Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
In the wake of a revealing and foreboding intervention by the Department of Justice (DOJ) in a commission lawsuit settlement, the broader real estate industry is currently processing the increasingly stark prospect of “decoupled” commissions, or other major fundamental shifts in how the business is practiced. Still moving within this regulatory shadow, however, are the many fractured copycat class-action suits, along with high-profile sexual assault allegations—several of which saw major development holding potentially far-reaching implications for real estate power players.
Here is what you might have missed from the courtroom this past week:
Buyer suits move forward, but HomeServices off on a technicality
In the consolidated super-sized commission suit filed by homebuyers (most class-actions so far have been filed by sellers), a judge allowed plaintiffs to press on with most of their claims, while also nullifying the litigation in two states and removing HomeServices of America as a defendant—at least for now.
Judge Andrea R. Wood, presiding over the cases in the federal Northern District of Illinois, ruled that plaintiffs had successfully drawn a “single, straight-line path by which the (agent’s) commission is passed through to the homebuyer,” meaning buyers can keep seeking damages based on alleged conspiracy and price-fixing by the National Association of REALTORS® (NAR) and big brokerages.
But Wood also ruled that transactions in two states—Kansas and Tennessee—would not go forward, based on the specific antitrust statutes in those jurisdictions. She also dropped HomeServices of America as a defendant, ruling that the Illinois federal court does not have jurisdiction over the company, leaving open the possibility that plaintiffs could amend their accusations.
The case, known as Batton, is still a long way from trial, with a potential class certification unlikely before next year.
eXp agent accused of sexual assault responds
Virtual brokerage giant eXp is facing accusations from several women that it allowed or failed to respond when recruiters drugged and sexually assaulted colleagues at company events, with at least four suing both the company and former agents in federal court.
Last week, two of the people who are accused responded, with Michael Bjorkman, a former eXp agent who was separated from the company two years ago, arguing that the accuser’s recollections of the alleged assaults were too vague to stand up in federal court, and disputing whether his interest in her had anything to do with recruitment goals.
Bjorkman contrasted his position with disgraced movie producer Harvey Weinstein, saying that there was no explicit offer of career advancement in his interaction with her, something the woman disputes.
Bjorkman’s girlfriend at time, Emily Keenan, who is also accused of participating in the assaults, issued a brusque response to the lawsuit, writing 140 times across 18 pages that she doesn’t have “knowledge or information sufficient to form a belief as to the truth” of specific events, and “therefore denies them.”
eXp has not yet responded to the accusations in this lawsuit, and last week requested an extension of time, as the wife of one of the company’s attorneys was scheduled to give birth on the day of the deadline.
Bjorkman and another former eXp agent, David Golden, are also facing similar claims from more women in a California federal court.
RE/MAX addresses lawsuit repercussions in earnings call
At the company’s Q4 and full-year 2023 earnings conference call last week, RE/MAX briefly addressed the company’s position in regard to commission suits, looking forward to a final approval of the company’s settlement this spring.
RE/MAX CFO Karri Callahan fielded a question from an investor who pointed to new disclosures the company filed related to commission lawsuits, and referenced a recent intervention by the Department of Justice in a separate ongoing class-action suit, asking how long the litigation will be an “overhang” for the company.
“Those disclosures relate to some copycat cases that had subsequently been filed after (the Burnett verdict),” she explained. “Important to note, our settlement does cover and releases us on claims for homesellers on a nationwide basis.”
Callahan added that the company is “cautiously optimistic” that a judge will grant final approval of the settlement on May 9, which will make those copycats “go away—” though it remains unclear if RE/MAX will still have to face ongoing lawsuits filed by homebuyers, with a judge recently allowing those separate claims to go forward.
Homesnap dropped from NYC commission suit
Homesnap, the CoStar-owned consumer portal, was dropped from a class-action suit filed by recent homesellers in that region, though the reasons for this were not immediately clear.
The lawsuit, known as March v. Real Estate Board of New York (REBNY), is notable because it encompasses a region independent of NAR. REBNY split from the national association in the 1990s, and agents, associations and listing services in the area are not subject to NAR rules or national MLS policy—though the lawsuit makes similar claims to other class-action suits, based on similar rules around commissions.
Homesnap, a consumer portal that was purchased by CoStar in 2020 for $250 million, collaborated with REBNY on a proprietary New York consumer listing portal called Citysnap. That service was meant to bring a “superior real estate solution” to the “unique” real estate market of New York City.
Citysnap and REBNY could not immediately be reached for comment.
