KANSAS CITY, Missouri — The second week of the Sitzer/Burnett class-action buyer broker commission antitrust lawsuit kicked off with a bang.
Just prior to the plaintiffs resting their case late Monday afternoon, HomeServices of America, one of the three remaining defendants in the commission lawsuit, filed a motion for judgment as a matter of law.
A judgment as a matter of law is permissible if there is no legally sufficient basis for a reasonable jury to find for the nonmoving party (in this instance, the plaintiffs) on the issue.
In the motion, HomeServices claimed that no evidence has been presented to show they conspired with the National Association of Realtors and other brokerages on rules for commissions.
The day started with video depositions of four real estate brokerage executives.
Rosalie Warner, a corporate representative for HomeServices of America and its affiliates, was the first to appear. During her deposition, Warner agreed that HomeServices’ franchise agreements stipulate that the independent contractors need to abide by the NAR Code of Ethics, but that agents don’t necessarily have to belong to NAR. She also agreed that every HomeServices agent in Missouri is a member of the MLS and that the firm advocates for clear cooperation.
In the deposition, Michael Ketchmark, the lead attorney for the plaintiffs, asked Warner to comment on a training script from HomeServices CEO Gino Blefari in which he said that when he was an agent, he was supremely confident and would tell prospective clients that while commissions are negotiable “they only go up from 6%.” Warner claimed that Blefari’s statements were not a rule for agents to follow, but an example of what Blefari would do.
Warner also testified that HomeServices of America has nothing to do with the commission splits determined by franchisees. During her testimony, Warner stated that Realtors should cooperate and share their commission when it’s in the client’s best interest but there’s not necessarily an obligation to do so.
She also said that HomeService’s guidelines state that listing brokers need to compensate buyer brokers only when the property is in the MLS. In her testimony, she noted that training modules receive very few views. According to Warner, the module that mentions commissions had just 138 views in 2020 and 2021, combined, among HomeServices’ 51,000 agents.
The next video deposition presented was that of Kevin Goffstein, the president of Berkshire Hathaway HomeServices Alliance and a board member of MARIS, the local MLS. According to Goffstein, MARIS has between 350 and 450 members most years.
Under questioning, Goffstein said that each agent has a contract that includes NAR rule clauses and that the contract also tells agents that NAR membership dues are needed by January.
In addition, the contract stipulated that agents must join their local Realtor association. Also featured in agent contracts is a commission guidelines section that calls for a minimum of 2.7% for buyer brokers and that overall broker commissions were to be between 6% to 10%.
Former association general counsel for NAR Cliff Niersbach was next, with the court viewing his video deposition. During his deposition, Niersbach was questioned about a letter sent in 2012 by Linda O’Connor to NAR’s Professional Standards Committee, which both she and Niersbach were members of, warning the committee that the Participation Rule was “the ultimate form of restraint of trade.” O’Connor told the 112-member committee in her letter that the rule should be eliminated.
Niersbach testified that the Professional Standards Committee only dealt with NAR’s Code of Ethics, so O’Connor’s suggestion was not advanced. He also agreed with the fact that there is no evidence he communicated with her to put the issue in the appropriate committee to look into it.
Ketchmark asked Niersbach why the committee didn’t investigate O’Connor’s complaint if NAR rules were inflating commissions. Niersbach replied that he did not agree with the question that NAR rules have increased commission costs.
The final witness of the morning was Darrell King, a former COO and compliance officer with Keller Williams. In his video deposition, King said that Keller Williams does not have an anti-trust policy. King was then presented with evidence that the firm has a section about it in their guidelines, to which King said, “We don’t violate anti-trust laws,” however he agreed with Ketchmark that the firm has never investigated this.
King also said that Keller Williams does not tell agents what commission to charge. In response to this, Ketchmark brought up slides shown by Gary Keller at a company-wide conference depicting sell-side and buy-side commissions.
King replied that he did not think it was wrong for Keller to talk about national commission levels since “it doesn’t mean anything to local market centers.” King added that Keller’s message was that agents should have the confidence and be open to “having a conversation” with their clients.
King also said that Keller Williams does not tell agents they shouldn’t negotiate except in extreme cases. Again, Ketchmark pulled out Keller Williams guidelines, which state that agents shouldn’t negotiate except in extreme cases but, ultimately, they can make their own decision of whether or not to negotiate.
The defense, which started its testimony late Monday, will continue to lay out arguments on Tuesday.
Editor’s note: Keep checking HousingWire.com for ongoing, live coverage from Kansas City from our editorial team on the commission lawsuit trial.
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