The court will consider approving the latest deal in the case, which allows commission sharing in the multiple listing system.
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The judge overseeing an antitrust commission case against a New England-based mega multiple listing service has set a date to consider the latest proposed settlement of the suit: April 1.
That means the U.S. Department of Justice has about two months to weigh in on the latest version of the deal.
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On Jan. 27, Judge Patti B. Saris of the U.S. District Court for the District of Massachusetts held a status conference over video for the case, known as Nosalek after its lead plaintiff, and then scheduled the deal’s preliminary approval hearing, which will also be held over video, for 9:30 a.m. Eastern on April Fool’s Day.
Like federal commission suits Moehrl and Sitzer | Burnett, Nosalek seeks class-action status and alleges that the sharing of commissions between listing and buyer brokers inflates seller costs and is a conspiracy in restraint of trade, a violation of the Sherman Antitrust Act.
Nosalek stands out among the many cases homesellers have filed challenging the practice of listing brokers sharing commissions with buyer brokers for four reasons:
- The National Association of Realtors is not a defendant in the case, but Massachusetts-based MLS Property Information Network (MLS PIN), is;
- MLS PIN, which had 44,600 subscribers in 2023, decided not to opt into the nationwide NAR settlement of similar suits, which means this homeseller commission case is ongoing;
- The proposed settlement in the case continues to allow sellers to make pre-emptive offers of compensation to buyer brokers via the MLS, which the NAR settlement prohibits; and
- The case is the only homeseller commission suit in which the DOJ has called for pre-emptive offers of compensation from sellers or listing brokers to buyer broker to be prohibited anywhere, both on and off the MLS.
Under the proposed settlement in Nosalek, MLS PIN would remove a requirement that homesellers must offer compensation to buyer brokers; would require listing brokers to notify sellers that they’re not required to offer compensation to buyer brokers and that they can decline if a buyer broker requests compensation; and would clarify that if the seller makes an offer to a buyer broker and the buyer makes a counteroffer, commissions would be negotiated among the seller, the buyer, the seller-broker and the buyer-broker.
The current version of the deal is the third amended proposed settlement agreement and increases the settlement fund from $3 million to $3.95 million in return for covering all real estate listings, not just residential listings, and for adding MLS PIN’s “participants and subscribers” as a covered group.
On Jan. 17, the Nosalek plaintiffs and MLS PIN submitted separate legal filings in support of their settlement’s preliminary approval and against the DOJ’s statement of interest in the case.
“The proposed settlement does not eliminate free-market compensation offers because to do so would be bad for home buyers, create an antitrust problem in its own right, and restrict commercial speech in violation of the First Amendment,” attorneys for MLS PIN wrote in their filing.
“[A] private enterprise like MLS PIN cannot ban (or, rather, be compelled by the government to ban) home sellers from offering compensation to buyer brokers in the free market,” they added.
“That is a blatant restraint on trade much more severe than other MLS rules that have been struck down as anticompetitive.”
Both the plaintiffs and MLS PIN noted the proposed deal does not prevent the DOJ from pursuing policy changes through either legislative reform or rulemaking.
“Plaintiffs here represent a putative class of sellers that legitimately may want to offer to pay a buyer’s broker in order to advance a transaction, including, for example, a simple desire to move quickly and get a deal done,” attorneys for the plaintiffs wrote in their legal filing.
“Yet the Department’s proposed resolution would restrict home sellers in Massachusetts from arranging a contract for sale as they see fit. Plaintiffs believe the Department’s proposal should instead be addressed through administrative rule making or legislation, not a lawsuit under the auspices of the antitrust laws …”
Attorneys for the plaintiffs also compared their proposed settlement to the NAR deal, stressing that the latter does not prohibit pre-emptive offers of compensation outside of the MLS and yet the DOJ did not object to that in its statement of interest for the NAR settlement.
“[T]he NAR rule change will not substantially hinder blanket offers of cooperative compensation being posted online,” the plaintiffs’ attorneys wrote.
“That settlement simply moves them to a new website. It is a distinction without a meaningful difference.”
Only allowing brokers to post offers of compensation on non-MLS sources may end up harming consumers, according to the filing.
“MLS sites provide centralized repositories where sellers and buyers can assess the overall market,” the filing reads.
“Restricting that information to broker and third-party sites does little to limit any undue ‘steering’ or pressure that may exist for sellers to offer such compensation. Rather, it merely pushes cooperative compensation more into the shadows and makes it harder for sellers (and buyers) to obtain all the information they need to make an informed decision.
“Accordingly, Plaintiffs respectfully submit that putative Class Members here are at least as well served, if not better served, under the [proposed settlement] than under the NAR settlement.”
The court now awaits a response from the DOJ.