Real Estate

Seller Who Balked At Inadequate Payout Appeals Commission Deal

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Just days after a homebuyer filed an appeal last week, a homeseller is now seeking to overturn a district court’s final approval of nationwide settlements to resolve antitrust claims against major real estate franchisors Anywhere, Keller Williams and RE/MAX.

Spring Way Center — a limited liability company once named as a plaintiff in a homeseller suit and whose owner’s identity is unknown to Inman — filed an appeal with the 8th U.S. Circuit Court of Appeals on Friday against a decision from Judge Stephen R. Bough of the U.S. District Court for the Western District of Missouri granting the approvals on May 9.

Spring Way Center’s legal filings regarding the appeal so far only notified the courts of the appeal and do not contain any arguments, but the company, which bought a home through an Anywhere-affiliated Coldwell Banker agent, made its views known on April 13, when it filed an objection to the settlements, which add up to $208.5 million.

“This amount is grossly disproportionate to the amount appropriate to adequately compensate the enormous number of injured parties,” attorneys for the company wrote.

The appeals 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.

Franchisors’ ‘huge profits’

Spring Way Center said the proposed compensation in the deals is “[w]oefully [i]nsufficient” considering the franchisors’ “huge profits.” For example, the company noted that Realogy’s earnings before interest, taxes, depreciation and amortization (EBITDA) was $5.8 billion during the total damages period from 2015 through 2023.

“This enormous EBITDA resulted in large measure from illegal price-fixing,” the filing says.

“Remarkably, the proposed settlement amounts to 1.4 percent of the company’s EBITDA. Similarly, RE/MAX has also reported positive EBITDA, adjusted net income, and free cash flow of $928 million over the damages period. However, the proposed settlement amount of $55,000,000 is inexplicably a paltry 6 percent.”

Because Keller Williams is a private company, the filing said Keller Williams’ financials were not readily available. Still, Spring Way Center offered its own calculations for how much homeseller class members would get from the settlements.

“The proposed compensation to class members from the brokerage firms amounts to $10.43 and likely less for each member,” the filing said.

“Even if the purported [National Association of Realtors] settlement is included, each class member would receive no more than $31.33.

“Furthermore, plaintiffs seek to recover approximately $12,000,000 spent by them on the Burnett trial from this aggregate settlement amount. Hence, the proposed settlement, particularly in light of the $1.78 billion Burnett verdict, which when trebled, amounts to $5.34 billion, is vanishingly small.”

Spring Way Center was the lead named plaintiff in a case filed on Dec. 4 in the U.S. District Court for the Western District of Pennsylvania. The suit names as a defendant West Penn MLS, which requires listing brokers to offer buyer brokers compensation when listing a property in the multiple listing service. The suit alleges the rule violates the federal Sherman Antitrust Act.

On January 26, the suit was amended without Spring Way Center as a named plaintiff, but continues. Spring Way Center is nonetheless a member of the settlement class.

“While the outcome of the trial and appeals is uncertain, that uncertainty does not mean that plaintiffs should be able to obstruct the other class members’ ability to effectively try their own cases in their own states with their own evidence,” Spring Way Center’s filing reads.

‘Free pass’ for franchisees

The company also objected to the franchisor settlements releasing franchisees from antitrust claims “in exchange for nothing.”

“[T]he proposed settlement fails to acknowledge that Realogy and its affiliates are only able to act through their franchisees,” the filing says.

“None of the franchisees have been required to compensate persons they harmed in any manner. Giving the franchisees a ‘free pass’ does nothing to further the underlying purposes of antitrust law to deter bad actors.”

Attorneys for Spring Way Center pointed out that the settlements don’t require anything of franchisees, only of franchisors.

“Nor does the proposed settlement contemplate an injunction forbidding sellers from making offers of compensation to buyer brokers as proposed in the [Department of Justice]’s Statement of Interest in Nosalek,” a major commission case in Massachusetts, the filing says.

“Under the proposed settlement, even though they were active participants in the conspiracy, the franchisees will be permitted to retain their profits from the conspiracy  they carried out against the plaintiffs. Moreover, they will not have to reform any of their conduct moving forward under the proposed settlement.”

Spring Way Center and the buyer who filed an appeal, James Mullis, must file appellant briefs by July 29, according to the appeals court’s schedule.

‘Fair and reasonable’

“Since entering into the settlement in October 2023, RE/MAX, LLC has been committed to obtaining final court approval releasing all U.S. RE/MAX Broker/Owners and affiliates from claims in the Burnett (formerly Sitzer), Moehrl, and Nosalek cases,” a RE/MAX spokesperson told Inman in a statement.

“RE/MAX, LLC is pleased the district court granted final approval in May. That said, an appeal of the order is neither unusual or unexpected, and RE/MAX, LLC will continue to vigorously defend the settlement during the appeal process. Ultimately, the Company believes the settlement is fair and reasonable and that the district court’s order should be upheld.”

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.

Michael Ketchmark

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.

“We expected the appeal and are ready for it,” Michael Ketchmark, lead plaintiffs’ counsel in Sitzer | Burnett, told Inman in a statement.

“If anyone thinks this will allow them to delay the changes and continue to violate the law, they are wrong.”

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.

Keller Williams declined to comment for this story. Anywhere did not respond to a request for comment.

Email Andrea V. Brambila.

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