NAR’s Remaining Legal Battles, DOJ Pressure

A key deadline in the antitrust fight over broker commissions may have passed, but the pressure is still on for the National Association of Realtors and some of the biggest names in residential brokerage quite yet.

The 1.5 million-member trade group agreed to new rules that went into effect in Aug. 17, shifting its guidance around agent compensation as part of a landmark settlement to resolve antitrust suits by homesellers.

In the months leading up to the deadline, the deal raised more questions than answers, and now that the rules have taken effect, many in the industry are still struggling to understand the long-term impact. As residential players wait for the fallout to take shape, NAR and some of its brokerage constituents are still contending with other lawsuits not covered by the deal.

The Department of Justice has also loomed large over the industry since April, when a federal appeals court granted the agency permission to renew its probe into NAR and the commission sharing rule targeted by the antitrust litigation.

It’s unclear whether the agency will move forward with its own investigation now that policy changes are already in place, but the option to do so is on the table.

A settlement refresher

Following settlements struck by some of the nation’s largest brokerages, NAR agreed in March to pay $418 million in damages to resolve homeseller claims the organization conspired with brokerages to drive up agent commissions.

The deal, which came after a jury verdict against the group in a lawsuit known as Sitzer/Burnett and a wave of copycat lawsuits, also extended an option to smaller brokerages and locally-controlled MLSs, along with providing a path forward for firms without agreements of their own.

Though NAR’s deal resolved a swath of claims brought nationwide, the agreement — and those reached by individual brokerages — applies only to lawsuits brought by homesellers, not homebuyers, many of which are still making their way through federal courts. (However, according to a NAR spokesperson, the settlement does release it and other entities covered by its agreement, from claims brought by buyers who also qualify as part of the homeseller class.)

Buy-side lawsuits

Among the cases filed by buyers are two Illinois-based lawsuits known as Batton 1 and Batton 2 named after the lead plaintiff, Mya Batton. But the attorneys for the plaintiffs in the lawsuits, the first of which was filed in 2021, have struggled to tie all of the plaintiffs and defendants to the jurisdiction of the federal court in Illinois, and many of the brokerages initially named in the cases have since been dismissed.

HomeServices of America was also initially included in the first Batton lawsuit, alongside NAR, Anywhere, REMAX and Keller Williams who are still litigating the claims, according to court documents. The judge dismissed HomeServices in February, and the attorneys representing the buyer plaintiffs instead sued the firm in a Florida-based lawsuit filed in April and known as Lutz.

Last month, the remaining brokerage defendants in the first Batton case also filed a motion to dismiss the case outlining a similar argument to HomeServices, though the judge has yet to enter a decision. The motion came about three months after the plaintiffs filed an appeal opposing the final approval of the settlement agreements posed by Anywhere, REMAX and Keller Williams in the Sitzer/Burnett lawsuit.

In the second Batton lawsuit, the judge dismissed claims against Douglas Ellliman and Howard Hanna. Elliman was added as a defendant in the Lutz lawsuit in June, and attorneys for the Batton plaintiffs filed another lawsuit against Howard Hanna in the Eastern District of Pennsylvania in May.

The five remaining brokerage defendants in the Batton 2 case — including Compass, eXp, Redfin, Weichart Realtors and United Real Estate — in June filed a motion to dismiss the claims, which the plaintiffs opposed in a counter-filing earlier this month. In the response, the plaintiffs argued that the buyers in the lawsuit “suffered direct injuries” in the form of inflated commissions.

Attorneys for the plaintiffs in the Sitzer/Burnett lawsuit sent out notices to potential members of the class on Aug. 17, the same day the NAR rules took effect. Eligible class members have until May 9, 2025 to file their claim.

DOJ Intervention

Also still at play is the DOJ, which now has the authority to revive its investigation into NAR and its practices. Under President Donald Trump’s administration, the agency agreed to drop its inquiry into the trade group in 2020, but later reneged on the deal once President Joe Biden’s administration took the helm.

NAR contested the DOJ’s decision to pull out of the settlement and won, but a federal appeals court later sided with the agency, ruling that agreement to forego its initial probe didn’t prohibit the department from investigating the trade group and its policies in the future.

The trade group said this month it plans to challenge the DOJ by petitioning the Supreme Court to block the federal investigation. The organization said it expects to file by Oct. 10.

So far, the agency hasn’t interfered with NAR’s settlement in the Sitzer/Burnett case, though it has taken issue with provisions proposed in other lawsuits like the one known as MLS PIN.

The DOJ has the power to continue investigating NAR, but it may opt out of pursuing another probe considering the new rules and a potential change in authority with the November presidential election.