors cover claims from the cases known as Sitzer | Burnett, Moehrl and Nosalek, as well as other, similar homeseller suits nationwide. The suits allege that some NAR rules violate the Sherman Antitrust Act by inflating seller costs. The suits primarily target NAR’s Participation Rule (also known as the cooperative compensation rule), which requires listing brokers to offer buyer brokers a commission in order to list a property in a Realtor-affiliated multiple listing service.
Michael Ketchmark of Ketchmark & McCreight, lead plaintiffs’ counsel in the Sitzer | Burnett case, told Inman the appeal will not have any impact on the implementation of the policy changes NAR agreed to in a separate settlement, which has not yet received final approval but whose policy changes are set to go into effect August 17.
“We will have to evaluate it on a case by case basis whether the other defendants can wait to implement the practice changes until after the appeal, but the failure to do so could expose them to additional liability,” Ketchmark said. “Any company with common sense should do it now.”
Michael Ketchmark
“All of the parties in this case are confident that the court of appeals will side with the trial court and uphold the settlements,” Ketchmark added. “We all knew the appeal was coming and we are ready.”
On June 4, homebuyer and homeseller James Mullis filed an appeal with the 8th U.S. Circuit Court of Appeals seeking to overturn a decision from Judge Stephen R. Bough of the U.S. District Court for the Western District of Missouri Western Division granting the approvals on May 9. Mullis informed that court he would appeal on May 31.
Mullis’s legal filings regarding the appeal so far do not contain any arguments. He must file an appellate brief by July 24, according to the appeals court’s schedule.
But Mullis is a named plaintiff in a case known as Batton 1 (formerly Leeder), which seeks class-action status, and names NAR, Anywhere, RE/MAX and Keller Williams as defendants and alleges the same NAR rules at issue in the homeseller cases have resulted in higher home prices paid by homebuyers in violation of state and federal antitrust laws.
On April 13, Mullis, who also sold a home in addition to buying one, filed an objection to the franchisor settlements in the Sitzer | Burnett court in Missouri.
“The Court should approve the settlements only if the settling parties expressly carve out claims asserted in the Batton action from the definition of ‘Released Claims’ or otherwise clarify that the settlements do not release damages claims related to transactions in which class members purchased homes,” attorneys for Mullis wrote.
“If not, the Court should reject the settlements as not fair and reasonable and as not providing adequate representation to class members who purchased homes.”
On May 8, the Batton 1 plaintiffs filed for a temporary restraining order and preliminary injunction to try to stop the final approval of the settlements, arguing that the deals should not prevent homebuyers from pursuing their claims, but were rebuffed because objectors, including Mullis, were given the opportunity to voice their objections at the May 9 fairness hearing in which the deals were ultimately approved.
Bough’s approval of the deals did not end litigation brought by homebuyers, but it did reduce the size of the potential class in homebuyer cases because it will not allow people who both bought and sold a property to pursue claims for buy-side damages.
On June 3, law firm Knie and Shealy, which represents South Carolina homesellers in another commission suit, indicated its intention to also file an appeal against the final approval of Keller Williams, Anywhere and RE/MAX settlements, but has not yet filed the appeal.
Inman has asked Keller Williams and RE/MAX for comment and will update this story if and when responses are received.