Plaintiffs zero in on antitrust violations as they wrap their case
A former NAR committee member called traditional compensation practices “the ultimate form of restraint of trade,” claiming that NAR looked the other way.
- The plaintiffs in the landmark Sitzer/Burnett trial called their final witnesses Monday morning.
- Plaintiffs’ attorneys pointed to evidence that NAR was made aware of concerns about antitrust violations but did not investigate them.
- HomeServices of America requested a summary judgment, saying that “no evidence” connected them to the case.
- The defense began to lay out its case in the afternoon, with NAR CEO Bob Goldberg and former NAR president Sharon Millett testifying.
KANSAS CITY, Mo. — As attorneys for the plaintiffs in the Sitzer/Burnett trial wrapped up their case Monday, they focused on the antitrust allegations at the heart of the lawsuit. The suggestion, based on witness testimony, was that the defendants knew they may be violating antitrust laws — but did nothing to change their business practices.
The trial, which began its second week in U.S. District Court, pits home sellers in Missouri against the National Association of Realtors, Keller Williams and HomeServices of America. The sellers allege that NAR and others participated in anticompetitive practices by forcing them into a system where they pay a commission that is split between buyer and seller agents.
Linda O'Connor, a former member of NAR's Professional Standards Committee, sent an email to committee leaders in 2012 detailing her concerns about antitrust law violations, calling traditional compensation practices "the ultimate form of restraint of trade" and a representation of price fixing in the free market. The committee did not investigate these concerns, according to testimony.
Cliff Niersbach, who was the associate general counsel for NAR from 1975 to 2016, said the organization received dozens, if not hundreds of suggestions that made it difficult to address each issue, but he acknowledged that the legal team did not look into O'Connors report.
Also testifying in the morning session was Darrell King, director of compliance at Keller Williams between 2006 and 2015. During King's testimony, attorneys for the plaintiffs attempted to show that there was a lack of institutional control at the company.
King stated that KW didn't have an antitrust policy, but it was later pointed out that one was in place for the agents, allowing the plaintiffs to imply that while some in the organization had to follow the rules, executives did not.
Defense hits the ground running
In the afternoon session, the defense kicked off its case. Former NAR president Sharon Millett took the stand, followed by current CEO Bob Goldberg. Both testified about how the current rules came about and NAR's role as it relates to compensation practices today.
Before testimony began, HomeServices of America, one of the defendants, filed documents requesting a summary judgment, stating that the "plaintiffs have submitted no evidence of any kind — neither direct nor circumstantial — that any HomeServices defendant entered into any kind of agreement with anyone relating to the conduct being challenged in this case." U.S. District Court Judge Stephen Bough had not ruled on the motion as of Monday evening.
Millett, who served as NAR president in 1999, said commissions practices changed in the 1990s as a way to address issues with sub-agency. Sub-agents are responsible for bringing a prospective buyer to a property, but actually work on behalf of the listing broker, which was very confusing to the consumer, Millett said.
As a result of NAR's efforts, sub-agency is rare today, and buyers are better served because of it, said Millett, noting that she was proud of her work to effect that change.
The internet's effect on homebuying, and the 'taboo' of commission rate discussions
During cross examination, Millett was asked whether the rise of the internet has made homebuying easier — the implication being that today's buyer agents don't need to work as hard given the resources available to consumers. In response, she said that having listings online actually makes it harder for buyers to make a decision, and information about a listing is often incomplete. This was debated for some time, with Millett standing by her statements.
She also said the job of the buyer's agent is more stressful and time-intensive, as they often work nights and weekends and take on duties that a seller's agent doesn't have to deal with.
Goldberg testified that NAR has no involvement with any kind of conspiracy, noting that it's "taboo" to talk about commission rates. He repeatedly stated that the organization does not talk to real estate brokerages about what commission should be charged and said NAR exists to provide other benefits to agents, such as offering health insurance and being a lobbying force for the industry. For the $150 membership fee, they provide "exceptional value," he added.
Goldberg is scheduled to be cross examined Tuesday morning.
As the defense team continues to lay out its case this week, it is expected to address these antitrust allegations and attempt to convince the jury that the plaintiffs have not proven their claims. Defense testimony is expected to last about a week, followed by closing arguments.
Want to know more? Follow all of our Sitzer/Burnett trial coverage here.