Another day and another class-action antitrust commission lawsuit accusing the real estate industry of colluding to inflate real estate agent commissions has been filed.
But this latest one comes with a twist — it was filed by homebuyers, unlike the others filed by home sellers.
Known as Batton 2, after the lead plaintiff Mya Batton, the lawsuit accuses Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna and Douglas Elliman of conspiring to artificially inflate agent commissions, resulting in elevated home-buying costs.
Unlike the Sitzer/Burnett, Moehrl and Gibson lawsuits, the National Association of Realtors (NAR) is missing from the list of defendants, however, the trade group’s presence is heavily felt in the plaintiffs’ complaint.
Batton 2 commission lawsuit details
Filed on Nov. 2 in the U.S. District Court for the Northern District of Illinois Eastern Division, this lawsuit also takes issue with NAR’s Participation Rule, which requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated MLS.
According to the complaint, this requirement of a blanket offer of compensation makes it easy for buyer agents to steer clients to properties they would make a higher commission on.
“NAR’s requirement that offers of compensation be expressed in specific dollar or percentage terms enables buyer agents to easily compare the financial compensation offered to them by home sellers and steer their clients to higher commission homes,” the filing reads. “Thus, the Rule is designed to create tremendous pressure on sellers to offer the high, standard commission and to act as a powerful deterrent to anyone who may attempt to offer a discounted commission.”
The complaint states the reason for the rule is “to maintain high broker commissions for NAR members at the expense of homebuyers.” The filing also argues that without the rule, buyers would negotiate buyer-agent commissions and not the home sellers, causing buyers’ agents to compete with one another by offering “lower commission rates and/or higher quality services.”
The plaintiffs claim that they and other class members have each “incurred at least thousands of dollars in overcharges as a result of Defendants’ conspiracy.”
What the plaintiffs are looking for
The suit is seeking class-action status, a jury trial, a damages award and a permanent injunction preventing the defendants “from establishing the same or similar rules, policies, or practices as those challenged in this action in the future.”
Unlike the other commission lawsuits, Batton 2 has two proposed classes.
The first is a nationwide class, which consists of “all persons who, since Dec. 1, 1996 through the present, purchased in the United States residential real estate that was listed on an NAR MLS.”
The second is a damages class, which consists of “all persons who, since Dec. 1, 1996 through the present, purchased in the Indirect Purchaser States residential real estate that was listed on an NAR MLS.”
According to the complaint, indirect purchaser states include Arizona, Arkansas, California, Connecticut, Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia, Wisconsin, Puerto Rico and Washington, D.C.
The nationwide class is seeking injunctive relief and the damages class is seeking monetary damages.
Not the plaintiffs’ first legal fight
Due to the time frame outlined in the class descriptions, this lawsuit has the potential to be even larger than the $200-plus billion Gibson suit.
While this is certainly not the first commission lawsuit for the defendants, which have also been named in the Gibson lawsuit in Missouri, it’s also not the first commission lawsuit for the seven named plaintiffs.
Mya Batton, Aaron Bolton, Michael Brace, Do Yeon Irene Kim, Anna James, James Mullis and Theodore Bisbicos are also the plaintiffs in a lawsuit against NAR, Anywhere, Keller Williams, HomeServices of America and RE/MAX pending in the same district.
This lawsuit, which was originally filed in January 2021 by Judah Leeder and later amended in July 2022 with Batton as the lead plaintiff, also alleges that NAR’s policies have inflated agent commissions, resulting in higher home prices paid by homebuyers. Motions to dismiss the lawsuit are currently pending.
The Batton 2 lawsuit lists the initial Batton suit defendants as co-conspirators, as well as “multiple local Realtor associations,” “the NAR MLSs” who’ve adopted the rule, “[f]ranchisees and brokers of Defendants” and “other brokers” who “complied with and implemented” NAR’s rule.
Compass said it did not want to comment on the lawsuit and the other defendants did not return a request for comment.
