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No one gets exactly what they want from a settlement. However, the agreement we entered into with the National Association of Realtors and Housing Services to resolve antitrust claims related to commissions nationwide meets the legal requirements of being fair, adequate and reasonable.
That’s according to Judge Stephen R. Baugh of the U.S. District Court for the Western District of Missouri, who gave final approval to the deal last week.
In a Nov. 27 written order, Baugh dismissed all objections to the deal filed in advance of a Nov. 26 fairness hearing and closed the settlement agreement, which includes nearly $700 million to a settlement fund. The status quo was maintained and plaintiffs’ lawyers were compensated. One-third of the settlement amount (approximately $233 million), plus $16.5 million in costs as requested.
“The NAR and HomeServices settlements, individually and together, and in light of previously approved settlements, significantly reduce the settlement class, considering the pros and cons of litigation, and the risks and costs of continued litigation.” “Providing substantial economic recovery to Appellate and Settlement Defendants,” Baugh wrote in the 88-page order.
“This settlement also includes significant changes to the Settlement Defendants’ policies, including the removal of the indemnification offer to MLS. [multiple listing service]”
Baugh’s language in his Nov. 27 order is often virtually identical or very similar to Baugh’s order a month earlier giving final approval of a settlement in another commission case known as Gibson. . This is likely in part because the challenges filed against Gibson largely mirror the challenges also filed against the NAR settlement.
Despite the U.S. Department of Justice’s filing in connection with the NAR settlement two days before the fairness hearing, and the presence of a Justice Department attorney at the hearing, Mr. Baugh did not mention the Department in his order granting final approval. , did not acquiesce. In response to the Department of Justice’s request that Baugh either change the settlement with respect to the buyer’s contract or clarify that the NAR settlement does not create “any immunity or defense under antitrust law.”
“The court also found that appropriate state and federal officials were timely notified of the NAR and HomeServices Settlement Agreement under the Class Action Fairness Act of 2005 (CAFA) and that the 90-day period for entry of approval was without objection. “It has also been certified by any government agency,” Baugh wrote.
Instead, Bo emphasized that the deal was reasonable under the circumstances. For example, Baugh said more than 99 percent of identified Settlement Class Members have been notified of the deal, and as of Nov. 14, more than 491,000 claims have been filed, while opponents 36 people, and only 39 people opted out.
He also disputed claims by some opponents that the scope of the deal was too broad, citing commission-related antitrust claims across the country and MLSs affiliated with real estate agents. It covered both non-affiliated MLS.
“A national settlement is a prerequisite to obtaining a settlement for the benefit of the class, a national settlement conserves judicial and private resources, and class members are encouraged to define the settling class through a notification process.” ,” Bo wrote.
“As the court further explains below, the record reflects that the inclusion of all MLSs relating to residential real estate nationwide in the Settlement Class is justified and necessary to achieve settlement. , the MLS is named Gibson (e.g., Real Estate Listing Service), and is not officially affiliated with NAR.
“Furthermore, the only way a settlement would have been possible was if it provided for nationwide recall and release.”
Baugh argued that the deal was the result of “intense negotiations” and that the plaintiff’s lawyers had obtained the maximum possible settlement in light of the defendant’s financial situation.
“While some class participants object that they will not be able to recover the full amount paid to the real estate agent, that is the nature of settlements and necessarily reflect a compromise.” writes Bo.
“The record supports our finding that the plaintiffs sought to obtain the maximum recovery possible given the risks of continuing the litigation, including each settling defendant’s ability to pay the payment limitations,” Baugh said. added.
Regarding the challenges filed, Mr. Baugh waived challenges filed by those who did not comply with his order to appear at a fairness hearing. However, he also rejected each objection on its merits and determined that there was no basis to deny final approval of the transaction.
In particular, Baugh criticized the objections from Tanya Monestier, a professor of contract law at the University of Buffalo, calling them “baseless.” Monestier wrote that the NAR settlement does not include an enforcement mechanism, to which he pointed out that not only the plaintiffs but also the courts themselves have the authority to enforce the agreement.
“Every significant real estate agent MLS in the country, a total of 547 real estate agent MLSs, participated in the settlement,” Bo wrote.
“Additionally, 15 MLSs other than real estate agents also opted in (including agreeing to make additional payments to the class). Additionally, under this agreement, Plaintiffs and the Court agree that large national brokerage firms that participated in the settlement It has the authority to directly enforce the settlement agreement against the 13 companies.
“And this settlement agreement creates substantial incentives for real estate agent MLSs, member boards, brokers, and individual agents to comply with the terms of the settlement. You become a “releasing party” only if you do so.[y] The change in practice will be reflected in the settlement agreement and “I agree”[] Provide evidence of such compliance if requested by the Co-Lead Counsel. ”
Regarding Mr. Monestier’s complaint regarding enforcement of the settlement by the plaintiffs’ attorneys, Mr. Bo wrote: It also contradicts the fact that lawyers have been vigorously prosecuting this case for six months.
“Professor Monestier said the co-lead counsel would not enforce the settlement because the settlement could be ‘undone’ in some way, thereby jeopardizing the co-lead counsel’s legal fees.” I’m guessing. However, according to the plain language of the agreement, once the settlement is finally approved, NAR does not have any rescission rights, so there is no conflict of interest. ”
Mr. Baugh also defended plaintiffs’ attorneys’ expertise regarding practice changes in NAR settlements.
“She claims that this practice change was ‘concocted by lawyers without a full understanding of how this would play out in the real world,'” Baugh wrote.
“However, the record reflects that the NAR settlement practice changes were developed in consultation with economic and real estate industry experts. Co-lead counsel also brings extensive antitrust expertise. We have developed our knowledge of the real estate industry based on five years of detailed factual and expert findings and research.
In his dissent, Monestier details workarounds that some attorneys are working on that violate the spirit or letter of the NAR Settlement Agreement’s practice change. Bo said that means the deal should be approved, not rejected.
“[A]Approval of the settlement will facilitate enforcement of the settlement,” Baugh wrote.
“Professor Monestier claims that these supposed ‘workarounds’ are ‘widespread,’ but she has not provided sufficient evidence to evaluate that claim and that she The examples provided are anecdotal and speculative.
“This practice change just took effect from August 17, 2024,” Bo added. “By comparison, the problematic NAR rules have been in place for decades,” the case record reflects, “which could take years.” . . We will see a significant market correction. ”
Baugh complained that Monestier’s objections “risk reverting to rules that juries have found to violate federal antitrust laws” and do not “offer a realistic alternative” to the NAR settlement. said.
“The NAR settlement reflects a negotiated compromise in litigation challenging a specific set of practices,” Baugh wrote.
“There are also limits to the scope of federal antitrust law and the court’s injunctive relief powers. As a result, the NAR settlement cannot be expected to address the full range of wrongdoing that may occur in the real estate industry.”
Mr. Beau also rejected Mr. Monestier’s protest that the fees sought by the plaintiffs’ lawyers were too high.
“Plaintiffs’ attorneys advanced this case without filing a government lawsuit,” Baugh wrote. “Plaintiffs’ attorneys then pursued this case on their own for more than five years, spending significant time and money in the process. Plaintiffs’ attorneys took the risk of pursuing the case through a jury verdict, resulting in one of the largest lawsuits in U.S. history.” obtained an antitrust jury verdict. [T]In his case, he definitely deserves the highest percentage of awards. ”
Baugh also pointed to practice changes included in the NAR settlement as partially justifying the attorney’s ruling.
“Professor, Mr. Monestier’s opinion is inconsistent with an analysis of the impact of the settlement’s injunctive relief provisions, which suggest that consumers could potentially save billions of dollars annually,” Beau wrote.
“Although attorneys are not seeking additional fees for this valuable relief in connection with these settlements, the value of this relief is substantial and will be appropriately considered in evaluating the fees sought.” he added.
Mr. Baugh concluded his order by affirming jurisdiction over the settlement.
“The court shall hold all matters relating to the administration and consummation of the Settlement, and all matters relating to the interpretation, implementation, administration, and enforcement of the Settlement, including with respect to the scope of the Settlement Class, the Released Claims, and the Released Parties. “We retain continuing and exclusive jurisdiction over the matters,” he wrote, “and seek to conduct and complete the claims management process in accordance with the terms and conditions of the Settlement for the benefit of the Settlement Class.”
Read the final approval order (refresh the page if the document does not appear).
Email Andrea V. Brambilla.
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