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Court stays two New York-based commission lawsuits

The March and Friedman commission lawsuits are now stayed until Judge Stephen Bough rules on NAR’s settlement agreement

Taking a similar approach to Judge Patti B. Saris, who is overseeing the Nosalek suit, New York-based Magistrate Judge Robert W. Lehrburger has decided to stay the March and Friedman commission lawsuits.

Both suits were filed in federal court in New York City and accuse real estate industry players of colluding to artificially inflate real estate agent commissions. There are roughly three dozen defendants in the cases — including the Real Estate Board of New York (REBNY) and several brokerages, such as Serhant., The Agency, Engel & Völkers New York, Compass and Douglas Elliman.

Lehrburger granted the stay during a hearing on Wednesday. The stay was requested in late May via a letter sent to the court by an attorney for Engel & Völkers New York, on behalf of itself and 16 other defendants.

In the letter, the defendants stated that the nationwide commission lawsuit settlement agreement reached by the National Association of Realtors (NAR) contained mechanisms that would resolve all of the commission-related antitrust claims that had brought against them. They also noted that the final approval hearing for the settlement is slated to take place on Nov. 26, 2024.

“Without clarity about all the Defendants’ status in this case, it is impossible to agree on an efficient approach to briefing motions to dismiss,” the letter states. “For this reason, at least five other related cases nationwide have been stayed to allow defendants time to determine whether they will opt into the NAR Settlement framework as Released Parties and to allow Released Parties to receive a decision on final approval.

“A number of these stays have been entered with the consent of all parties because they recognize that the impact of the NAR Settlement is unknown and that attempting to proceed with briefing substantive motions will waste the parties’ and the court’s resources.”

Additionally, Engel & Völkers New York last week informed the court that it had reached a nationwide settlement of the claims brought about in the Gibson suit.

Despite maintaining that its Residential Listing Service (RLS) is not an MLS, REBNY opted into NAR’s settlement agreement in mid-June as a non-Realtor-affiliated MLS.

In a response to the defendants’ letter, attorneys for the Friedman plaintiffs argued in their filing that the claims made by their clients will not be released by the NAR settlement.

“Friedman alleges a wholly separate conspiracy perpetrated through The Real Estate Board of New York, Inc. (‘REBNY’) to inflate buyer-broker commissions in specific areas of Brooklyn for homes listed on REBNY’s Residential Listing Service (“RLS”) under the REBNY rules and code of ethics,” the reply states.

“NAR is not a party in Friedman, and REBNY is not a party in the NAR cases. Indeed, REBNY and NAR have nothing [to] do with each other. Unlike the NAR conspiracy, the REBNY conspiracy involved each brokerage and principal broker agreeing in writing to abide by the REBNY rules and code of ethics as a precondition to transacting on the RLS.”

The plaintiffs’ attorneys also claim that buyer broker commissions in New York City are “far more inflated under the REBNY conspiracy than the distinct NAR conspiracy.”

Ultimately, Lehrburger rejected the plaintiffs’ arguments, but he declined to rule on the scope of the settlement. The judge stated that a broader ruling was not needed to make the decision to grant a stay, as he felt the criteria usually considered for a stay had been met.

After Judge Stephen R. Bough, who is overseeing the Sitzer/Burnett suit, issues his ruling in late November, the March and Friedman defendants will have two weeks to file a motion for a new stay. After that, the plaintiffs will have 45 days to respond and the defendants will have another 21 days to reply.

The March and Friedman plaintiffs are not the only ones to take issue with NAR’s settlement agreement.

In response to West Penn MLS‘ motion to stay the Moratis suit, the plaintiffs claimed that the business practice changes outlined in NAR’s settlement would do nothing to halt the alleged conspiracy. The judge overseeing the Moratis suit sided with the plaintiffs and denied West Penn’s motion to stay the case.

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