This week—specifically this past Tuesday—was the deadline for anyone to enter a formal objection to the National Association of REALTORS®’ (NAR) settlement agreement, struck with class-action seller plaintiffs back in March. While about half a dozen parties came forward, including plaintiffs behind other commission-focused lawsuits and a law professor who has written critical analyses of the industry, one voice was noticeably absent: the Department of Justice (DOJ).
But that shouldn’t necessarily be viewed as an implicit endorsement, or a sign that law enforcement won’t have anything to say on the settlement. Brian Schneider, chief counsel at Bright MLS, previously told RISMedia that he doesn’t believe the DOJ are bound by the deadline, and that Judge Stephen R. Bough, who is overseeing the settlement process, is “almost certain” to allow them extra time.
“I think if the Justice Department decided that they need a few more weeks to analyze data and information, they may well use that time,” Schneider said.
Meanwhile, other interested parties offered extensive criticisms of the deal, focusing on everything from the likely low payments going to consumers to nuances between the original Burnett case and the many copycats that have popped up since the verdict (which was handed down exactly one year ago).
In a lengthy filing earlier this week, lawyers behind New York City commission cases (known as Friedman and March) called their lawsuits “wholly distinct and unrelated” to the NAR litigation as they have targeted REBNY and its listing service, the RLS, which operate mostly in Manhattan.
They specifically asked Bough to strike the entire opt-in aspect of the NAR settlement, and decried the fact that many brokerages were able to garner immunity from that deal without making payments of their own.
“REBNY and NAR have absolutely nothing to do with each other. And they have had nothing to do with each other for three decades,” the March plaintiffs wrote. “Notably, REBNY’s RLS was created eight years after NAR’s Mandatory Offer of Compensation Rule was created.”
While sellers who used the RLS are explicitly included in some of the settlement deals agreed to by big brokerages, the March plaintiffs pointed out that one of the Burnett plaintiffs’ expert witnesses during the Burnett trial explicitly excluded REBNY and transactions in Manhattan from his analysis due to its long separation from NAR. They also noted that several defendants argued that REBNY is a separate entity and market during the failed push to consolidate Burnett copycat cases earlier this year.
A high-profile objector is one of the plaintiffs behind the buyer cases—commission lawsuits making mostly the same factual allegations as the seller cases, but alleging that it was homebuyers that were harmed as “indirect purchasers” of real estate services.
Bough previously ruled that buyers who also sold a home during the relevant time period (roughly the last six years) would be included in separate settlement agreements struck by Anywhere, Keller Williams and RE/MAX in their separate settlement agreements.
Lawyers representing that buyer plaintiff, James Mullis, wrote that the Burnett case “has never advanced claims for damages incurred by homebuyers and cannot now purport to release such claims.”
“The complaint being settled before this Court only sought to represent a class of homesellers and points only to alleged harms to the seller in a given transaction for damages,” they wrote.
Those plaintiffs are also appealing Bough’s ruling regarding the brokerage settlement agreements, and the buyer cases have been partially paused as the issue is litigated in both this case and the appeals court. In their objection, the buyer-case lawyers also cited the DOJ’s previous intervention into another class-action settlement, in which DOJ lawyers wrote that “the buyer-broker commission has a very real cost to homebuyers, who ultimately pay through higher purchase prices.”
Basic issues
Other objectors focused on broader aspects of the settlement that affect—or fail to affect—various elements within the real estate industry.
One other group of copycat plaintiffs focused on what they described as the “grossly disproportionate” payment amounts, as well as making similar arguments as the New York City plaintiffs regarding how their case differed from Burnett.
“Defendants’ franchisees and independent real estate brokerages engaged in their price-fixing conspiracy differently and did so differently in different locations,” they wrote.
A group of potential class members hailing from South Carolina also voiced their objections, also focusing on the likely small payments going out to homesellers—claiming each would receive around $35.
They also questioned whether certain opt-ins and individual settlement agreements were properly executed under the law, going so far as to argue that missing dates, improper signatories, missing mediation sessions and late submissions called into question the validity of the deal (or deals).
“The difficulty (Burnett plaintiffs’ lawyers) has had in administering these settlement negotiations, missing deadlines, failing to post properly executed settlement agreements, and even failing to date those agreements, demonstrates why this should have been left as a state by state class action. A national settlement with the goal of punishing an entire industry for its sins is simply too unwieldy to be administered properly,” they claimed.
Another objector is Tanya Monestier, a University at Buffalo law professor whose legal critiques of the settlement drew attention from the DOJ this past summer. Monestier is also a member of the settlement class, having sold a home on an NAR-affiliated MLS back in 2022.
Her 132-page objection is sharply critical of the NAR deal, characterizing the settlement as insufficient and anti-consumer—“something concocted by lawyers without a full appreciation of how this would play out in the real world.”
“The settlement creates an illusion of change without providing any actual change. The settlement serves to further entrench a system where the seller pays the buyer’s broker fees,” Monestier wrote.
Monestier also objected to the legal fees sought by the plaintiffs’ attorneys, which are likely to total over $340 million.
In asking Bough not to approve the settlement, Monestier cast herself as an objective, neutral party whose main concern is consumer protections. She accused the industry at large, including REALTOR® associations, of purposefully violating the settlement through various “workarounds,” including amending buyer agreements, seller-paid “bonuses” offered to buyer agents, buyer agents soliciting higher fees but then waiving them and putting commission ranges in buyer contracts.
Monestier included dozens of excerpts from REALTOR® association trainings, guidance documents and Q&As, along with a multitude of screenshots of private real estate Facebook groups and real estate-focused forums on Reddit to support her arguments.
“I view these as a widespread practice, explicitly or implicitly endorsed by state realtor groups, brokerages, and NAR,” she wrote.
Other, less formal objections—from members of the real estate community as well as recent homesellers—trickled in over the past few months, though most were not represented by lawyers.
The in-person hearing for Bough to consider the NAR settlement and hear objections is currently scheduled for Tuesday, Nov. 26 in Kansas City, Missouri. Bough has indicated that he will require objectors to attend in person if they want to speak out about the settlement—something that at least some of those writing against the deal pushed back on.
Monestier formally requested the ability to participate in the hearing remotely.
“The in-person requirement serves to stifle the voice of objectors,” she wrote. “No reasonable person would pay thousands of dollars out of pocket to come to a hearing for a settlement which, if approved, would net them a few dollars.”
