Commission lawsuit: HomeServices files motion for judgment as a matter of law

By BrokerOwner.net October 23, 2023 Housing News

KANSAS
CITY,
Missouri
—
The
second
week
of
the

Sitzer/Burnett
class-action buyer
broker
commission antitrust
lawsuit kicked
off
with
a
bang.

Just
prior
to
the
plaintiffs
resting
their
case
late
Monday
afternoon,

HomeServices
of
America,
one
of
the
three
remaining
defendants
in
the
commission

lawsuit,
filed
a
motion
for
judgment
as
a
matter
of
law.

A
judgment
as
a
matter
of
law
is
permissible
if
there
is
no
legally
sufficient
basis
for
a
reasonable
jury
to
find
for
the
nonmoving
party
(in
this
instance,
the
plaintiffs)
on
the
issue.

In
the
motion,
HomeServices
claimed
that
no
evidence
has
been
presented
to
show
they
conspired
with
the

National
Association
of
Realtors

(NAR)
and
other
brokerages
on
rules
for
commissions.

The
day
started
with
video
depositions
of
four
real
estate
brokerage
executives.

Rosalie
Warner,
a
corporate
representative
for
HomeServices
of
America
and
its
affiliates,
was
the
first
to
appear.
During
her
deposition,
Warner
agreed
that
HomeServices’
franchise
agreements
stipulate
that
the
independent
contractors
need
to
abide
by
the
NAR
Code
of
Ethics,
but
that
agents
don’t
necessarily
have
to
belong
to
NAR.
She
also
agreed
that
every
HomeServices
agent
in

Missouri
is
a
member
of
the

MLS
and
that
the
firm
advocates
for
clear
cooperation.

In
the
deposition,
Michael
Ketchmark,
the
lead
attorney
for
the
plaintiffs,
asked
Warner
to
comment
on
a
training
script
from
HomeServices
CEO

Gino
Blefari
in
which
he
said
that
when
he
was
an
agent,
he
was
supremely
confident
and
would
tell
prospective
clients
that
while
commissions
are
negotiable
“they
only
go
up
from
6%.”
Warner
claimed
that
Blefari’s
statements
were
not
a
rule
for
agents
to
follow,
but
an
example
of
what
Blefari
would
do.

Warner
also
testified
that
HomeServices
of
America
has
nothing
to
do
with
the
commission
splits
determined
by
franchisees.
During
her
testimony,
Warner
stated
that
Realtors
should
cooperate
and
share
their
commission
when
it’s
in
the
client’s
best
interest
but
there’s
not
necessarily
an
obligation
to
do
so.

She
also
said
that
HomeService’s
guidelines
state
that
listing
brokers
need
to
compensate
buyer
brokers
only
when
the
property
is
in
the
MLS.
In
her
testimony,
she
noted
that
training
modules
receive
very
few
views.
According
to
Warner,
the
module
that
mentions
commissions
had
just
138
views
in
2020
and
2021,
combined,
among
HomeServices’
51,000
agents.

The
next
video
deposition
presented
was
that
of
Kevin
Goffstein,
the
president
of

Berkshire
Hathaway
HomeServices
Alliance
and
a
board
member
of

MARIS,
the
local
MLS.
According
to
Goffstein,
MARIS
has
between
350
and
450
members
most
years.

Under
questioning,
Goffstein said
that
each
agent
has
a
contract
that
includes
NAR
rule
clauses
and
that
the
contract
also
tells
agents
that
NAR
membership
dues
are
needed
by
January.

In
addition,
the
contract
stipulated
that
agents
must
join
their
local
Realtor
association.
Also
featured
in
agent
contracts
is
a
commission
guidelines
section
that
calls
for
a
minimum
of
2.7%
for
buyer
brokers
and
that
overall
broker
commissions
were
to
be
between
6%
to
10%.

Former
association
general
counsel
for
NAR
Cliff
Niersbach
was
next,
with
the
court
viewing
his
video
deposition.
During
his
deposition,
Niersbach
was
questioned
about
a
letter
sent
in
2012
by
Linda
O’Connor
to
NAR’s
Professional
Standards
Committee,
which
both
she
and
Niersbach
were
members
of,
warning
the
committee
that
the
Participation
Rule
was
“the
ultimate
form
of
restraint
of
trade.” O’Connor
told
the
112-member
committee
in
her
letter
that
the
rule
should
be
eliminated.

Niersbach
testified
that
the
Professional
Standards
Committee
only
dealt
with
NAR’s
Code
of
Ethics,
so
O’Connor’s
suggestion
was
not
advanced.
He
also
agreed
with
the
fact
that
there
is
no
evidence
he
communicated
with
her
to
put
the
issue
in
the
appropriate
committee
to
look
into
it.

Ketchmark
asked
Niersbach
why
the
committee
didn’t
investigate
O’Connor’s
complaint
if
NAR
rules
were
inflating
commissions.
Niersbach
replied
that
he
did
not
agree
with
the
question
that
NAR
rules
have
increased
commission
costs.

The
final
witness
of
the
morning
was
Darrell
King,
a
former
COO
and
compliance
officer
with

Keller
Williams.
In
his
video
deposition,
King
said
that
Keller
Williams
does
not
have
an
anti-trust
policy.
King
was
then
presented
with
evidence
that
the
firm
has
a
section
about
it
in
their
guidelines,
to
which
King
said,
“We
don’t
violate
anti-trust
laws,”
however
he
agreed
with
Ketchmark
that
the
firm
has
never
investigated
this.

King
also
said
that
Keller
Williams
does
not
tell
agents
what
commission
to
charge.
In
response
to
this,
Ketchmark
brought
up
slides
shown
by

Gary
Keller
at
a
company-wide
conference
depicting
sell-side
and
buy-side
commissions.

King
replied
that
he
did
not
think
it
was
wrong
for
Keller
to
talk
about
national
commission
levels
since
“it
doesn’t
mean
anything
to
local
market
centers.”
King
added
that
Keller’s
message
was
that
agents
should
have
the
confidence
and
be
open
to
“having
a
conversation”
with
their
clients.

King
also
said
that
Keller
Williams
does
not
tell
agents
they
shouldn’t
negotiate
except
in
extreme
cases.
Again,
Ketchmark
pulled
out
Keller
Williams
guidelines,
which
state
that
agents
shouldn’t
negotiate
except
in
extreme
cases
but,
ultimately,
they
can
make
their
own
decision
of
whether
or
not
to
negotiate.

The
defense
started
its
testimony
late
Monday
after
the
plaintiffs
rested
their
case.

Susan
Millett,
a
past
NAR
president
who
was
instrumental
in
changing
a
key
rule
that
eventually
became
the
Clear
Cooperation
Rule,
was
the
first
to
testify.

According
to
Millet,
before
1996
instead
of
there
being
an
agent
who
represented
the
seller’s
interests
and
an
agent
who
represented
the
buyer’s
interests,
it
was
typical
that
the
seller
had
an
agent
who
represented
their
interests
and
then
there
would
be
a
so-called
“sub-agent”
who
worked
with
the
buyer
but
didn’t
represent
their
interests.

Most
states
began
writing
laws
that
called
for
a
change
to
the
practice,
and
NAR
itself
began
to
see
more
buyer
agents
coming
into
the
marketplace.
In
1992,
a
committee
suggested
the
rules
change
from
a
seller
sharing
commission
with
a
sub-agent
to
a
seller
sharing
commission
with
a
participant
in
the
MLS.

Millett
said
this
rule
change,
which
went
into
effect
in
1996,
was
not
about
commissions
but
about
providing
better
representation
and
creating
a
better
marketplace.

According
to
Millett’s
testimony,
NAR
heard
that
sub-agency
wasn’t
working,
so
the
trade
group
focused
on
the
rule
about
seller’s
agents
sharing
commissions
with
sub-agents.

“We
changed
the
rule
to
allow
—
not
force
—
listing
agents
to
make
offers
of
commission
sharing
to
other
MLS
participants,”
Millett
said.

During
his
cross-examination,
Ketchmark
noted
that
the
rule
change
Millett
helped
create
became
heavily
focused
on
commissions
as
the
years
passed.

The
defense
next
called
on
NAR
CEO
Bob
Goldberg
to
testify.
Goldberg
said
NAR
never
conspired
with
the
corporate
defendants
on
commissions.
He
stated
that
to
be
a
Realtor
you
adhere
to
the
group’s
Code
of
Ethics.

He
also
noted
that
the
is
no
requirement
that
a
real
estate
agent
has
to
join
the
trade
organization.
Goldberg
testified
that
while
there
are
roughly
2.5
million
real
estate
licensees
in
the
U.S.,
only
1.58
million
of
them
are
NAR
members.

When
asked
why
sellers
and
buyers
would
choose
to
use
a
NAR
member
versus
a
non-affiliated
agent
or
doing
a
for
sale
by
owner,
Goldberg
said
that
NAR
members
have
high
professional
standards,
experience
and
deep
knowledge
of
trends
and
neighborhoods,
which
benefit
their
clients.

Goldberg
also
noted
that
homeowners
who
sold
their
homes
without
a
professional
made
20%
less,
on
average,
than
those
who
used
a
NAR
member,
according
to
a
study
published
in
Realtor
Magazine.

“The
beauty
of
this
industry
is
it’s
all
about
choice,”
Goldberg
said.

Goldberg
also
testified
that
NAR
does
not
track
commissions
or
“touch”
what
commissions
its
members
charge.
However,
he
did
say
that
NAR
members
are
required
to
adhere
to
NAR’s
Code
of
Ethics
and
that
while
NAR
doesn’t
own
or
operate
MLSs,
it
does
have
model
rules
for
MLSs.
The
NAR
CEO
also
said
that
it
was
preposterous
that
anyone
would
claim
NAR
is
in
favor
of
higher
commissions
so
the
trade
group
could
receive
$150
per
member
in
dues.

According
to
Goldberg,
NAR
takes
antitrust
law
very
seriously
and
it
instructs
members
to
not
fix
or
control
commissions.
He
stated
that
broker
compensation
is
solely
a
matter
of
negotiation
between
the
NAR
member
and
their
client.