HomeServices of America loses appeal in commissions case
The Eighth Circuit Court of Appeals upheld a ruling denying HSoA’s motion to force arbitration in the Sitzer/Burnett case, scheduled for trial in October.
- The Sitzer/Burnett case is one of several class action lawsuits related to buyer-broker compensation paid by sellers.
- It will be the first of the major cases to go to trial, which is set for Oct. 16.
- The case could have huge ramifications for how agents are compensated across the real estate industry.
An appeal by HomeServices of America in a major class action lawsuit challenging the system of buyer agent commissions was denied, keeping the case on track for a trial this fall.
On Aug. 2, the Court of Appeals for the Eighth Circuit affirmed a previous ruling issued by the U.S. District Court in Kansas City, Missouri, denying HomeServices the option to compel the plaintiffs of Sitzer/Burnett case to pursue arbitration in lieu of a court trial.
In support of its motion and subsequent appeal, HomeServices of America pointed to listing agreements signed by class members that included arbitration clauses. The courts noted, however, that the agreements were made between home sellers and subsidiaries of HomeServices, and HomeServices was not directly mentioned in the arbitration agreements.
In July, HSoA was denied a request for summary judgment in a similar case filed in Massachusetts.
The Missouri case, which is scheduled to go to trial Oct. 16, pits several home sellers against the National Association of Realtors and several of the country's largest brokerages, including HomeServices. In the original complaint filed in 2019, the plaintiffs charged that the defendants have conspired to require home sellers to pay the broker representing the buyer of their homes in violation of federal antitrust laws.
Michael Ketchmark, lead attorney for the plaintiffs, said he represents over 500,000 Missouri home sellers who could be due billions of dollars in damages.
"The day of accountability is near. A tremendous amount of evidence has been hidden from the public by these corporate defendants. All of that is about to change when we expose their wrongdoing to a jury in Missouri," Ketchmark said in an email. "In my opinion, the defendants are afraid of competing in a free and open market, but they're about ready to return to it. The day of collusion and forced commissions is about to end."
Real Estate News has reached out to the lead attorney for HSoA for comment.
In response to HomeServices' appeal, the Eighth Circuit judges said that "courts — not arbitrators — determine whether a party has waived its right to arbitration through default," and that HomeServices effectively waived its right to arbitrate by actively litigating the case for close to a year before filing its motion. The judges also sided with the district court to deny arbitration to the unnamed class members after the court granted class certification.
This appeal originally delayed the start of the Sitzer/Burnett trial, which was slated to start in late February 2023. Judge Stephen Bough has scheduled a meeting in September to finalize the court date.