Tanya Monestier, a law professor at the University at Buffalo, writes that even a last-minute twist could not stop the trend, and predicts there is a long way to go before courts truly move away from fees.
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On Tuesday, a Missouri district court judge gave final approval to NAR’s settlement.
The admission comes as no surprise to those following the lawsuit. This writing was on the wall when Judge Stephen R. Baugh ordered the challengers to appear in person in a Missouri courtroom for a fairness hearing.
Opponents must pay thousands of dollars in travel and lodging expenses out of pocket, and are limited to speaking for no more than three minutes. To put it bluntly, the “fairness” hearing did not seem like a beacon of fairness.
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Even a last-minute twist could not stop this train. Two days before the fairness hearing, the Department of Justice filed a statement of interest in the case. The agency’s position was that it was not interested in civil settlements. It’s the Department of Justice, and it’s willing to invoke antitrust laws if it feels like it. Oh, and by the way, did you sign the entire buyer agreement before the tour? The Department of Justice believes this violates antitrust laws.
Despite an 11-hour intervention, Baugh approved the settlement.
Therefore, the settlement will be final.
The decision will be appealed to the Eighth Circuit Court of Appeals. The court will consider the judge’s decision to find the settlement fair, reasonable and appropriate. The scope of that review will depend on who and what is being appealed, but the Eighth Circuit will likely examine the definition of the class, the scope of the exemption, the amount of the settlement fund, and the amount of injunctive relief. In short, it’s not over until it’s over.
Meanwhile, the plaintiffs have finally gone “on the record” to clarify the meaning of the settlement agreement. In a filing dated Nov. 20, they made a bombshell statement to the real estate industry. Buried in the 137-page filing were plaintiffs’ statements about what the NAR settlement does not allow.
Real estate agents are not allowed to upwardly modify buyer representation agreements to collect additional fees. A real estate agent cannot collect bonuses paid by the seller after the agent has already entered into a representation agreement with the buyer. Real estate agents are not allowed to use min/max ranges (Georgia Association of Realtors, I’m looking at you!). Real estate agents are not allowed to create property-specific contracts to match the compensation rate offered by the seller. In so-called “tour contracts,” the real estate agent’s remuneration amount must be clearly stated in the tour contract itself. It is not possible to enter into a full service brokerage agreement with a different compensation rate after the fact.
That means all the workarounds I’ve been preaching for six months are prohibited under the NAR settlement. I don’t know why it took the plaintiff six months to say this. Actually, I have doubts. But for now I’ll keep them to myself.
Specifically, it means that the form needs to be modified. You will have to restart your training session. Someone needs to tell Zillow. There are many other things as well. Thank you, “We’ll-Be-Watching-You”. I could have said something sooner.
In their filing, the plaintiffs spell out what could happen if industry participants fail to follow these rules and take workarounds. ) You can sue those agents or brokers themselves. ” (Ignore the not-so-subtle drip of sarcasm in this statement).
In other words, following these workarounds will set up Sitzer | Burnett 2.0. The most logical lawyers to prosecute violators are clearly class counsel themselves. Whether they do so is another matter entirely, but this seems to be the case that continues to be given.
Looming over all of this, of course, is the threat of Justice Department action. It is probably safe to assume that with the transition to a new administration, the defendants will have some leeway. But this Justice Department is playing the long game. I wouldn’t be surprised if the Republicans lose the next election or if the Justice Department picks up where it left off.
Legally speaking, this is what is called a complete cluster***k.
Tanya Monestier is a professor of law at the University at Buffalo School of Law in New York. follow her Twitteror connect with her on LinkedIn.
