CMLS forming $1M-plus legal action fund after Compass threats 

In the face of increasing legal threats from brokerage giant Compass, a trade group that represents multiple listing services is forming a legal action fund.

The Council of MLSs (CMLS), which has 236 MLS members representing more than 1.7 million subscribers, is in the process of finalizing contributions adding up to more than $1 million, CMLS CEO Jessica Edgerton told The Real Deal, which first reported the news. 

How the fund will work: "The proposed fund will provide financial assistance for legal matters of significance to the broader MLS industry, extending beyond any single organization," CMLS said on its website last week. "The fund will operate under clear, written eligibility criteria, conflict-of-interest procedures, and independent antitrust review to guide funding decisions."

The announcement noted that grant applications are not yet open and that contributors "will not influence case selection or receive preferential access to funding."

A response to litigation threats: CMLS's move comes after Compass CEO Robert Reffkin took the stage at the trade group's conference in Florida on Sept. 30 to warn MLSs that, unless they stopped fining or punishing subscribers for publicly marketing office exclusives, Compass would sue them for antitrust violations, according to reporting by Inman.

That same day, California Regional MLS (CRMLS) released a public statement indicating it would not give in to Compass' demands and said it was establishing a legal defense fund. Two additional MLSs have since publicly refused to comply with Compass' demands. 

The lawsuits begin: In early October, CRMLS proactively sued the brokerage giant, asking the court to declare that its cooperation rules don't violate state or federal antitrust laws and to prevent Compass from filing an antitrust lawsuit against the MLS.

Since then, Compass has filed its own complaint against CRMLS and has stated its intention to sue Austin-based Unlock MLS. Just this week, six more MLSs filed a joint lawsuit against Compass requesting an injunction similar to the one sought by CRMLS.

'CMLS stands ready' to defend the MLS: "[The MLS] provides clarity and transparency into the home market for aspirational buyers," Edgerton wrote on LinkedIn. 

"It gives a small brokerage the same reach as a global one. It supplies banking institutions the data integrity they require to put a mortgage within reach of a first-time homebuyer. It provides home-sellers with the greatest pool of potential buyers."

Edgerton, who is a former litigator and former chief legal officer for Leading Real Estate Companies of the World, said she believes the courts are "a powerful tool for justice" that exist "to resolve disputes on their merits."   

"When a company can win by threatening to outspend its opponent, the size of its legal budget replaces the strength of its argument," Edgerton wrote.

"Justice becomes something only the deepest pockets can afford. CMLS stands ready to level that playing [field] as best we can. Because protecting the MLS means protecting the American Dream."