Commissions on trial and the Charles E. Whittaker U.S. district courthouse in Kansas City, Mo.
Illustration by Lanette Behiry/Real Estate News

A reprimand, but no mistrial despite objections from the defense 

Defense attorneys argued that an “ambush video” introduced Tuesday in the Sitzer/Burnett trial was grounds for a mistrial, but the judge disagreed.

October 25, 2023
3 minutes

Key points:

  • Attorneys for HomeServices of America were able to get the video in question stricken from the record, with the judge instructing the jury to ignore that evidence.
  • The jury was also told to ignore references to a Department of Justice investigation, which the parties had agreed not to discuss at trial.
  • The trial continued with cross examination of Gino Blefari, president and CEO of HomeServices of America, and other representatives of HomeServices companies.
  • KW submitted a motion for summary judgment, which the judge denied later in the day.

KANSAS CITY, Mo. — Court proceedings in the Sitzer/Burnett class action lawsuit continued on Wednesday despite HomeServices of America's request for a mistrial after what they called an "ambush video" was introduced into testimony on Tuesday afternoon.

Describing a BHHS executive's commentary on the Tom Ferry Podcast Experience in 2019 as "vulgar," attorneys for HomeServices argued that it was not part of the exhibit list and the defendants were deprived of the opportunity to review it beforehand to determine its authenticity or credibility, according to court documents.

The video had been presented to HomeServices founder Ron Peltier, who was asked if the controversial tactics were part of the company's training practices. One segment of the podcast shows BHHS senior vice president Allan Dalton crudely talking about how agents should essentially use intimidation tactics in response to a client's request to lower their commission.

Attorneys offer dueling objections

Defense attorneys presented other objections, including references made by Michael Ketchmark, lead attorney for the plaintiffs, related to investigations by the Department of Justice — a topic both sides had agreed not to bring up in front of the jury prior to the trial.

While Judge Stephen Bough declined to declare a mistrial, he did reprimand Ketchmark and instructed the jury to ignore the video and the other evidence objected to by the defense. Ketchmark countered that he had some objections of his own, including the charge that HomeServices' attorneys have not been forthcoming about their witness list.

HomeServices distances itself from franchise operations

During the morning session, HomeServices of America President and CEO Gino Blefari concluded his testimony. He told the jury that the HomeServices business model allows a lot of independence between the company and its franchises. While admitting that "the buck stops with me," on many aspects of the business, he said that wasn't necessarily the case when it came to training, which is largely overseen by independent offices.

He also responded to a video previously introduced by the plaintiffs. In the video, Blefari talks about agents aiming for the full 6% commission, but he said during testimony that the point he was trying to make was that agents should have the confidence to ask for the full commission rate because that would make it more likely to happen.

The jury also heard initial testimony from Rosalie Warner, a senior vice president of network services for HomeServices. Warner described the business relationship with franchises as relatively hands-off, implying that HomeServices has little control over the decisions made by these offices because they are independent operations.

During cross-examination, Warner stuck to her earlier statements, reiterating that HomeServices acts more like a holding company, and the employees of its franchises are viewed as independent contractors, providing further distance between HomeServices and the practices of those companies. 

Also taking the stand in the afternoon were Mike Frazier and Krista Wilson with ReeceNichols Real Estate, which has offices in Missouri. ReeceNichols is an affiliate of Berkshire Hathaway, which falls under the HomeServices umbrella. They backed up Warner's assertions of independence, saying many of the decisions are made on the local level.

A 'Hail Mary' move from KW

The defense is expected to move on to testimony from Keller Williams on Thursday, likely wrapping up its case in the next few days.

Ahead of providing testimony, attorneys for Keller Williams submitted a motion for summary judgment on Wednesday, saying the plaintiffs had not proven their antitrust claims — a move also made by HomeServices prior to testifying. KW's motion was denied by Judge Bough.

Want to know more? Follow all of our Sitzer/Burnett trial coverage here.

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