Commissions lawsuit now a class action, greatly increasing its scope
A judge ruled that the Moehrl suit would now cover all sellers who paid commissions to named companies over a 5-year period, plus “current and future” sellers.
- The Moehrl suit lists top brokerages as defendants and seeks damages of more than $13 billion.
- The ruling “is a blow” to the defendants as it “essentially guarantees” a trial, said industry observer Russ Cofano.
- The plaintiffs allege that requiring sellers to pay commissions to buyer brokers is a violation of federal antitrust laws.
A lawsuit that could change the way agents and brokers get paid has been declared a class action, a decision that dramatically increases its scope and potential impact.
Plaintiffs in the Moehrl vs. the National Association of Realtors, et al., case are seeking more than $13 billion in damages because they paid a cost — the buyer's agent commission — that would have been paid by homebuyers in a competitive market.
U.S. District Judge Andrea R. Wood ruled Wednesday that in addition to the handful of people who sued in 2019, the outcome of the lawsuit will cover thousands of home sellers "who paid a commission between March 6, 2015, and December 31, 2020' to specified companies and MLSs as well as "current and future" sellers engaged with those entities.
"With this class certification, we are pleased to be one step closer to a trial that will bring a competitive market to millions of Americans buying or selling real estate," said Benjamin D. Brown, co-lead counsel for the certified classes of home sellers, partner at Cohen Milstein and co-chair of its antitrust practice.
The Moehrl suit lists NAR, Realogy (now Anywhere), HomeServices of America, RE/MAX and Keller Williams as defendants. Twenty MLSs, including some of the country's largest (most notably Bright MLS and Stellar MLS) are alleged to be "co-conspirators."
"The court did not decide the merits of the plaintiffs' claims, which we categorically deny," Darryl Frost, spokesperson for Keller Williams, told Real Estate News on Thursday. "The case is far from over, and we will continue to vigorously defend ourselves in court."
While this case does not cover every seller or every market, it includes hundreds of thousands of agents and millions of transactions across the country worth billions of dollars.
The ruling is a "substantial negative blow to the defendants because it essentially guarantees this will go to trial," said Russ Cofano, CEO of Collabra Technology. Cofano also has served as an attorney and industry legal counsel. A class certification usually precedes settlement discussions, but in this case, due to "the sheer enormity of the damages claims," that seems unlikely, Cofano said.
"We are disappointed in the decision," said NAR VP of communications Mantill Williams. "Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers."
Williams described the current compensation structure — having the listing broker pay the buyer broker's compensation — as a win for consumers, saving sellers time and creating a larger pool of buyers.
For buyers, these marketplaces "save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people," Williams said.
Plaintiffs accuse the defendants of "conspiring to require home sellers to pay the broker representing the buyer of their homes, and to pay at an inflated amount, in violation of federal antitrust law," according to the co-lead counsel in the case.
A similar lawsuit, Burnett v. The National Association of Realtors (formerly Sitzer vs. NAR), was filed in 2019 and declared a class action in April 2022. However, Burnett is limited to Missouri, while Moehrl would affect commissions in many states. The defendant list is the same — NAR and the four largest real estate enterprises — and the suit also calls out several Missouri-based MLSs.
Correction: An earlier version of this article mischaracterized the role of MLSs. They are alleged "co-conspirators," not defendants.