Brokers Divided on Settlements; Supreme Court Rules Landmark Regulatory Case — RISMedia

Editor’s Note: THE COURT REPORT is RISMedia’s weekly report on current and upcoming lawsuits, investigations and other legal events involving real estate.

Recent legal proceedings have included both class action lawsuits specifically targeting the real estate industry and wide-ranging national decisions that will also address housing issues.

NAR’s petition for DOJ reconsideration denied

Earlier in 2024 The Department of Justice (DOJ) has reopened its investigation to the National Association of Realtors (NAR) — investigation closed in 2020 The Justice Department seems particularly concerned regarding NAR’s business relationship with MLS, believing that this relationship and the policies surrounding it may constitute a violation of antitrust law.

NAR previously filed a motion to reconsider the case, which allowed the Justice Department to reopen its investigation. On July 12, the NAR petition was rejected by the United States Court of Appeals for the District of Columbia in Washington, D.C. Accordingly, the investigation will continue for the time being; previous meeting of the Department of Justice and the National Office of Risk Assessment has not led to significant progress towards resolving the problem.

A NAR spokesperson told RISMedia: “This ruling contradicts long-standing precedent on the interpretation of government contracts and the fundamental principle that the government must honor its word. We are evaluating all remaining legal options and are committed to exploring all avenues to ensure DOJ honors the terms of our 2020 agreement.”

Supreme Court Overturns Chevron Deference, Subverting the Regulatory State

In 1984, the U.S. Supreme Court in Chevron USA, Inc. v. Natural Resources Defense Council, Inc. held that federal regulators have broad authority to interpret and apply regulations as they see fit and that courts should defer to expert opinion when making regulatory decisions.

Under the Chevron Deference, courts would generally allow agencies to interpret and apply statutes based on their own expert opinions. Judges themselves would decide issues based on congressional advice intention when the regulations were passed, rather than a strict interpretation of the text. (For example, a new chemical that causes disease is discovered after a law regulating such chemicals is written. Agencies would classify it as hazardous under that law, and courts would respect that, even if that particular chemical could not be specifically (listed as such in the act because legislators were unaware of its existence at the time.)

On June 28, the Supreme Court overturned that precedent in Loper Bright Enterprises v. Raimondo. Chief Justice John Roberts wrote, “Chevron’s premise is flawed because agencies have no special authority to resolve statutory ambiguities. The courts do.”

Legal experts say the decision will have serious consequences, including for the real estate market, as it opens the way to challenging long-standing regulations. Housing experts are divided on the potential consequences.

More and more brokerage firms are reaching settlements in seller class action lawsuits, while several others are deciding to continue the litigation

July 15 was the deadline for defendants to file lawsuits in Gibson v. National Association of REALTORS®. Filed in Missouri, Gibson is a consolidated class action lawsuit by home sellers who sold through the NAR-affiliated MLS system.

When the deadline came, United Real Estate and HomeSmart are the latest brokerage firms to reach a settlement in class action lawsuits against home sellers. United CEO Dan Duffy said in a statement:

“We have always strived to provide our brokers and agents with the best support and value. This settlement allows us to focus on equipping agents with the tools and resources they need to compete and serve their clients with excellence, without the burden of lengthy litigation.”

Under the settlement, United Real Estate will pay $3.7 million. Like most other brokerages that have settled, it will make changes to its business policies while denying any allegations of wrongdoing.

The settlement had a domino effect. Plaintiff Chris Masiello in Masiello v. Arizona Association of Realtors et al (a smaller class action filed in Arizona) filed a motion on July 22 to stay the case as it relates to HomeSmart because Masiello’s class of plaintiffs is in the same class as Gibson. The stay was approved shortly after the motion was filed.

However, the other plaintiffs — The K Company, Real Estate One (REO), NextHome, William Raveis, Howard Hanna, Weichert, Crye-Leike Realty, John L. Scott, eXp Realty, Baird & Warner and Keyes Illustrated Properties — have filed a motion to continue Gibson’s lawsuit for the time being.

“John L. Scott Real Estate has never acted as a sales agent or purchaser in connection with a real estate transaction in the State of Missouri,” wrote Lennox Scott, owner of John L. Scott Real Estate, in a filing. “Throughout my tenure as an agent or officer of John L. Scott Real Estate, I have never believed that it would be possible or prudent to subject the property to the jurisdiction of a court in the State of Missouri.”