Parks agrees to settlement with Compass; NAR appeals investigation — RISMedia

Editor’s Note: The COURT REPORT is RISMedia’s weekly overview of current and upcoming court cases, investigations and other legal developments surrounding real estate.

This week, previously decided cases were revisited on the legal side of the real estate world, with the National Association of REALTORS® (NAR) voting against reopening investigations and lawsuits against itself. And brokerage firm Parks Pilkerton (more commonly known simply as Parks) announcing that it has gained immunity from seller lawsuits as part of a previously agreed-to settlement.

NAR appeals Justice Department investigation

In April 2024 A three-judge panel allowed the Department of Justice (DOJ) to reopen an antitrust investigation against NAR. On May 20, 2024, NAR filed an appeal with the DC Circuit Court of Appeals, requesting a rehearing by the same three-judge panel or a rehearing by the full court.

“As part of our commitment to represent the interests of our members and the public who buy and sell homes, we are asking the U.S. Court of Appeals for the D.C. Circuit to review the April 5, 2024 decision, uphold the district court’s decision, and bind the Department of Justice to the terms of our 2020 agreement,” A NAR spokesman told RISMediareferring to an earlier agreement between NAR and the DOJ to drop the investigation in exchange for the former changing certain rules.

Two of the three judges ruled that this letter did not promise a permanent closure of the investigation and allowed the Justice Department to proceed with the investigation.

In its objection, the NAR points out that many of the changes requested by the Department of Justice have already been implemented (with implementation by 17 August 2024) following the association’s pending settlement in the Sitzer v. Burnett class action lawsuit. However, a rule important to the Department of Justice (Clear Cooperation, which requires NAR members to list their products on NAR’s affiliated MLSs) was not changed.

It remains to be seen whether the Justice Department will seek to interfere with NAR’s class action settlement agreement as part of its investigation.

Parks are off the hook thanks to Compass comparison

In a court document filed today, Tennessee-based law firm Parks Pilkerton and plaintiffs in the Gibson lawsuit (a nationwide class action filed by the same lawyers behind Burnett) announced that the company would receive immunity from lawsuits brought by the sellers as a result of Compass’ previously announced settlement of the litigation.

Parks had only recently been added to Gibson’s lawsuit as plaintiffs sought to include several large independent brokerage firms that were excluded from the settlement with NAR.

But according to the filing, Parks was already covered because it had previously been acquired by Compass, which agreed in March to pay $57.5 million and change its practices in exchange for immunity.– something the plaintiffs were apparently not aware of.

The agreement still needs final court approval, but the judge in charge of the case has in the meantime suspended all legal deadlines applicable to Parks.

NAR objects to retrial of case

The Clear Cooperation Rule is also at the center of an antitrust lawsuit against NAR. Top Agent Network (TAN) — a San Francisco-based pocket listing startup — sued NAR in 2021, arguing that the rule was an anti-competitive practice.

The case was dismissed by a federal judge this year, but the dismissal was seemingly overturned by the Ninth Circuit Court of Appeals in the summer of 2023, on the grounds that TAN’s case was sufficiently similar to a lawsuit and settlement filed by PLS.com.

TAN has filed an appeal in California court They are pushing to move their case forward; the next hearing is scheduled for July 18, 2024. On May 23, 2024, NAR’s defense attorneys filed a brief asking the court to dismiss TAN’s appeal. NAR’s brief argued that TAN’s dismissal was legally consistent with the PLS.com settlement because the dismissal was based on TAN’s own business model (described as “an exclusive listing service for elite real estate agents”) being anticompetitive. PLS.com does not have an equivalent business model, and therefore, NAR argues, its settlement is irrelevant to the standing of TAN’s case.

At the time of going to press, the judge had not yet decided on the applications.

MLS PIN plaintiff and defendant consult with the Department of Justice

The U.S. Department of Justice indicated that it was dissatisfied with NAR’s proposed settlement of the class action lawsuit, citing in particular inadequate rule changes related to compensation offers.

“We believe that compensation offers should not be made anywhere, but certainly not in the MLS,” said Jessica Leal, a Justice Department attorney.

The DOJ had previously delayed a settlement in a Massachusetts commission case known as Nosalek v. MLS Property Information Network, Inc. et al. The DOJ, which filed a formal statement of interest in the case, also believes that the defendants’ rule changes (MLS PIN) did not go far enough to produce effective pro-competitive results.

On May 24, 2024, attorney Seth Klein (representing the plaintiffs in Nosalek v. MLS PIN) filed a brief with Judge Patti B. Saris (the district judge overseeing the case). The letter states, “Plaintiffs will be coordinating with MLS PIN and the Department of Justice to discuss the issues raised by the Court.” The parties will file a joint statement by June 21, 2024.

MLS PIN and the plaintiffs in the case had originally planned to respond to the DOJ on May 24, but that deadline was raised by Saris following a status conference to discuss the case. MLS PIN and the plaintiffs said they would still file their separate responses before June 21 and use those to advance ongoing discussions with the DOJ.

Zillow Tourist Agreement – ​​Legal or Not?

The changes currently taking place in the real estate industry are primarily related to buyer representation. Zillow has made a name for itself here and has released a new “viewing agreement” that can be used by buyer agents/brokers. (Read the one-page document here). The standard document specifies for buyers that a broker offering travel services inherently enters into an exclusive client relationship.

The Virginia REALTORS® Association sent a message to its members on May 3, 2024, stating that in their opinion, Zillow’s agreement was not consistent with Virginia law.

“Please discuss your business practices AND any agreements you plan to use with your broker, and make sure any forms you use comply with Virginia law,” the news story said.