Wells Fargo has agreed to pay $1 billion to settle a class action lawsuit that accuses the bank of hurting investors by overstating how much progress it made fixing up its practices in the aftermath of its fake accounts scandal.
The settlement, if approved by the court, would be among the largest recoveries from a securities class action lawsuit of all time, according to the plaintiffs’ attorneys.
Plaintiffs include pension funds in Mississippi, Rhode Island and Louisiana.
“If approved, this settlement will help compensate hundreds of thousands of investors – state employees, nurses, teachers, police, firefighters and others – whose critical retirement savings were impacted by Wells Fargo’s fraudulent business practices,” Steven Toll, managing partner at Cohen Milstein Sellers & Toll, said in a Monday release.
The National Association of Realtors agreed to changes that could trim the commissions paid to agents as part of the deal reached with co-lead counsel at Ketchmark and McCreight, Boulware Law, Williams Dirks Dameron, Hagens Berman, Cohen Milstein, and Susman Godfrey.
Journalists refer to it as “above the fold.” The top half of the front page is reserved for the big stuff.
And there, last week, atop The New York Times, The Washington Post, and The Wall Street Journal sat stories about a$418 million settlement that the National Association of Realtors reached to resolve antitrust claims brought on behalf of home-sellers across the country. Perhaps bigger than the number, NAR agreed to shake up the industry practice where the seller’s agent shares commissions—usually 5% to 6% of the total sale price—with the buyer’s real estate agent. Critics have argued that the practice inflates commissions and the overall cost of residential real estate in the U.S.
Our Litigators of the Week are co-lead counsel in the proposed settlement at Ketchmark and McCreight, Boulware Law, Williams Dirks Dameron, Hagens Berman Sobol Shapiro, Cohen Milstein Sellers & Toll, and Susman Godfrey.
The Litigation Daily quizzed Cohen Milstein’s managing partner Benjamin Brown, a driving force in the first-filed suit in Illinois, about how the settlement is poised to change the real estate industry.
Lit Daily: What was at stake in this litigation?
Ben Brown: The amount of money Americans spend annually for real estate brokers is staggering and far higher than in other countries. We knew this litigation was the best chance private antitrust enforcement would have to fix this broken market. While there was potentially a significant monetary recovery if we won, we always recognized that the future value of significant injunctive relief would dwarf the amount of money that could realistically be recovered. So, from the start, the litigation team always approached this case with a goal of changing the way homes are listed and sold in the United States.
How did you and your firm get involved?
We were approached by a realtor and consumer advocate named Doug Miller. Doug had a wealth of knowledge about the industry but no formal antitrust or economics background. A small team at my firm worked for months with Doug and a couple of expert economists to build the case. Then we reached out to partners and friends in the bar to build a formidable litigation team to share the considerable risk of a litigation of this scope and magnitude.
Who all ultimately ended up working on the plaintiffs’ team and how did you divide the labor?
There were many folks involved, but the key attorneys on the Moehrl team were my partner, Robby Braun and myself, Steve Berman and Rio Pierce from Hagens Berman, and Marc Seltzer, and Beatrice Franklin at Susman Godfrey. Robby was really the ringmaster throughout the case but the three firms worked as equal partners. Later, we joined forces with Brandon Boulware’s and Mike Ketchmark’s firms from the Kansas City follow-on case. Their team’s commitment to the litigation and trial skills added tremendous value. Despite the size of the combined team, we have managed to work well together as equal partners.
NAR has been the subject of a couple of DOJ probes over the past decades. Why did it take so long for a private antitrust suit of this sort to come together?
Private and public antitrust enforcers had been discussing broker commissions seemingly forever. But this was a particularly daunting case. Many firms could not afford it because the case required tens of millions of dollars of investment and looked like one that could never settle prior to trial. I also think previous antitrust cases, public and private, were not properly focused on the buyer broker commission rule. The industry currently mandates that sellers offer a blanket and effectively non-negotiable commission to buyer brokers. I think in a decade, people will look back and marvel at how it was that this persisted for so long.
The plaintiffs in the Missouri suit made it to trial first. Was there any tension over that pacing? You filed your case first and they made it to trial first, after all.
Candidly, there was a bit of tension at first. The Missouri case was a smaller case with smaller firms that piggybacked on our filing. But we litigated alongside those firms and soon saw how invested they were in doing the case the right way. Obviously, Mike Ketchmark in particular is a very experienced trial lawyer and the Missouri verdict has benefited all plaintiffs.
What did you learn about your claims by how that trial played out with a $1.8 billion conspiracy verdict in November against NAR and two brokerage firms?
The biggest thing we learned from the trial was how easily the jury understood our case. When you live with a case for years and get into the weeds, sometimes it’s easy to lose sight of the forest. People understand that when the brokers together set up a rule that effectively eliminates all price competition for their services, prices are going to be inflated. People understand it’s unnatural to have sellers paying for the brokers on the other side of their negotiations.
A split Ninth Circuit panel on Thursday affirmed certification of a damages class of Meta Platforms advertisers who were allegedly deceived about Facebook’s “potential reach” tool, but upended certification of an injunction class, telling the district court to take a fresh look at whether the lead plaintiff actually has standing.
The panel majority, in a published opinion, affirmed a California federal judge’s order certifying a class of advertisers who claim Meta raked in money by misrepresenting the potential reach of advertisements to Facebook users by allegedly including fake and duplicate accounts, rejecting Meta’s argument that this misrepresentation does not present a common question across the class.
The advertisers allege that Meta inflated the potential reach of ads on its platforms by stating that “potential reach” was an estimate of people, when it’s actually an estimate of accounts, according to the opinion. Meta argues that this alleged misrepresentation is a numerical discrepancy between people and accounts, rather than people being substituted for accounts, the opinion states.
“Under its theory, Meta contends the misrepresentations materially varied because the numerical value of the discrepancy differed for each individual advertiser based on its advertising budget and targeting, and thus there was no common misrepresentation among the class,” the majority said. “We disagree.”
. . .
Geoffrey Graber of Cohen Milstein Sellers & Toll PLLC, lead counsel for the advertisers, told Law360 on Thursday, “We are very happy with today’s Ninth Circuit ruling. We now look forward to showing the evidence at trial that Meta knew about this inflated reach issue for years and yet continued to take advantage of advertising customers.”
. . .
The advertisers are represented by Geoffrey Graber, Andrew N. Friedman, Karina G. Puttieva, Madelyn Petersen and Eric A. Kafka of Cohen Milstein Sellers & Toll PLLC and Charles Reichmann.
A proposed class of eyeglass wearers is asking a New York federal court to grant preliminary approval of a $39 million settlement to end a suit alleging LensCrafters misled consumers by advertising that its AccuFit Digital Measurement System was five times more accurate than competitors, having reached the agreement less than two weeks before trial.
In a motion filed Monday, the proposed class, led by Thomas Allegra, urged the court to give the go-ahead on the deal with Luxottica Retail North America, which does business as LensCrafters, and bring an end to nearly six years of litigation over the measurement system.
The trial had been scheduled to begin on July 10 but was called off after the parties alerted the court they had finalized a settlement agreement and entered into that agreement on June 27.
In the suit, the proposed class had alleged that LensCrafters had charged a premium for eyeglasses made with the AccuFit system, having advertised that the system allows for more accurate measurements of the distance between a customer’s pupils to within a tenth of a millimeter, and thus the glasses have greater precision than those offered by other companies.
The class claimed, however, that even if the AccuFit system could produce such precise measurements, when it came to actually manufacturing glasses, LensCrafters was still using decades-old technology that could only use measurements of a full millimeter.
. . .
The proposed class is represented by Geoffrey A. Graber, Andrew N. Friedman, Brian E. Johnson, Claire Torchiana and Theodore J. Leopold of Cohen Milstein Sellers & Toll PLLC.
Five of Cohen Milstein’s attorneys have been appointed to serve on Law360 editorial advisory boards for its Benefits, Competition, Consumer Protection, Discrimination, and Wage & Hour sections.
- Daniel Sutter – Benefits
- Daniel McCuaig – Competition
- Eric Kafka – Consumer Protection
- Harini Srinivasan – Discrimination
- Christine E. Webber – Wage & Hour
The editorial advisory boards provide feedback on Law360’s coverage and expert insight on how best to shape future coverage.
Groundbreaking $418 million legal agreement could drive down commission rates and shrink the number of real-estate agents
The National Association of Realtors has reached a nationwide settlement of claims that the industry conspired to keep agent commissions high, it said Friday, a deal set to usher in the biggest changes to how Americans buy and sell homes in decades.
The $418 million agreement will make it easier for home buyers to negotiate fees with their own agents and could lead more buyers to forgo using agents altogether, which has the potential to drive down commission rates and force hundreds of thousands of agents out of the industry.
NAR agreed to abandon longstanding industry rules that have required most home-sale listings to include an upfront offer telling buyers’ agents how much they will get paid. Under a system in place for a generation, sellers have typically set buyers’ agents fees. Consumer advocates say the arrangement has prevented buyers from negotiating to save money and kept commissions in the U.S. higher than in most of the world.
. . .
“Buyers were cut out pretty much entirely from negotiating commissions and I think this will invite them under that tent,” said Benjamin Brown, co-chair of the antitrust practice at Cohen Milstein, one of the firms representing plaintiffs in the Chicago case.
The National Association of Realtors will pay $418 million in damages and will amend several rules that housing experts say will drive down housing costs.
American homeowners could see a significant drop in the cost of selling their homes after a real estate trade group agreed to a landmark deal that will eliminate a bedrock of the industry, the 6 percent sales commission.
The National Association of Realtors, a powerful organization that has set the guidelines for home sales for decades, has agreed to settle a series of lawsuits by paying $418 million in damages and by eliminating its rules on commissions. Legal counsel for N.A.R. approved the agreement early Friday morning, and The New York Times obtained a copy of the signed document.
The deal, which lawyers anticipate will be filed within weeks and still needs a federal court’s approval, would end a multitude of legal claims from home sellers who argued that the rules forced them to pay excessive fees. Representatives for N.A.R. were not immediately available for comment.
Housing experts said the deal, and the expected savings for homeowners, could trigger one of the most significant jolts in the U.S. housing market in 100 years. “This will blow up the market and would force a new business model,” said Norm Miller, a professor emeritus of real estate at the University of San Diego.
. . .
“The forces of competition will be let loose,” said Benjamin Brown, co-chairman of the antitrust practice at Cohen Milstein and one of the lawyers who hammered out the settlement. “You’ll see some new pricing models, and some new and creative ways to provide services to home buyers. It’ll be a really exciting time for the industry.”
In real estate, the saying goes, location is everything.
How apt, then, that in the multibillion-dollar litigation that stands to upend the residential real estate industry, the place where the cases are heard has proven to be pivotal.
Because location doesn’t just matter when you’re buying a house. It can also prove fateful in litigation.
Later this month, a panel of judges will hear arguments to decide whether to consolidate about 20 cases naming more than 200 real estate industry players, including the National Association of Realtors, or NAR — and if so, where to centralize them.
Plaintiffs allege real estate agent commissions — typically 5% to 6% of a home’s sale price — have been artificially inflated for decades, the result of an antitrust conspiracy to stifle competition.
The plaintiffs already scored a massive win in Kansas City, Missouri, when a federal jury in October awarded a class of home sellers nearly $1.8 billion. (The penalty could top $5 billion if U.S. District Judge Stephen Bough agrees to triple the damages.)
No surprise, that’s where most plaintiffs’ lawyers would like to keep on litigating, opens new tab.
As for defense counsel — a veritable Who’s Who of Big Law — they stress that the allegations are without merit.
In a pending motion for a new trial, NAR argues that broker commissions are not fixed and that the jury verdict “defies precedent, logic, and the evidence.”
If the Judicial Panel on Multidistrict Litigation decides centralization is in order, defendants are pushing for anywhere but Kansas City, suggesting Chicago, Pittsburgh or Plano, Texas, as alternative sites.
. . .
Sure enough, Ketchmark’s case leapfrogged ahead.
For the Chicago lawyers, it “seemed like a bitter pill to swallow that we didn’t get to try the case first,” Benjamin Brown, co-chair of Cohen Milstein Sellers & Toll’s antitrust practice, told me.
But he credits Ketchmark for skillfully litigating his case and delivering a verdict that provides powerful leverage in settlement negotiations, to their collective benefit.
Defendants Anywhere Real Estate and RE/MAX settled on the eve of trial, while Keller Williams cut a deal after the verdict.
Their combined $208.5 million payout, subject to judicial approval, covers both the Kansas City and Chicago cases, as well as another follow-on case filed in 2020 in Massachusetts, according to court papers and a press release, opens new tab.
“I’ve really got to hand it to (Ketchmark) and his whole team,” Brown said. “Knowing what we know today, I wouldn’t do it differently.”
Meat industry giants Tyson and JBS have agreed to pay a combined $127.2 million to resolve a lawsuit accusing them of suppressing workers’ pay at processing plants, marking the largest deals so far in the wage-fixing case in Colorado federal court.
Lawyers for the workers on Friday asked a judge, opens new tab to preliminarily approve the two deals, which would push total settlements to $138.5 million since the class-action lawsuit was filed in 2022.
A class estimated at tens of thousands of red meat processing workers at 140 plants alleged a years-long conspiracy among JBS, Tyson and other companies to artificially keep wages low. The lawsuit said the companies violated antitrust law by sharing confidential compensation data through surveys and meetings.
. . .
For plaintiffs: George Farah of Handley Farah & Anderson; Shana Scarlett of Hagens Berman Sobol Shapiro; and Brent Johnson of Cohen Milstein Sellers & Toll.
Ethan Wu speaks to Financial Times legal correspondent Joe Miller
Ethan Wu: If you have bought or sold stocks in the US, you most likely have interacted with a high-frequency trader. Even if indirectly, these big trading houses make US stock markets work. But they’re a little bit of a black box. A recent lawsuit suggests that may be changing. This is Unhedged, the markets and finance show from the Financial Times and Pushkin. I’m reporter Ethan Wu here in the New York studio, joined today by legal correspondent Joe Miller to help us break open the black box. Joe, are you using like a crowbar or like, how are you cracking this one open?
Joe Miller: No, I’m using my ability to read 85 pages of dense legal filings without giving up or quitting.
Ethan Wu: You’re really selling your job to the audience.
Joe Miller: I know, right?
Ethan Wu: It sounds truly thrilling.
Joe Miller: I love this stuff, though.
Ethan Wu: So Joe, you’ve just written, you know, a really interesting, excellent column about a small little biotech company, the small little biotech company that could. And by could I mean sue the big high-frequency traders, the titans of Wall Street, about alleged spoofing. We need to walk through this because it’s technical and it’s granular, but I think it really gets to the heart of a big conflict that’s been going on for, I mean, at this point, a decade on Wall Street.
Joe Miller: Yeah. Ethan, as you know, I am a card-carrying nerd. But even for me, this is quite nerdy, but I think very interesting. So stick with me. In late 2022, a small Maryland biotech which is developing a vaccine for brain cancer, one of the most pernicious forms of cancer, filed this bombshell lawsuit. And this lawsuit named a bunch of companies known as market makers, including Virtu. And you may have heard of Ken Griffin’s Citadel.
Ethan Wu: Ken Griffin of Dumb Money fame, Citadel Securities.
Joe Miller: Citadel Securities, yes, correct. Yeah, thank you for that correction. And essentially, the allegation which we can get into in detail was that these enormous companies, you know, multibillion dollar companies who control more and more of trading on New York stock exchanges, that they were doing something called spoofing. And essentially what they were doing is they were targeting a stock, in this case, a small company, you know, trying to do good in the world. And they were putting in fake sell orders on those stocks, sending a signal to the market because there were all of these sell orders going in, that they were down on this stock, waiting for the stock price to plummet and then buying back that stock at a much cheaper price. This was a, you know, it’s fair to say this is an explosive allegation. And not very many people thought that this would go very, very far.
Ethan Wu: But the magistrate in the case seems open to it.
Joe Miller: Exactly. So I was following this, you know, without much hope of it ever going anywhere. And then I’m standing in the line, actually for one of the Trump hearings the other day and I’m just checking, you know, the latest orders that have been filed in various cases. And I see that this case has been dismissed. And usually that would be the end of that. But there was a long what’s called R&R, which is a report and recommendation from a magistrate judge on why it should be dismissed.
And as I’m reading this, it’s like he’s validating every single one of the allegations. When I say validating, it’s not going to the truth of those allegations but saying, hey, on the face of it, these allegations are at least plausible enough to proceed. And the only reason he dismissed the case was he said that he didn’t think that the plaintiffs had done enough to tie the stock losses on various days to specific trading. It’s a technicality which he urged them to fix and to refile. But all of a sudden this, for lack of a better word, conspiracy theory, which was what most people had been painting this lawsuit as. And it you know, it lit up the Reddit threads, the sort of Reddit threads that were behind the meme stock trading. Here you have a very sober magistrate in, you know, probably the most important commercial court in the world saying, look, this stuff is plausible enough to be able to be taken forward. And that’s what really caught my attention.
Ethan Wu: Let’s back up and go piece by piece, because there was a lot in your kind of high-level summary, Joe.
Joe Miller: I told you it’s nerdy.
Ethan Wu: Yeah, it is, it is, but again, interesting. So spoofing — let’s start with spoofing. This is, as I understand it, the idea that you dangle some sell orders to make it look like the market’s really bearish on the stock, right? So you’re not actually executing the sell orders. You’re displaying intent through the market, right? You can post limit orders in the marketplace and make it seem like, well, at a certain level, I might start selling. That signals to other traders in the market, yeah, there’s a lot of people bearish on the stock so maybe other people are like, well, I better sell quickly, right, if there’s a lot of intention to sell this. And, you know, maybe you pull back on the sell orders when the stock actually starts to get sold off. In the court order itself they call these baiting orders, right? You’re dangling it out there for somebody to bite on and then you yank it back at the last second.
Joe Miller: And you could do it the other way around. You could pump up the price by putting in buy orders. In this case, the allegation was there were sell orders. And this practice is obviously as old as the markets have existed. But it only really became illegal in the US after Dodd-Frank. It was put into the Dodd-Frank Act. And there’ve been a few successful prosecutions of individuals over spoofing, but there’s never been a successful civil case, which is why this case is, you know, particularly interesting, this and a bunch of others that have come along. And the problem at the heart of this is that the behaviour that you described there is also part of normal market-making, right? Because if you are someone like Citadel and Virtu — maybe we can explain for a second what these guys do, right, is that they take in enormous amounts of orders from brokers like, you know, Charles Schwab and Robinhood, etc. In some cases, they pay for those orders and they then make the market by buying and selling and always having liquidity to provide. And they say that they can then provide the retail investor at the end of this transaction with a better price as a result, right?
Ethan Wu: Yeah. Let’s do that next. So we have spoofing — dangling little orders in front of the market, pulling them back at the last second. Then you have market makers. And so you mentioned Virtu, Citadel Securities. And people may know these names from the big GameStop fracas of 2021, where, you know, they stand between retail investors and their stock brokers and then the market itself. And they’re like, you said, Joe, they’re trying to make little tiny bits of profit on a huge volume of trading orders by taking them in and finding small, little pricing discrepancies across all the venues that stocks are listed on, right? So this is a practice as old as time.
Joe Miller: And those discrepancies add up to billions and billions of dollars in profits.