Panel of Judges Appears Open to Consolidating Commission Cases

Charleston, SC—Today, a panel of federal judges heard arguments from both plaintiffs and remaining brokerage defendants regarding whether the many disparate commission cases should be consolidated under one judge in one district—a decision with wide-ranging implications for the entire industry, as buyer suits remain a threat even to companies that have settled, and dozens of brokerages remain outside the National Association of REALTORS® (NAR) settlement.

The Judicial Panel on Multidistrict Litigation, commonly known as the MDL, consists of seven judges hand-picked by the chief justice of the Supreme Court. Ruling exclusively on civil cases, the panel handles everything from patent disputes to disaster claims, with the power to “centralize” large numbers of similar lawsuits under one roof.

Back in December, lawyers who represented plaintiffs in the Burnett case petitioned the MDL to move most (but not all) Burnett copycat cases to Missouri under Judge Stephen R. Bough, who oversaw the Burnett trial. NAR also supported centralization, seeking to include even more cases but pushing for Judge Andrea R. Wood in Chicago (where NAR’s headquarters are located) to preside over the lawsuits.

In a federal courtroom in Charleston today, the panel appeared to focus on the “common questions of fact,” and seemed to be leaning toward one of the plaintiffs’ preferred venues, with at least one judge balking at the possibility of sending the case to Wood in Chicago.

Judge Matthew Kennely said he thought there was a “good chance” that sending the cases to Chicago would “slow down Moehrl,” the largest and most advanced seller-side case, which is currently on track for a trial in late 2024 or early 2025.

NAR’s settlement agreement bars them from participating in the MDL proceeding, despite the fact that buyer lawsuits could potentially be included, and the settlement does not include those claims.

On the other hand, Compass—although they also just recently settled the seller cases—still showed up to the hearing to argue against consolidating the buyer suits. An attorney representing the company described the buyer litigation as “fundamentally different,” noting that damages in particular would have been calculated using very different methods and formulas.

While centralization is ostensibly about efficiency, every defendant and plaintiff is seeking their own comparative advantage from the outcome. In this case, not every plaintiff or defendant agrees on the necessity of consolidation, and most have differed on the district and judge.

The question of whether the buyer cases should be included is also extremely important, as those suits are based on a different legal foundation than Burnett, despite making similar accusations. 

Another question the panel will have to decide is whether lawsuits involving entities not affiliated with NAR should be consolidated. Both plaintiffs and defendants involved in those cases showed up to argue against having their litigation included.

Jill Manning, a lawyer representing plaintiffs who are suing two MLSs in San Francisco, told the MDL panel that the “unique nature” of those MLSs, which are locally owned, should keep them out of the consolidation process. Manning also noted that California’s unfair competition laws create another unique wrinkle that should separate her case from other copycats.

Lawyers involved in the MLS PIN lawsuit based in Massachusetts—a case which has taken on outsized significance due to the Department of Justice’s intervention—also opposed consolidation.

Wendy Newton, representing West Penn MLS, which is also not affiliated with NAR, emphasized how local the particular lawsuit was that her client faced, as the lawsuit only covers transactions on a single MLS which operates in one part of Pennsylvania. The lawsuit also relies on state laws, she said, and should be left in its original district.

On the other hand, the plaintiffs who originally petitioned for consolidation seized on NAR settlements to advance their arguments in favor of consolidation, and that Missouri and Bough are the most appropriate choices, noting in a filing ahead of today’s hearing that Bough will be presiding over final approval of the NAR agreement—which could affect nearly all the other cases and defendants.

“As new Defendants opt in and any potential settlement disputes arise, Judge Bough will make decisions that may bear on several of the (lawsuits),” they wrote. “It would be manifestly inefficient for these cases to proceed in different Districts around the country, subject to a game of telephone when decisions made in the Western District of Missouri involving the settlements must carry over to another court. And it would be likewise inefficient for the cases to proceed in a courtroom other than Judge Bough’s.”

Ben Diessel, an antitrust lawyer who has worked on commission-related lawsuit defenses for real estate companies, tells RISMedia that there is plenty of precedent for consolidating “indirect purchaser” claims like those made by buyers with other similar antitrust litigation.

According to Diessel, the judge who is assigned all the cases would likely choose one or more “bellwether” lawsuits, which would move faster in an attempt to decide issues common to many or all of the cases. Depending on the cases chosen (and other factors within the judge’s discretion), this could slow down the process or increase legal costs for anyone caught up in one of the lawsuits.

While the panel considers the arguments made today, many of the individual commission cases remain paused ahead of a ruling, which is expected in days, not weeks. Others, however, including the buyer suits, continue to move forward.

Elizabeth Conneely contributed to this reporting.

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