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Homesellers in the Gibson commission lawsuit demanded half of eXp World Holding’s cash on hand last year as part of a hard-knuckled settlement proposal — an amount the brokerage immediately rejected before striking a deal with plaintiffs in a separate case last fall, new court papers filed this week reveal.
The amount Gibson homeseller plaintiffs demanded in negotiations last year could have reached $63.45 million, according to eXp’s earnings reports and the new filings. Months later, however, the company mediated a settlement with attorneys for plaintiffs in a separate case called Hooper, agreeing to pay $34 million.
Those details came to light this week through a legal battle still playing out between the nation’s largest brokerages and attorneys who are working to finalize lawsuits filed by sellers that targeted the way real estate brokers are paid.
In a set of tit-for-tat filings in the Hooper case this week, eXp and Weichert defended their settlements and asked the court to approve them, while the Gibson plaintiffs continued painting the settlements as “sweetheart deals” for eXp and Weichert that were unfair to members of the class.
The filings pulled back the curtain on some of the remaining real estate companies who have yet to obtain an approved settlement.
“This settlement guarantees the class tens of millions of dollars over the next two years, without the risk of years of prolonged litigation and accumulated expenses,” eXp said in its filing.
The Gibson plaintiffs repeated their claims that eXp and Weichert both engaged in what’s known as a “reverse auction,” or a legal strategy in which a defendant negotiates with attorneys who are willing to accept settlement amounts less than attorneys in a separate case. Gibson attorneys claim the approach led to what they called the “sweetheart deal” for the two companies.
The plaintiffs’ attorneys argue both eXp and Weichert engaged in reverse auctions before both companies reached settlement agreements with attorneys in the Hooper case.
“Intervenors negotiated with eXp and Weichert for months, including in mediation. Intervenors refused to accept eXp’s and Weichert’s lowball offers, so eXp and Weichert secretly sought out more pliable counsel,” the plaintiffs’ attorneys said in a legal filing on Wednesday.
Those attorneys are asking the court to reject eXp and Weichert’s requests to approve their respective settlement agreements.
“They are unfair, unreasonable, and inadequate and should be rejected,” the attorneys wrote, before shedding light on what happened behind closed doors that led eXp and Weichert to leave the negotiating table.
Inside the negotiations
The legal threats offered new details into what happened out of the public eye, as plaintiffs’ attorneys worked against lawyers for some of the largest real estate brands in the world on how much they’d have to pay to settle court cases.
EXp’s Glenn Sanford speaks with Brad Inman
A jury in the Sitzer | Burnett case in Missouri issued a $1.78 billion verdict against the real estate industry in October 2023. That marked the beginning of negotiations for brokerages, franchisors and the National Association of Realtors, who all looked to avoid further litigation from a sprawling list of so-called copycat lawsuits filed across the country.
EXp and Weichert were among the final holdouts as they negotiated with plaintiffs’ attorneys over how much they’d have to pay.
In October, eXp announced it had reached its $34 million deal to settle the Hooper case.
In November, Weichert followed eXp’s lead and agreed to settle the Hooper case and pay $8.5 million.
Both settlements followed months of negotiations and an offer by Weichert to pay more to settle the Gibson case before those negotiations broke down.
Just weeks before that, Weichert offered plaintiffs in the Gibson case $13 million, the Gibson attorneys said in their Wednesday filing.
In filing their opposition to the Hooper settlements, the Gibson attorneys repeatedly called the Hooper attorneys ineffective, inexperienced and inadequate.
“The results are unfair, unreasonable, and inadequate settlements, highlighting Plaintiffs’ and their counsels’ inadequate representation,” the attorneys wrote, noting that eXp’s settlement amount in Hooper amounted to 27 percent of its cash on hand at the time. (At the start of 2024, eXp reported having $126.9 million in cash and cash equivalents. Twenty-seven percent of that is $34.2 million.)
The Gibson attorneys wrote that eXp was in arguably the best position to pay a higher settlement amount, noting that the company had over $100 million in cash on hand and no debt, according to a court transcript included in the new filing this week.
Noting the $1.78 billion verdict in the Sitzer | Burnett case, an amount that would automatically triple to more than $5 billion, the Gibson attorneys said eXp and Weichert faced possible extinction if they didn’t reach settlement agreements.
“The most likely outcome for eXp and Weichert, if they continue to litigate, is ruinous liability sufficient to bankrupt both,” the attorneys wrote.
In its filing, eXp said that it spent months negotiating with the Gibson attorneys before the two sides were at loggerheads.
“eXp’s settlement negotiations with Intervenors reached an impasse when Intervenors walked out of the parties’ mediation after Intervenors insisted that eXp’s next move be to offer half of its cash on hand in settlement before Intervenors would even make a counteroffer,” eXp attorneys wrote.
The brokerage also argued that its settlement was fair and should be approved.
It pointed out the company didn’t exist when NAR created rules that were central to the commission litigation; that eXp didn’t take leadership roles at NAR; that its commissions were negotiable; and that there was no evidence that eXp colluded to inflate commissions.
The company said that it had reached one of the highest settlement amounts outside of the real estate defendants who settled the Sitzer | Burnett case, and argued that its $34 million was in line with other settlements negotiated by the Gibson attorneys.
They pointed out that the attorneys in the Hooper case had agreed to accept 20 percent of the settlement proceeds, which is lower than the 33 percent that will go to the plaintiffs’ attorneys in the Sitzer | Burnett, Gibson and other cases.
EXp pointed to Compass’ $57.5 million settlement of the Gibson case. After adjusting for the difference in attorneys’ fees, eXp said that its settlement amount was on par with the Compass settlement and among the top half of all settlements reached by the Gibson plaintiffs’ attorneys.
“As the amount of eXp’s settlement is plainly within the range of possible recoveries and fair, reasonable and adequate in light of, among other things, Intervenors’ own approved settlements, Intervenors should not be permitted to deprive the class of this substantial recovery now.”