A $34 million settlement struck by mega-brokerage eXp and a separate $8.5 million deal agreed to by Weichert have been thrown into significant doubt after Judge Stephen R. Bough, who oversaw the Burnett case, expressed major reservations about the process of the negotiations, ordering both brokerages to turn over documents and communications for his review.
In a hearing last Wednesday, Bough appeared skeptical of the fact that eXp and Weichert conducted negotiations in two separate cases without informing the other parties, with plaintiffs in one case—the largest Burnett copycat, based in Missouri and known as Gibson—alleging the two brokerages received “sweetheart” deals through a so-called “reverse auction,” shopping around for whichever copycat case would settle for the lowest amount.
“I know what the normal process is,” Bough told eXp’s lawyer, James Morsch, according to a court transcript acquired by RISMedia. “I think we can all agree that it’s not normal for a party to conduct two mediations without telling somebody else that that’s what’s going on…I think you would teach every law school class that if there’s going to be two mediations going on, negotiating in good faith means you communicate honestly about that.”
As one of the last, largest brokerages to settle the seller-side commission lawsuits, eXp’s decision to strike a deal in a small Georgia-based copycat (known as Hooper) turned some heads back in October. Weichert also settled in the Hooper case, which is in the very early stages—contrasting with Gibson, which was filed by the same lawyers behind Burnett and has advanced further through motions and discovery.
But with parties disputing basic facts—including whether the Hooper plaintiffs ever examined eXp’s finances and ability to pay (a key factor in class-action settlements) or whether eXp at one point made a higher offer to the Gibson plaintiffs—Bough said there was enough evidence to justify his taking a closer look at what happened.
“Your client brought me into this fistfight,” Bough told Morsch, “and that’s where I’ve allegedly (understood) there were two mediations competing, and at least this group of plaintiffs (in Gibson) didn’t know that your client was also meditating in front of former judges…and so good-faith negotiation in every case—there’s an amount of honesty. I’m assuming your client did, but, you know, trust but also verify.”
eXp, for its part, has defended the settlement, having previously noted that the negotiations with the Gibson plaintiffs ended months before a deal was struck in Hooper.
“We remain focused on securing approval of our settlement of the seller-side commission cases and confident the Georgia judge overseeing the Hooper case will find the settlement to be fair, reasonable and adequate,” an eXp spokesperson told RISMedia via email.
Morsch admitted at the hearing that there was some pressure on eXp to strike a deal, saying it was “problematic” for the company to be “one of the only large brokerages out there that hasn’t settled.”
“We knew at some point we were going to have to settle these cases,” he said.
But allowing discovery into the mediation process would also be very problematic, Morsch argued, because it would give insight into the company’s strategy and “thought process” around the commission lawsuits, which could be leveraged by those objecting to the settlement.
“(T)he reality is other courts in other jurisdictions, including the Eighth Circuit, have consistently denied access to the settlement negotiation materials because they’re sensitive in nature,” Morsch said.
Bough was not convinced, eventually denying eXp’s order to reconsider the discovery process, which will—at least initially—only involve Bough himself as part of an “in camera” review, meaning evidence or information that only a judge views.
“I’m not telling you you’re not going to see (the communications and evidence),” Bough told Brandon Boulware, a lawyer representing the Gibson plaintiffs. “I’m telling you I’m going to see it first.”
What is at stake
As other companies have relatively quickly shown they are willing to pay to avoid a trial or a judgment in the commission cases, eXp and Weichert stood for a long time as outliers. Although both were only named in any commission-focused class action after the Burnett verdict in October of 2023, they waited almost six months after other copycat defendants in Gibson struck deals before finally negotiating with the Hooper plaintiffs.
According to Morsch, “direct communications” with the Gibson plaintiffs ended in April of 2024, and eXp successfully negotiated with the Hooper plaintiffs on October 1 of the same year.
Whether or not eXp paid significantly less than other brokerages was a point of dispute, with Morsch arguing that based on the company’s transaction volume, the amount is aligned with deals Bough has already approved.
“There’s no indication that the amount is dramatically low,” he said.
Boulware dramatically disagreed.
“I was reading (filings in the Hooper case) when I had a cup of coffee. I literally spit out my coffee on my shirt and had to change my shirt,” he said.
He also argued that on its surface, the case was “a textbook case reverse auction,” pointing to a group of law students who were observing the hearing.
“When these students go and read their textbook in a couple years on what is a reverse auction, it’s going to be this case,” he said.
Regardless of the outcome, as Bough sorts through the dispute, the proceedings promise to inject more uncertainty into eXp’s legal path forward, as most brokerages appear ready to put the saga of the commission lawsuits behind them.
It was not immediately clear what would happen if Bough were to determine that the settlement qualified as a “reverse auction.” While Morsch urged him to allow the judge in Hooper—Mark Cohen—to make his own determination regarding the settlements, Bough informed all parties that Cohen or his clerks were listening in to the hearing, and that Bough would be communicating with him on the proceedings.
“But I’m not planning on sending him anything that’s given to me in camera. That’s my inclination,” Bough said.
And while Morsch admitted that eXp did not inform both sets of plaintiffs about the parallel settlement negotiations, he strongly disputed the characterization that the negotiations were in bad faith.
“We didn’t cherry-pick these lawyers. They sued us, and we only went to them after being unsuccessful in negotiating the deal with the Gibson plaintiffs,” he said.
A key dispute is over an email Boulware claimed to have received from the mediator in his negotiations, which he claimed said that “eXp would settle for in excess of $40 million.”
Morsch called this characterization “a complete misstatement.”
“I can assure you, Your Honor, that no email sent to Mr. Boulware by (the mediator) Mr. (Greg) Lindstrom about $40 million ever came to us or ever came to the mediators in our case and certainly never to the Hooper plaintiffs,” Morsch said.
Throughout the hearing, Bough was sharp in his questions and critiques of the defendants, noting that he has been overseeing this particular litigation over more than four years “hyper-aggressively.” He also cautioned Morsch—who teaches class-action law at Loyola Chicago—on his usage of time early in the hearing.
“I’ve got one hour for you. So I’m going to reel you back from the three-hour class actions course from law school, and I know the basics,” Bough said. “Lord knows the Eighth Circuit and the Eleventh Circuit can take judicial notice that I’m aggressive and go at it hard all the time. And so welcome to Courtroom 7B.”
Bough gave the defendants one week to gather and provide the materials for his review.
