A judge rejected the brokerage firm’s request to block the Gibson lawsuit, arguing that tactics the company allegedly used to settle another case contained “elements of collusion.”
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EXp Realty filed a lawsuit Thursday after the judge overseeing the Missouri state commission’s case declined to put a moratorium on the case while the brokerage firm pursues the controversial deal in another court. I faced a setback.
In a new legal filing, U.S. District Judge Stephen Baugh denied eXp’s request for a “stay,” or moratorium, on the Gibson Commission case. EXp had sought a stay of the lawsuit after reaching a settlement in another lesser-known commission case known as Hooper.
“The court finds that plaintiffs raise genuine issues of potentially questionable conduct with respect to eXp’s Hooper settlement and that further discovery is required in this case,” Baugh said in the filing. I mentioned it inside.
News of the ruling was first reported by Real Estate News.
In a statement to Inman eXp, eXp said, “In April 2024, the mediation with Plaintiff Gibson was unsuccessful. Separately, nearly six months later, eXp entered into mediation with Plaintiff Hooper and concluded that the mediation was fair and reasonable. “We have reached a settlement that we believe will be found to be fair.” It was appropriate and not the product of a so-called reverse auction. ”
At issue is eXp’s Hooper settlement, announced in early October, which will pay the intermediary $34 million. Weeks later, home sellers and plaintiffs in the Gibson lawsuit criticized the settlement as a “sweetheart” deal. They claimed that eXp used a strategy known as a “reverse auction” to reach an agreement. This essentially amounts to defendants scouring similar class actions to find the lowest settlement price.
The Gibson plaintiffs wanted to force eXp back to the negotiating table, something eXp’s injunction request would have prevented.
Meanwhile, eXp defended the deal in a court filing last week, saying there are no rules forcing it to negotiate with the Gibson plaintiffs.
However, Judge Baugh was clearly not convinced that the issue was resolved.
In Thursday’s ruling, Baugh cited past precedent and argued that a reverse auction requires an “element of collusion” in which “incompetent lawyers are willing to sell the class.” It would not be in the interests of justice to grant a stay in order to achieve a speedy settlement in the later Hooper case. ”
The ruling means the parties in Gibson can conduct discovery or investigate whether eXp actually used reverse auctions to enter into the Hooper transaction.
The ruling also applies to Weichert Real Estate Affiliates, which settled its Hooper lawsuit last week, following eXp’s lead.
Read the full judgment here (if you can’t see the document, please refresh the page).
Update: This article was updated after publication with a statement provided to Inman by eXp.
Email Jim Dalrymple II
