Commission lawsuit defendant HomeServices of America is asking the U.S. Supreme Court to hear its argument that the Eight Circuit wrongly rejected arbitration agreements with unnamed class members in the Sitzer/Burnett commission lawsuit.
In late October 2023, a Missouri jury found HomeServices of America, as well as Keller Williams and the National Association of Realtors, liable for colluding to artificially inflate real estate agent commissions. Keller Williams settled this suit and others for $70 million last week, following RE/MAX and Anywhere, who had also been named as defendants but settled prior to the start of the trial.
In a court document filed on Friday, HomeServices of America told the Supreme Court that each HomeServices of America client contract states that the “signatories can arbitrate any claim or dispute arising out of the contract.” However, the plaintiffs who signed the contract sued a non-signatory parent company of the signatory brokerages, which “asserted liability based on the non-signatory’s relationship with its subsidiary.” Due to this, HomeServices said it sought to compel arbitration to determine whether the plaintiffs’ claims are arbitrable.
“The Federal Arbitration Act (“FAA”) requires courts to enforce arbitration agreements ‘according to their terms,’ including agreements that require arbitration of ‘gateway questions’ concerning whether a particular claim must be arbitrated,” the filing states.
HomeServices claims that the Eighth Circuit violated this principle “when it decided for itself whether the plaintiffs’ antitrust claims against HomeServices are subject to arbitration. There is no dispute that the plaintiffs agreed to contracts that include mandatory arbitration provisions. Those contracts require the arbitrator, not the court, to resolve disputes about the ‘interpretation’ and ‘enforcement’ of the contracts. But rather than enforce those provisions by ordering arbitration, the Eighth Circuit interpreted the terms of the contracts under state law and concluded that the contracts did not require the plaintiffs to arbitrate claims against HomeServices, the indirect parent of the real-estate brokerages that signed arbitration agreements with the plaintiffs.”
Under Missouri state law, HomeServices of America would have needed to have been named as a third-party beneficiary on the client contracts and it was not, meaning that HomeServicesis unable to compel arbitration, the brokerage argued. HomeServices first filed its motion to compel arbitration in March 2020, less than a year after the lawsuit was originally filed.
Due to what HomeServices called the Eighth Circuit’s “misguided approach” to this question of arbitration, the defendant feels that the court’s ruling should be reversed.
“Despite waiving their right to pursue class litigation against HomeServices, the plaintiffs obtained a $1.8 billion verdict, which they are seeking to treble,” the filing states. “The petition should be granted, and the Eighth Circuit reversed.”
In an emailed statement, Chris Kelly, an executive vice president at HomeServices, said that the case could have “far-reaching implications for the validity of arbitration clauses in the United States.”
“HomeServices filed a Writ of Certiorari with the United States Supreme Court seeking a review of the determinations made by the trial court and the Eighth Circuit regarding our right to pursue arbitration as the contractually-agreed method of resolving any dispute,” Kelly wrote. “As we explain in the filing, there is no dispute that the contracts at the core of this matter include mandatory arbitration provisions, meaning these issues should have been reviewed by an arbitrator, not a court. This appeal highlights a substantial inconsistency among circuit courts regarding the interpretation of arbitration agreements and delegation clauses. By bringing this issue before the Supreme Court, we aim not only to seek a resolution for this specific case but also to ensure the uniform application of the Federal Arbitration Act nationwide, thereby preserving the integrity and intended function of arbitration agreements.”