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Amended Settlement Agreement In Nosalek Suit Not Enough To Appease The DOJ

The home seller plaintiffs and MLS Property Information Network’s (MLS PIN) efforts to address the Department of Justice’s “significant concerns” about their proposed settlement agreement in the Nosalek commission lawsuit were not enough.

In a letter filed on Monday, the DOJ told Judge Patti Saris that it had concerns about the second amended settlement agreement.

“On Wednesday, Dec. 13, plaintiffs’ counsel shared the Second Amended Settlement with the Department of Justice and indicated that they intend to file a renewed motion for preliminary approval on Monday, Dec. 18, 2023,” Jessica Leal, the DOJ’s trial attorney, wrote in the letter. “While the Second Amended Settlement makes some proposed changes, the Department of Justice continues to have concerns with the proposed settlement.”

The amended agreement has not yet appeared on the court docket as of Tuesday morning.

The letter did not elaborate on what the DOJ’s concerns are.

Leal also asked Saris to give the DOJ until Feb. 15, 2024, to file a statement of interest, if the court wishes to hear the department’s views before making a decision about granting preliminary approval.

Originally filed in December 2020, the Nosalek lawsuit, alleges that MLS PIN, Keller Williams and HomeServices of America have colluded to artificially inflate real estate agent commissions.

Since it is broker-owned, MLS PIN is not directly required to abide by the National Association of Realtors (NAR) rules, including is Participation Rule, however, MLS PIN has nonetheless adopted a similar rule requiring listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing to MLS PIN.

Both RE/MAX and Anywhere had also been named as defendants in the lawsuit, but the two firms have entered into joint settlement agreements with the plaintiffs in this suit, as well as the Sitzer/Burnett and Moehrl commission lawsuits. Judge Stephen Bough, who oversaw the Sitzer/Burnett trial, granted preliminary approval for the two settlements in November.

MLS PIN, however, has not been as fortunate. New England’s largest MLS filed its proposed settlement agreement in the Nosalek suit in late June. 

In the proposed agreement, MLS PIN said it would pay $3 million, change its commission policies and cooperate against the remaining defendants in the lawsuit. According to the proposed settlement, of the $3 million MLS PIN has agreed to pay in the settlement, up to $900,000 will go toward attorney’s fees, up to $200,000 will go toward expenses, $250,000 will go toward notifying settlement class members and each of the three named lead plaintiffs will get up to $2,500 for being class representatives.

The remaining $1.64 million would be used to pay for further expenses for the litigation against the remaining defendants “for the benefit of Settlement Class Members,” according to the filing.

Despite initial skepticism, Saris ultimately granting the settlement preliminary approval in mid-September.

However, in late-September, the DOJ intervened, filing a motion to extend the deadline for the final approval of the settlement.

“The United States makes this request to better enable the Department of Justice to evaluate the Proposed Settlement and its competitive effects,” the motion read. “Pursuant to its mission, the Antitrust Division is concerned about policies, practices, and rules in the residential real-estate industry that may increase broker commissions.”

The DOJ added that rather than open up competition, “MLS PIN’s proposed rule changes still establish an elaborate protocol (under penalty of sanction) regulating buyer-broker commissions, including requiring the listing broker to initially set the ‘total amount of compensation offered’ (including the number zero) in the listing. Thus, MLS PIN would continue to organize and facilitate brokers’ blanket, unilateral offers of compensation to buyer brokers.”

Saris ultimately granted the DOJ’s motion in early October.

Both MLS PIN and the DOJ declined to comment on this latest development in the lawsuit.

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