Sitzer | Burnett closing arguments wrap as judgment day approaches

Publish Date: October 31, 2023

Written by Andrea V. Brambila

- Originally published at Inman News - Andrea V. Brambila

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KANSAS CITY, Mo. — Attorneys for each side in the Sitzer | Burnett trial made their closing arguments Monday, in a final attempt to sway a Kansas City jury to find that the National Association of Realtors and major real estate franchisors either did or did not conspire to inflate buyer broker commissions.

The plaintiffs in the case now in the hands of an eight-person jury allege the National Association of Realtors, Keller Williams, Anywhere (formerly, Realogy), RE/MAX, and HomeServices of America and two of its subsidiaries HSF Affiliates and BHH Affiliates violated a federal antitrust law by following and enforcing a NAR policy known as the Participation Rule, or the cooperative compensation rule, with the purpose or effect of raising, inflating or stabilizing commission rates.

The rule requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated multiple listing service.

The class action lawsuit represents about 500,000 Missouri homesellers seeking reimbursement for nearly $1.8 billion in commissions paid to buyer brokers between 2015 and 2022.

Below are highlights from the defendants’ closings as well as of an impassioned rebuttal from the plaintiffs’ lead attorney.

NAR’s closing

In their closings, attorneys for the defendants repeatedly stated that the plaintiffs did not have any evidence to prove the alleged conspiracy.

The plaintiffs have to prove there was a conspiracy by a preponderance of the evidence — meaning that it is more likely there was a conspiracy than that there wasn’t — and “it’s not enough to take a kitchen sink approach” pulling documents from different companies and using them against the others, Ethan Glass of Cooley, lead counsel for NAR, told the jury.

“The law matters, the evidence matters, common sense matters,” Glass said. “Don’t leave your common sense at the door.”

In his closing, Glass conflated NAR and its members, saying the jury would have to decide whether “the 1.6 million people who are NAR” worked together with the corporate defendants to follow and enforce the cooperative compensation rule.

“This case is an insult to their hard work,” he said, noting that some of those agents are Missourians.

Glass said there were no documents or testimony at trial that were evidence of a conspiracy and that none of the defendants’ witnesses had ever heard of the rule at issue before this lawsuit.

He alleged that the plaintiffs’ lead counsel, Michael Ketchmark of Ketchmark and McCreight, kept changing the definition of “conspiracy,” including by alleging that the rule itself is the conspiracy, but that the question before the jury was whether there is a conspiracy to “follow and enforce” the rule.

It’s not illegal for trade associations to make rules and there’s no evidence that NAR enforces the rule in Missouri, Glass added.

“The plaintiffs’ lawyer has utterly failed to prove that a conspiracy to follow and enforce the rule even exists,” he said.

Glass pointed out that NAR issues guidance specifically telling its members not to inflate or fix commissions and that when they set compensation they should do so unilaterally and independently.

“That is the opposite of a conspiracy,” Glass said.

Against Ketchmark’s objection, Glass told the jury that in Missouri a seller may legally agree that their agent can share compensation with the buyer agent.

Glass noted that Ketchmark had used different figures to point to allegedly fixed commissions such as 6 percent, 5 percent, 3 percent, and 2.7 percent — omitting that the figures were different in part because they sometimes referred to the total commission the seller paid and sometimes only the share paid to the buyer agent.

“Oddly, the price that’s fixed changes depending on which way the wind is blowing,” Glass quipped.

He alleged that if “the plaintiffs’ lawyer has his way,” buyers won’t have agents, setting the industry back 30 years to the days of subagency when buyers didn’t have agents with fiduciary duties to them.

Glass noted that there are some 3,000 real estate agents in Missouri that are not Realtors, meaning homesellers have “3,000 options” and that in the seven-year period relevant to the case, sellers offered a commission other than 3 percent in the case’s four subject MLSs 110,000 times.

“I know you will make the right decision,” Glass told the jury.

HomeServices’ closing

Robert MacGill of MacGill, lead attorney for the HomeServices defendants, started out his closing by reminding the jury that people, including corporations, are equal before the law.

He then noted that “no one invented this practice of cooperative compensation” and that it had originally started in the late 1800s.

“It’s an American market outcome,” MacGill said.

The rule “simplifies transactions and creates efficiency,” he added, citing defendants’ expert Dr. Lawrence Wu.

“The rule helps sellers get the highest market price for their home.”

MacGill also alleged there was no evidence of a conspiracy, noting that there wasn’t “a single document” showing that the defendants had communicated about the rule or about commissions.

He noted that plaintiffs’ expert Dr. Craig Schulman had said he could draw an inference of conspiracy from data showing commission clustering in the four Missouri MLS markets he studied.

“No, he can’t,” MacGill said. Citing Wu, he said the rule imposed no restrictions on the choices of sellers or buyers, and that the commission clustering “shows competition at work” rather than a conspiracy because that may just be the “market price.”

He also noted that Schulman had not looked at paid commission rates, but rather offered rates, which Wu had found differed between 23 and 33 percent of the time.

MacGill pointed to witnesses who testified that HomeServices, BHH and HSF are not members of NAR and never directed their agents to join NAR, local Realtor associations or MLSs and that brokerages subsidiaries that do, “make their own decisions.”

In regards to damages, MacGill said no one had been injured by the cooperative compensation rule, much less the entire class of 500,000 homesellers. He pointed to the named plaintiffs that had testified, who when they were themselves buyers benefitted from not having to pay their own buyer agents.

“They got exactly what they contracted for and in addition they also benefited from the practice of cooperative compensation as buyers,” MacGill said.

Like Glass, MacGill conflated NAR and its members, saying that “perhaps 1 percent” of the entire U.S. population was being accused of conspiracy, which is “a very serious thing.”

He ended by asking the jury to base their verdict on “evidence, not bias.”

Keller Williams’s closing

“None of what you’ve heard about Keller Williams is true,” Timothy Ray, Keller Williams’ lead counsel, told the jury.

“None of what you’ve been told is true. Not a single thing,” he added.

Like Glass and MacGill, he combined the defendants with the agents who make up their rosters, saying that “decent, honest, hardworking people” were being called “thieves.”

He noted that there are 180,00 agents affiliated with KW. “We can’t control them,” he said.

Ray noted that what he says and what Ketchmark says is not evidence and that he found it “odd” that the plaintiffs had not called a single agent to ask if they joined NAR because of KW’s policy manual, which requires that agents join the association but offers an exemption.

Ray displayed a photo of a crowd with their umbrellas up as an example of the same behavior that can be arrived at independently.

“Just because everyone has an umbrella does not mean they all agreed to do so,” Ray said. “It may just mean it’s raining outside.”

He accused Ketchmark of telling the jury “half-truths” and “taking pieces of what someone said [and] twisting it around.”

He finished by asking the jury to award the plaintiffs “zero damages.”

Plaintiffs’ rebuttal

After the defendants gave their closing arguments, Ketchmark launched into his rebuttal — loudly. Much of his 27-minute counterargument was delivered at high volume.

He noted that he’d been waiting to hear “for five years!” why the cooperative compensation rule is mandatory.

“They haven’t explained it to you,” he told the jury.

Hitting back against Ray’s point that he didn’t have agents testify, Ketchmark said, “They’re the ones with the agents! Where are their agents? Where are their people?”

The reason the plaintiffs didn’t have agents testify is because “we are not blaming the agents!”

“Did I ever say at one time that 1.6 million Realtors are part of this conspiracy?” he added. “It’s a deliberate attempt to confuse you.”

He scoffed at Glass’s suggestion that the plaintiffs’ attorneys are trying to take $1.78 billion in damages from Missourians who are agents when they actually represent half a million Missourians who are homesellers and are trying to get that money back for them.

He pointed out that Glass had said NAR doesn’t make money on commissions, but NAR gets $240 million in dues every year from its 1.6 million member agents.

“We all know what’s going on!” Ketchmark cried. “We all know why they’re doing it!”

He pushed back against accusations that he was not being honest with the jury.

“I would never do that,” Ketchmark said, audibly choking up.

“Do not stand here and attack my integrity in front of these people like that! You know why that happens? It’s because they know the answers to these questions” you have to decide, Ketchmark told the jury.

In regards to Wu’s testimony, Ketchmark pointed out that Wu had admitted that the defendants’ lawyers had helped him with his presentation and said that while the defendants’ attorneys want the jury to believe that that happens all the time, Ketchmark had specifically asked the plaintiffs’ expert, Schulman, if his team had had any input into his testimony and Schulman had said no.

In regards to sellers having choices, he said that every single one of the homeowners in the class had been forced to pay a buyer broker commission in order to have their listing on the MLS.

“The law says they [the defendants] can’t do that,” Ketchmark said.

Regarding the lack of communication between the defendants about commissions, Ketchmark pointed out that commissions are posted on the MLS.

“You don’t have to exchange emails,” Ketchmark said. “It’s right there. Hidden from the public.”

In regards to sellers signing contracts in which they agreed to pay buyer agents, Ketchmark said, “You’re not allowed to fix prices and then say, ‘Well you paid the fixed price.’”

Ketchmark ended by telling the jury that the “corporate titans” on the defendants’ side are “waiting to hear what you have to say” and that the jury should “hold them accountable.”

“Press the reset button on the housing market,” Ketchmark said. “Return the homes to the homeowners.”

“They’ve gotten away with it for so long,” he added.

He asked the named plaintiffs, four of whom were in the gallery, to stand up.

“They’re the voices of the forgotten people,” Ketchmark said. “Our system doesn’t have to forget you. Our system can hold these corporations accountable. Use your voice.”

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