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After initially expressing misgivings, the judge in charge of an antitrust case between the largest multiple listing service in New England and homeseller plaintiffs has given a deal between the parties the green light.
Although not related to the more recognizable commission suits currently wending their way through the courts, buyer commission rule change proposals in this case could provide a sneak peek at how broader changes could be implemented, depending on the outcome of those bombshell class-action suits.
On Sept. 7, Judge Patti Saris, of the U.S. District Court in Massachusetts, granted preliminary approval of a proposed settlement agreement between the plaintiffs and broker-owned multiple listing service MLS PIN in which the latter agreed to overhaul its commission policies, pay $3 million and “cooperate” in the litigation against the remaining defendants named in the suit: Real estate franchisors Anywhere (formerly Realogy), RE/MAX, Keller Williams and HomeServices of America.
“The terms of the Settlement are hereby preliminarily approved … as being fair, reasonable, and adequate to the Settlement Class,” Saris wrote in her order.
“Plaintiffs’ claims against the non-settling Defendants shall proceed and are not affected by this Order,” she added.
The settlement class is made up of sellers who paid, or on whose behalf sellers’ brokers paid, buyer broker commissions during the settlement class period in connection with the sale of residential real estate listed on Pinergy, MLS PIN’s multiple listing service system.
A final settlement approval hearing is set for Jan. 4, 2024. If approved, the deal will resolve all claims in the litigation pertaining to MLS PIN. As part of the agreement, MLS PIN denied any wrongdoing or liability regarding the claims.
At a hearing a month ago, Saris balked at the structure of the original settlement agreement because the deal would not have given the class members in the case — except for the lead plaintiffs — any money from the $3 million settlement fund paid for by MLS PIN, but plaintiffs’ attorneys would have gotten their expenses covered to date as well as future expenses for the litigation against the remaining defendants.
In order to address the judge’s concerns, the plaintiffs and MLS PIN restructured the fund. As in the original settlement, of the $3 million, up to $900,000 will go toward attorneys’ fees, up to $200,000 will go toward incurred expenses, about $250,000 will go toward notifying settlement class members and each of the three named lead plaintiffs will get up to $2,500 for being class representatives.
However, in the amended agreement, the plaintiffs will not ask the court to use the remaining funds for future litigation expenses. Rather, the class counsel will put the remaining funds in an interest-bearing U.S. government money market fund “until the conclusion of the litigation against all Defendants, at which time Plaintiffs shall file a motion with the Court seeking an appropriate disposition of the balance of the Settlement Fund.”
The amended agreement also changes the settlement class period so that it doesn’t begin in 1997 when MLS PIN was founded, but rather begins on Dec. 17, 2016, and extends until there is a final judgment and order of dismissal of the entire case. Because of this change, the settlement class is identical to the class that the plaintiffs will move to certify in the litigation against the remaining defendants, according to a supplemental memo filed by the plaintiffs with the amended agreement.
Other than those two main changes, “the substance of the proposed Settlement — including elimination of the Buyer-Broker Commission Rule at issue — remains the same as before,” the memo said.
As part of the settlement, MLS PIN will remove a requirement that homesellers must offer compensation to buyer brokers; will require listing brokers to notify sellers that they’re not required to offer compensation to buyer brokers and that they can decline if a buyer broker requests compensation; and will clarify that if the seller makes an offer to a buyer broker and the buyer makes a counteroffer, “then any commission to be paid is negotiated among the seller, the buyer, the seller broker, and the buyer broker,” according to the notices that will be provided to settlement class members.
At last month’s hearing, Saris admitted that she did “love” the proposed rule changes in the settlement, which would make the offering of compensation to buyer brokers optional, similar to changes broker-owned Northwest MLS has adopted. The changes are contingent on the settlement’s final approval.
The case, known as Nosalek after its lead homeseller plaintiff (previously Bauman), was filed in December 2020. Like federal commission suits Moehrl and Sitzer/Burnett, it seeks class-action status and alleges that the sharing of commissions between listing and buyer brokers inflates seller costs and is a conspiracy in restraint of trade, a violation of the Sherman Antitrust Act.
However, Nosalek differs in one important respect from the other suits: The National Association of Realtors is not named as a defendant but MLS PIN is. The MLS, which has a full-time staff of 60 employees, boasts approximately 46,000 subscribers in six New England states and New York. Many of the brokers who are subscribers of MLS PIN are likely to be franchisees of the remaining defendants.
At last month’s hearing, Stacey Mahoney, representing Realogy Holdings Corp. (now known as Anywhere), said that when MLS PIN’s board voted to approve the initial settlement agreement, the brokers under Realogy brands on that board abstained from the vote.
MLS PIN’s spokesperson Melissa Lindberg said, “We are pleased with the Judge’s decision to move forward with the settlement. Beyond that, we cannot comment as it’s still pending litigation.”
Andrea V. Brambila
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