The National Association of REALTORS has filed a motion to dismiss a class action suit against the group. photo credit: Getty
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The National Association of REALTORS has filed a motion to dismiss a class action lawsuit that was filed against the organization in March. The antitrust suit, which accuses the trade group of colluding to inflate commissions through its Multiple Listing Services and compensation policies, also named four major real estate brokerages as defendants—RE/MAX, Keller Williams, HomeServices of America and Realogy Holdings.
According to NAR’s statement “the complaint misrepresents NARs rules for the operation of Multiple Listing Services, which have long been recognized by the courts across the country as protecting consumers and creating competitive, efficient markets that benefit home buyers and sellers.”
The suit stems from a 2015 home sale in which Christopher Moehrl, the original complainant on the claim, was forced to pay both his agent’s commission and the commission of the agent representing the buyer.
According to the filing, the defendants have been “conspiring to require home sellers to pay the broker representing the buyer of their homes, and to pay at an inflated amount, in violation of federal antitrust law … The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market.”
In its motion to dismiss, NAR called Moehrl’s claims a “wholly inaccurate misreading of certain provisions in the NAR Handbook on Multiple Listing Policy and the NAR Code of Ethics.”
The class action suit is now open to sellers in more than 20 MLS service areas across the country and has spawned two copycat claims, both filed last month. Mantill Williams, NAR’s vice president of communications, says the group will move to dismiss the other cases as well.
According to John Smaby, president of NAR, all three claims have no merit.
“In today’s complex real estate environment, REALTORS and Multiple Listing Services promote a pro-consumer, pro-competitive market for home buyers and sellers, contrary to the baseless claims of these class action attorneys,” he said. “Our filing today shows the lawsuit is wrong on the facts, wrong on the economics and wrong on the law.”
He also says the class action attorneys involved in the case “dreamed up” anticompetitive rules that don’t exist within NAR’s policies.
Those attorneys include a slew of major players from five legal firms, as well as nonprofit organization Justice Catalyst Law. One of the firms—Hagens Berman Sobol Shapiro—has secured billion-dollar judgments in class action suits against the tobacco industry and Toyota and was also involved in the 2016 case against disgraced medical technology provider Theranos.
Rob Hahn, the founder at real estate consulting firm 7DS Associates, expects the well-heeled firms are more than prepared for NAR’s motion to dismiss.
“This is entirely expected, and there’s no chance that firms like Hagens Berman filed this without expecting this,” Hahn said. “I think everybody is waiting to see if these three lawsuits survive the motion to dismiss. If they do, the floodgates will open.”
Only time will tell, and as Williams explains, it could be a long road ahead if the dismissal isn’t granted.
“We filed our motion to dismiss last week, and now we await the judge’s decision,” Williams said. “If the court allows the plaintiffs to proceed, we may be looking at a very long, drawn-out process. Class-action lawsuits like this one have been known to go on for years—sometimes more than a decade.”