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The bombshell Sitzer | Burnett verdict is now two weeks old, but the flood of similar new cases continues — including, this week, a new lawsuit out of Texas that targets both local Realtor associations and teams.
Texas-based homebuilder QJ Team LLC and holding company Five Points Holdings filed the case Monday in the U.S. District Court for the Eastern District of Texas. Like the Sitzer | Burnett suit, as well as others that began before and after the recent verdict, the new case slams the practice of having sellers’ agents offer compensation to buyers’ agents. The suit describes this practice as a violation of antitrust laws and the result of a “concealed conspiracy” on the part of the National Association of Realtors and franchisors Anywhere and RE/MAX.
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However, the new Texas case is noteworthy because despite calling out NAR, Anywhere and RE/MAX, none of those entities are named as defendants.
Rather, the defendants include the Texas Association of Realtors, the Austin Board of Realtors, the San Antonio Board of Realtors, the MetroTex Association of Realtors, and the Houston Association of Realtors. Other defendants include Keller Williams, Fathom Realty, Side, Tim Heyl’s the Heyl Group Holdings, and numerous other brokerages and teams. In total, there are more than two dozen defendants listed in the case.
This new case — along with one filed last week against the Real Estate Board of New York and other firms — consequently represents something of a novel twist in the ongoing bombshell commission saga; in the past, high-profile antitrust commission lawsuits tended to focus on national franchisors and NAR, which operates across the entire U.S.
The case’s complaint also accuses two teams, the Hexagon Group and The Michael Group, of violating the Texas Deceptive Trade Practices Act, which prohibits deceptive or misleading business practices. The complaint doesn’t elaborate on how the teams allegedly broke the law but says they did so knowingly.
The new Texas suit ultimately seeks class-action status — in this case, on behalf of all homesellers in Texas who put their properties on a multiple listing service and paid a “buyer broker commission from November 13, 2019, until the present.”
Among other things, the suit argues that NAR, local MLSs and the various defendants “stifle” competition and inflate costs to consumers. The “conspiracy” also allegedly forces sellers to pay for services that in a “competitive market and in the absence of the defendants’ anticompetitive restraint, would typically be borne by the homebuyer.”
“These anticompetitive measures favor the defendants by enabling brokers to impose charges on homesellers beyond competitive thresholds and thwarting competition from innovative or lower-cost alternatives,” the complaint argues.
Such arguments echo those made in court during the Sitzer | Burnett case, where attorneys for a group of homeseller-plaintiffs in Missouri argued that a real estate industry conspiracy was inflating consumer costs and violating antitrust laws. A jury ultimately found that argument persuasive and, after just two hours of deliberation, awarded the plaintiffs $1,785,310,872 in damages, which will be automatically trebled to $5.356 billion.
Immediately following the verdict — which NAR has vowed to appeal — an attorney representing the plaintiffs filed yet another, similar case, now known as Gibson, against a new series of defendants. Other commission-based suits in Illinois, South Carolina, and New York soon followed as well. Those new cases also add to a group of suits, including Moehrl, Batton 1 and Nosalek, which predate the Sitzer | Burnett verdict and which are slowly moving through the courts.
The point, then, is that there are a lot of commission-focused antitrust cases, and the number is steadily rising.
Reached for comment, the Texas Association of Realtors told Inman in an email Tuesday that it “stands by the value of the professional expertise that its members provide to their clients.”
“We are reviewing the filing and will respond to it accordingly,” the email added.
Keller Williams referred Inman to a previous statement on the Sitzer | Burnett case, which expressed disagreement with the verdict. The statement adds that the company “followed the law regarding cooperative compensation and stands by the evidence presented on the 100-year-old practice of sellers’ agents offering commissions to other agents who help market and sell homes.”
Fathom Realty declined to comment on the case. Side also decline to comment, citing a policy of not speaking out on pending litigation.
The Houston Association of Realtors told Inman it was reviewing the case and is “unable to comment at this time.”
Inman will update this story as other defendants respond to requests for comment.
The complaint in the new Texas case ultimately concludes by asking for, among other things, a jury trial, unspecified damages and an injunction that would prevent the defendants from requiring sellers to pay buyers’ agent commissions.
Read the full complaint here:
Update: This post was updated after publication with comments from various defendants in the case, as well as additional details from the complaint.
Email Jim Dalrymple II