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Despite Pandemic, Discovery to Proceed in Realty Broker Fee Case

April 7, 2020, 8:08 PM

RE/MAX LLC lost its bid to pause a lawsuit alleging a nationwide scheme to rig real estate broker commissions, when a Kansas City, Mo., judge ruled Tuesday that discovery could proceed despite the Covid-19 pandemic.

“While the court acknowledges and appreciates the newfound challenges posed by the pandemic, all the parties to this suit have dealt with those challenges in a courteous, professional, and resilient manner,” Judge Stephen R. Bough wrote.

In addition to the RE/MAX, the proposed class action targets the National Association of Realtors, Realogy Holdings Corp., HomeServices of America, and Keller Williams Realty. It accuses them of conspiring to bar brokers who represent home sellers from negotiating the commissions they pay brokers representing buyers.

The case was filed in the U.S. District Court for the Western District of Missouri by a couple who claim the scheme inflated their commission when they sold their home. It’s one of two parallel suits making similar claims, with the other proceeding in Chicago federal court. The Department of Justice is also investigating.

Bough gave the case the green light in October. He rejected the argument that requiring a unilateral commission offer can’t be an antitrust violation because it has the legitimate purpose of stopping buyers’ brokers from holding otherwise good deals “hostage” based on commission size.

The rule may have pro-competitive justifications, but weighing them against its anti-competitive effects is for summary judgment or trial, the judge said.

At a March 26 settlement teleconference, RE/MAX sought a two-month stay on behalf of the defendants, which are also pressing a bid to arbitrate the case. RE/MAX filed a formal motion April 1, saying the real estate industry “has suffered a massive hit.”

“Business-as-usual proceedings will divert defendants’ resources from attempting to manage their businesses through this crisis and impair their ability to cost-efficiently conduct the intensive fact discovery,” the motion said.

Denying the motion, Bough acknowledged that “these are extraordinary times” and that the pandemic “will impact the parties in significant and unforeseen ways.”

But they’ve successfully dealt with those difficulties so far “by email, telephonic meet-and-confers, or teleconference with this court,” the judge said.

“The court is confident that these practices, as well as the continued professionalism of the parties, remain the most effective tools for managing the litigation-related challenges posed by the coronavirus,” he wrote.

RE/MAX is represented by Horn Aylward & Bandy LLC. HomeServices is represented by Barnes & Thornburg LLP, Foley & Lardner LLP, and Lathrop GPM LLP. Keller Williams is represented by Holland & Knight LLP and Brown & James PC. Realogy is represented by Morgan Lewis & Bockius LLP and Armstrong Teasdale LLP. The NAR is represented by Stinson LLP and Schiff Hardin LLP.

The plaintiffs are represented by Williams Dirks Dameron LLC and Boulware Law LLC.

The case is Sitzer v. Nat’l Ass’n of Realtors, W.D. Mo., No. 19-cv-332, 4/7/20.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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