Above: the Federal District Court of Western Missouri in Kansas City on Monday, October 16, where the Burnett vs. NAR trial is being presided over by Judge Stephen R. Bough.
KANSAS CITY—The commencement of the highly anticipated Burnett vs. the National Association of REALTORS® (NAR) class action trial was delayed this morning as attorneys continued to vet potential jurors during an extended voir dire process. Having sold a home in Missouri during the timeframe in question (2015 – 2022), several jurors were immediately dismissed as potential members of the class.
At the same time, lawyers for both sides continue to spar over evidentiary issues, with the plaintiffs filing a last-minute objection to defendants relying on state laws in the multidistrict case, while the defendants accused the plaintiffs of ignoring a ruling on introducing certain types of evidence.
Taking place at the Federal District Court of Western Missouri, located in Kansas City, the trial is presided over by the Honorable Stephen R. Bough. In his statement to the more than 60 potential primary and alternate jurors present, Judge Bough explained the crux of the plaintiffs’ allegations: that a conspiracy existed among the defendants to follow NAR rules designed to inflate or stabilize real estate commissions, an accusation that violates the Sherman Antitrust act. Bough acknowledged the gravity of the task before jurors: to “ask citizens to decide these enormously important issues,” adding that this is the biggest jury pool that has been called for a non capital crime “in a long time.”
Multiple attorney teams were present for the defendants, NAR, along with corporate defendants Anywhere Real Estate, HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLS, RE/MAX, LLS and Keller Williams Realty, Inc.
The unique and tightly woven structure of organized real estate appeared to be playing a significant role in the legal maneuvering ahead of the trial.
The defendants appeared to have won a partial victory when Bough ruled last week that the plaintiffs cannot use the close relationship between franchises and subsidiaries to argue a conspiracy took place, but this morning, lawyers for BHHS accused plaintiffs of ignoring that ruling.
According to a court filing, plaintiffs are planning to play a video clip of the “volatile” deposition of Rosalie Warner, senior vice president, network services at HSF Affiliates LLC, who was questioned about how a real estate executive could be CEO of two ostensibly competing companies.
The foundational issue of price fixing, and whether real estate companies overtly set commission rates, also promised to be a focus early on. Both Warner and Gino Blefari, CEO of HomeServices of America, were questioned pointedly in their depositions regarding agent training that highlighted a 6% commission rate, including one where Blefari said that he would negotiate the 6% rate—but only if it went up.
Jury selection also clearly revealed the unique, pervasive influence of residential real estate and homeownership in American communities.
According to lead attorney for the plaintiffs, Michael Ketchmark of Kansas-based Ketchmark & McCreight, the class action suit represents 263,000 transactions that took place during the stated timeframe, with each member of the class paying approximately $7,000 in unwarranted commissions, resulting in a single requested settlement of $1.8 billion.
Ketchmark delved into the many facets of the case in order to determine if jurors’ backgrounds and/or pre-existing viewpoints would preclude them from providing an unbiased review of the facts presented by both sides during the trial. He emphasized that, unlike a criminal case which requires jurors to deliver a verdict “beyond a reasonable doubt,” a verdict in a civil case is based on a “preponderance of evidence.”
Most juror candidates are homeowners, and many have sold homes. Some had previous training as real estate professionals, and several reported real estate professionals within their families—a son, a cousin, a grandmother, a sister-in-law. Others reported both fond memories and bad experiences when working with real estate agents.
Ketchmark also questioned jury candidates regarding their feelings about internet commerce (potentially setting the stage for an argument against buyer agency), antitrust rules and trade associations. Before breaking for lunch, Timothy Ray with Chicago-based Holland & Knight, the law firm representing Keller Williams, also questioned the juror candidates, asking if they feel “consumers should have choice and be free to make decisions that benefit themselves.” He also told the court that “neither Keller Williams or its agents conspired with anyone to do anything.”
Aside from the potential $1.8 billion paid to those home sellers who comprise the class action, the outcome of the case could also signal a paradigm shift in how REALTORS® earn a living, placing a monumental decision in front of jurors. As Ketchmark told the court this morning, “The most powerful seats in this courtroom are in the jury box,” adding that the jurors have the “power to change lives.”
The voir dire continues this afternoon, with Judge Bough stating that the jury would be in place by 2:30 p.m. CT this evening.
RISMedia is on location in Kansas City to report on the trial. Stay tuned for ongoing updates.
