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Litigators of the Week: Plaintiffs Reach a $418M Market-Shifting Settlement With Realtor Group

American Lawyer

March 22, 2024

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.

Read Litigators of the Week: Plaintiffs Reach a $418M Market-Shifting Settlement With Realtor Group.