In the News

In Real Estate Commission Cases, a Funny Thing Happened on the Way to the Forum


March 14, 2024

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.”

Read In Real Estate Commission Cases, a Funny Thing Happened on the Way to the Forum.