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.

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“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.

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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.

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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.

Agnieszka Fryszman (L’96), a partner at Cohen, Milstein, Sellers & Toll, is one of the world’s leading human rights lawyers against corporate abuse.

As founder and chair of the firm’s Human Rights practice group, Agnieszka champions the rights of victims of injustice and abuse against corporate giants and foreign powers. Throughout her legal career, she has brought civil suits on behalf of victims of torture, human trafficking, extrajudicial killings, and forced labor.Agnieszka Fryszman Headshot

As an evening student at Georgetown Law, Agnieszka connected with lawyers at Cohen Milstein who were litigating cases against corporations that had benefitted from forced and slave labor during the Holocaust. Intrigued by the ability to use legal skills to remedy some of the injustices that occurred during Nazi-era Germany, Agnieszka joined the firm after graduation and worked on the legal team that successfully held German and Austrian companies to account for profiting from such forced and slave labor, eventually reaching a settlement worth 10 billion Deutsche Marks for 1.5 million survivors around the world.

Following this historic win, Agnieszka was determined to continue the campaign against corporate impunity for human rights abuse, and she successfully persuaded Cohen Milstein to start a practice group dedicated to human rights — a group that is now consistently recognized as one of the best private international human rights practices in the world.

For over twenty-five years, Agnieszka has worked on and won some of the most complex human rights strategic litigation claims in U.S. federal courts. In her current work involving the Trafficking Victims Protection Reauthorization Act, Agnieszka represents Cambodians who sought employment at a Thai factory but who ended up being trafficked into forced labor. She also recently brought suit on behalf of men from Nepal who had agreed to work for a luxury hotel in Jordan but who, upon arrival, were divested of their passports, locked in a compound, forced to work at U.S. military bases, and, for many, eventually killed by insurgents. Agnieszka has also been involved in landmark cases regarding fishing boat slavery, comfort women, the victims of 9/11, and Guantánamo Bay detainees.

Recently, Agnieszka and her team worked on a historic case involving Indonesian villagers and their families against ExxonMobil. The villagers alleged that the soldiers of the Indonesian military retained by ExxonMobil to protect its facilities in Aceh had tortured, raped, or killed the villagers’ relatives. After more than two decades of fighting on behalf of her clients and just one week before the trial, Agnieszka and her team secured a historic settlement from ExxonMobil, empowering the Indonesian villagers to receive the recompense and recognition that they had sought for years.

The Risks and Rewards of Fighting for Justice

Agnieszka says that the most rewarding part of her job is the ability to help people claim their rights and find vindication, particularly in a world with an “enormous amount of unfairness and injustice.” With her legal acumen and commitment to justice for the underserved, she is able to “help people who were wronged recognize that they have rights that can be enforced” and assist them in challenging big corporations despite the obstacles put in their path. Her recent success helping Indonesian villagers triumph over ExxonMobil is a prime example of this achievement. Agnieszka finds it especially uplifting to see how her legal success stories have helped her clients and their communities improve their lives in the aftermath of horrendous acts of violence and injustice. One woman in a trafficking case in Nepal, Agnieszka says, was initially homeless and penniless. But with the settlement that Agnieszka was able to secure, she now lives in a three-story house and her children go to an American school and are fluent in English. Because of the settlement, “the whole trajectory of their lives has been changed,” says Agnieszka.

However, being at the forefront of human rights law and having to use new and innovative strategies also comes with a cost. “You inevitably make mistakes, and you’re not the person that bears the cost of them,” says Agnieszka. Agnieszka was involved in the first case of its kind against a corporation for alleged human rights violations overseas, and she believes she would take a different tack if litigating it again. Though their strategy was not wrong, she clarifies, the law developed in another direction, and the case might have been successful if it had been the fifth case of its kind, with better-developed law. Cases like these, she says, “carry the weight of people’s hopes and expectations.” If you lose because you were first and the law needed to be amended or the breadth of case law expanded, you are not the one paying the price of the learning process; the people who were harmed do, Agnieszka explains. “I always want to win, and I always want to win big for my clients. But you can’t always win. It’s frustrating.”

Former President Trump and his legal team have decided against appealing a court’s decision that found he is not immune from civil lawsuits that blame him for the Jan. 6 attack on the Capitol, after they previously signaled he would file an appeal.

Trump’s decision to not take his broader immunity claim to the Supreme Court means lawsuits seeking to hold him accountable for his role on Jan. 6 can move forward.

A Colorado federal judge Tuesday gave initial approval to class settlements with two meat producers and a consulting company, requiring $11.25 million in payments to resolve claims that they participated in a nationwide scheme to fix and depress wages for meat plant workers.

In an order, U.S. District Judge Philip A. Brimmer advanced a deal for Seaboard Foods LLC and its owner Triumph Foods LLC to pay $10 million into a settlement fund and supply the plaintiffs with documents, data, depositions and witnesses to be used as evidence against the remaining defendants.

Perdue Foods LLC has also agreed to cooperate with the plaintiffs and pay $1.25 million to class members, an estimated tens of thousands of workers at meat processing plants across the country.

Tuesday’s order also stayed the proceedings against the companies and a data consulting firm that allegedly helped the meat producers exchange compensation data, Webber Meng Sahl and Co. Inc.

The approvals come as Colorado-based JBS USA decided earlier this month to settle and avoid a trial in the sprawling November 2022 suit, which accused more than a dozen meat processing companies of sharing pay studies and data to fix wages at plants across the country.

. . .

The proposed class is represented by Shana E. Scarlett, Rio S. Pierce, Abby R. Wolf, Steve W. Berman, Elaine Byszewski and Abigail D. Pershing of Hagens Berman Sobol Shapiro LLP, George F. Farah, Rebecca Chang, Nicholas J. Jackson, Martha E. Guarnieri, Simon Wiener and William H. Anderson of Handley Farah & Anderson PLLC, Brent W. Johnson, Benjamin D. Brown, Robert A. Braun, Alison S. Deich, Zachary Glubiak, Zachairy I. Krowitz and Nina Jaffe-Geffner of Cohen Milstein Sellers & Toll PLLC, Brian D. Clark, Stephen J. Teti, Arielle S. Wagner and Eura Chang of Lockridge Grindal Nauen PLLP, and Candice J. Enders and Julia R. McGrath of Berger Montague PC.

With a Department of Justice lawsuit appearing imminent, Apple (AAPL) may have provided last-minute evidence to bolster the DOJ’s case against its potentially anticompetitive behavior in the wake of the Epic Games trial.

. . .

“Whether Apple’s “compliance” with Judge Gonzalez Roger’s order is anticompetitive is a trickier question than you might think,” said Daniel McCuaig, a partner at Cohen Milstein Sellers & Toll who previously served as an attorney in the DOJ’s antitrust division. But DOJ lawyers “won’t be amused. Apple’s demonstration of disdain for both competition and a court’s lawful order surely makes the Division at least marginally more likely to file suit. And I would expect the episode to be included in the complaint – it offers a compelling narrative of a company that not only believes itself to be above the law but also will require a very clear and firm injunction to convince it otherwise . . . The remedy that Apple now is flouting could have been imposed for a Sherman Act violation. In which case, Apple achieving the same result by these different means would properly be viewed as anticompetitive.”

Cohen Milstein Sellers & Toll PLLC’s securities team made headlines last year by securing one of the largest securities class actions recoveries of all time for Wells Fargo investors and by introducing major corporate governance reforms at several financial institutions after their alleged attempts to obstruct the stock loan market, earning the firm a spot among Law360’s 2023 Securities Groups of the Year.

The $1 billion settlement — the sixth-largest securities settlement of the last decade — between Wells Fargo and its investors was finalized in September, and Cohen Milstein served as co-lead counsel for the plaintiffs. The suit alleged the bank and its top executives made false and misleading statements about their compliance with consent orders put in place after the bank was found in 2016 to have engaged in widespread consumer abuses, including opening millions of unauthorized customer accounts.

The deal is the largest security settlement to not involve a financial restatement by the institution or enforcement actions by the U.S. Securities and Exchange Commission or the U.S. Department of Justice. Steven J. Toll, co-chair of Cohen Milstein’s securities practice, said that makes the recovery especially significant, since accounting corrections and legal action from the government are typically the hallmark of securities cases.

“We didn’t have those factors that make cases easier to win, so that heightens the value of what we were able to achieve here,” Toll said. “It was all through our own work and research and analysis of all the issues that was able to get us such a large number.”

Wells Fargo shareholders said they incurred significant losses in March 2020 when reports from the U.S. House Committee on Financial Services and subsequent congressional hearings revealed that Wells Fargo had “clearly demonstrated an unwillingness and inability to stop harming its customers” and that its remediation plans fell “woefully short” of regulators’ expectations.

Wells Fargo argued investors could not prove that statements about progress toward overhauling its risk management policies were false or made to intentionally mislead investors.

Toll said the timing of the alleged stock declines, which occurred around the time COVID-19 was declared a global pandemic, was another hurdle in the suit.

“It was a very unusual challenge to confront, and they kept arguing why the damages and thus the recovery and settlement should be much lower, but we were able to still get a very substantial settlement,” he said.

Cohen Milstein helped investors secure another big payout last year in an anti-competitive class action against defendants Morgan Stanley, Goldman Sachs, UBS, JP Morgan and EquiLend. Including a previous $81 million settlement with Credit Suisse, the court has preliminarily approved more than $580 million in cash payments.

. . .

Many of Cohen Milstein’s cases, including the Boeing suit, the Wells Fargo suit and the antitrust financial suit, are led by institutional investors. Julie Reiser, also Cohen Milstein’s securities practice co-chair, said one of the most rewarding parts of her job is knowing people will have the financial security to retire when large settlements are paid out.

“Working with pension funds to collect money and to make sure they’re made whole when there’s fraud is really motivating for me and my colleagues, and that helps make our practice stronger,” Reiser said.