Moehrl v. National Association of Realtors, et al.

Overview

Cohen Milstein is co-lead class counsel in Moehrl, et al. v. National Association of Realtors, et al., Case No. 19-cv-01610 (N.D. Ill.) and Gibson, et al. v. National Association of Realtors, et al., Case No. 4:23-cv-00788 (W.D. Mo.), two antitrust class actions that address allegations of longstanding anticompetitive practices in the residential real estate industry that have inflated the cost of broker commissions throughout the United States.

Cohen Milstein initiated the original investigation into anticompetitive practices by the National Association of Realtors (NAR), one of the largest trade associations in the United States, and several of the nation’s largest residential real estate brokerages involving rules requiring, among other things, that sellers of listed homes on multiple listing services (MLS) offer compensation to buyers’ agents. Cohen Milstein subsequently teamed up with Hagens Berman Sobol Shapiro LLP and Susman Godfrey LLP.  The firms’ investigation showed that the NAR’s cooperative compensation rules and other rules restricting the negotiation of commissions incentivized buyers’ agents to steer clients toward homes with higher commissions and resulted in home sellers paying inflated buyer broker fees.

After Moehrl was filed, the law firms Ketchmark and McCreight P.C., Williams Dirks Dameron LLC, and Boulware Law LLC, filed and litigated another class action alleging similar theories to Moehrl but in a different geographic area: Sitzer (later named Burnett), et al. v. National Association of Realtors, et al. (W.D. Mo.) in June 2019.  The Sitzer firms obtained a $1.8 billion jury verdict in October 2023.

Cohen Milstein and the co-lead team in Moehrl subsequently joined forces with the lead firms in Sitzer to co-lead two additional nationwide class actions against additional defendants: Gibson, et al. v. National Association of Realtors, et al. (W.D. Mo.) and Umpa v. National Association of Realtors, et al. (W.D. Mo.). (These two cases were consolidated in April 2024.)

Settlements

Since October 2023, Cohen Milstein and co-counsel have helped home sellers achieve more than $997.1 million in settlements thus far, of which, more than $876.5 million has been granted final approval by the courts, including a $418 million settlement with NAR and the $250 million settlement with HomeServices America, which was granted final approval on November 26, 2024.

The settlement terms with NAR include extensive industry reforms that will help increase transparency and fairness regarding buyer broker commissions, while eliminating requirements that sellers must offer on multiple listing services to pay the commissions of brokers representing the buyers they are negotiating against.

Starting on August 17, 2024, some of the new rules NAR agreed to implement include:

• Require MLS participants to disclose to prospective sellers and buyers in conspicuous language that broker commissions are not set by law and are fully negotiable.
• Eliminate and prohibit any requirement by NAR and its affiliated multiple listing services (MLS) that listing brokers or sellers must make offers of compensation to cooperating brokers or other buyer representatives, and prohibit and eliminate any requirement that such offers, if made, must be blanket, unconditional or unilateral;
• Prohibit NAR MLS participants, subscribers, other real estate brokers, other real estate agents, and sellers from (i) making offers of compensation on MLS to cooperating brokers or other buyer representatives (either directly or through buyers) or (ii) disclosing on the MLS broker compensation or total brokerage compensation;
• Eliminate and prohibit any requirements conditioning participation or membership in a NAR MLS on offering or accepting offers of cooperative compensation;
• Require NAR MLS participants acting for sellers to conspicuously disclose to sellers and obtain seller approval for any payment or offer of payment that the listing broker or seller will make to another broker, agent, or other representative acting for buyers; and
• Require MLS participants to disclose to prospective sellers and buyers in conspicuous language that broker commissions are not set by law and are fully negotiable.

Litigation in this proprietary and certified antitrust class action against other defendants continues.

Important Rulings & Dates – Moehrl & Gibson

• On March 6, 2019, Cohen Milstein and co-counsel filed Moehrl on behalf of home sellers.
• On October 10, 2019, the U.S. Department of Justice filed a statement of interest in Moehrl.
• On May 30, 2020, the court appointed Cohen Milstein Interim Co-Lead Class Counsel to represent home sellers in this litigation in Moehrl.
• On October 20, 2020, the court denied defendants motion to dismiss in Moehrl.
• On March 29, 2023, the court granted class certification in Moehrl.
• On November 26, 2024, the court granted final approval of a $418 million settlement against NAR that includes sweeping, industry-wide injunctive relief. At the same hearing, the court also granted final approval to the $250 million settlement against HomeServices America.

Case Background

Annually, Americans pay roughly $100 billion in real estate commissions in one of the most important transactions of a lifetime. Total broker compensation in the United States is typically 5% to 6% of the home sales price, with approximately half of that amount—and increasingly more than half—paid to the buyer broker.

The National Association of Realtors (NAR) is one of the largest trade associations in the United States. Founded in 1908, it touts more than 1.5 million members, known as Realtors, and has more than $1 billion in assets. For decades, NAR has set the rules and guidelines for governing realtors’ client relationships and home sales across the United States. It also governs local multiple listing services (MLS) across the country used by its members and non-members.

The NAR Handbook on Multiple Listing Policy required all brokers to make a blanket, largely non-negotiable offer of buyer broker compensation (the “Buyer Broker Commission Rule”) when listing a property on a MLS. MLSs that are governed by local NAR associations, are required to follow and comply with NAR’s Handbook, including the Buyer Broker Commission Rule.

Originally filed on March 6, 2019, plaintiffs, home sellers who listed their homes on one of twenty MLSs, brought the Moehrl action against NAR and the four largest national real estate broker franchisors, Realogy Holdings Corp., HomeServices of America, Inc., RE/MAX Holdings, Inc., and Keller Williams Realty, Inc., for conspiring to use the mandatory Buyer Broker Commission Rule as a means to require home sellers to pay the fees of the broker representing the buyer of their homes, and to pay these fees at an inflated amount, in violation of federal antitrust law.

Because many buyer brokers have incentives to steer clients away from listings offering commissions that are below the prevailing rates, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a standardize, supra-competitive commission. Absent the mandatory Buyer Broker Commission Rule, plaintiffs claim, buyers would have incentives to negotiate their own brokers’ commissions or to save money by forgoing a broker altogether.

The conspiracy, plaintiffs allege, has saddled home sellers with a cost that would be borne by the buyer in a competitive market. Plaintiffs further allege that the conspiracy has inflated buyer broker commissions, which, in turn, have inflated the total commissions paid by home sellers, who have incurred, on average, thousands of dollars in damages as a result of the alleged conspiracy.