Remax, Keller Williams, Anywhere settlements get final approval

A federal court in Missouri has approved settlements for three cases over buyer real estate broker fees with a trio of real estate franchisors following a last-minute attempt to derail the proceedings was quashed.

Judge Stephen Bough ruled in favor of the settlement with Keller Williams, Anywhere Real Estate and Remax on Thursday. One of the objectors had attempted to prevent the hearing on Wednesday in another federal court in Illinois but that judge quickly rejected the petition.

The approval was expected, noted Marty Green, a principal at the law firm of Polunsky Beitel Green.

"Although there were some objections that the Court had to address, the momentum of the case has been rapidly moving toward a nationwide resolution, and it was very unlikely that the Court was interested in deviating from a process that furthered that outcome," Green said in a statement. "While the Court may make some adjustments to the process from here, we expect the Court will do everything in its power to continue the march toward final resolution."

The ruling noted that as of May 2, almost 200,000 claims have been made as a result of the settlement, while only 12 people objected and 61 opted out. "[T]he minuscule amount of opposition to the Settlements also favors approval," said Bough.

The claims period still has a full year from May 9 to run.

While the legal efforts are generically grouped under the name Sitzer/Burnett, the specific class action cases the agreement resolved were Burnett, Moehrl and Nosalek.

Still, the settlement releases the defendants, their subsidiaries, brands, affiliated agents, along with their franchisees and their agents from ongoing and future litigation surrounding the antitrust claims.

Among the agreements still pending are those with the National Association of Realtors as well as with Homeservices of America.

"Collectively, together with the Anywhere, Remax and Keller Williams settlements, these settlements provide a total settlement fund of over $600 million with other settlements announced bringing the total to over $900 million," Bough wrote. "The NAR settlement also provides opportunities for various multiple listing services and brokerages to opt-in to the settlement, which may provide still further financial compensation to the Settlement Class."

Going forward, given that the Compass and Douglas Elliman settlements are similar to the Burnett agreements, there's no reason why those won't be approved as well, said Soham Bhonsle, an analyst at BTIG, in a report.

"From here, investors will need to watch the [Justice Department's] stance on the NAR settlement as it will ultimately dictate how agents operate in the marketplace going forward (because agents who belong to an MLS will need to abide by the rules their [multiple listing service] agrees to, i.e. the rules in the NAR settlement)," Bhonsle said.

"To that point, we note that the NAR received preliminary approval in its settlement on April 24 and the final approval hearing is slated for Nov. 26."

The approved settlement applies only to plaintiffs on the sell-side of the transaction and does not cover any litigation with the buy-side participants. This agreement reduces the size of the potential, but not yet certified, plaintiff class by eliminating claims for buy-side damages by those who also sold a property and are covered by the settlement, the Anywhere (formerly Realogy) statement said.

"I am pleased the court has granted Anywhere final approval of our nationwide settlement," said Ryan Schneider, Anywhere CEO and president, in its statement. "This is a significant milestone on our path to put these claims behind us, begin to implement agreed upon practice changes, and move forward with our affiliated agents and franchisees as, together, we continue helping home buyers and sellers move to what's next."

A similar sentiment came from Keller Williams.

"We are pleased to hear of the court's final approval of our settlement," said Darryl Frost, a spokesperson for Keller Williams. "We will continue to focus on what we do best: empowering real estate entrepreneurs so they can deliver exceptional value to their clients."

Remax in its statement noted it neither admitted or conceded liability with this settlement and continued to deny "the material allegations" raised.

"Since entering into the settlement last fall, Remax has been committed to obtaining final approval," says Erik Carlson, CEO of the parent company Remax Holdings. "We are thrilled to be leading the way in moving forward, maintaining our focus on supporting Remax affiliates and continuing to foster greater transparency in the industry on behalf of homebuyers and sellers."

Korein Tillery, the law firm for the objector in the Batton case, James Mullis, who sought that injunction, was not able to comment on this latest ruling.

Among the objections, some claimed the settlement did not go far enough, while others claimed it was too broad.

For the first group, Judge Bough wrote that he oversaw the Burnett trial and the injunctive relief addresses the issues raised by the plaintiffs.

"The Court overrules objections that the injunctive relief goes too far," the ruling stated. "The injunction is reasonably tailored to address the Plaintiffs' claims — which centered on the Mandatory Offer of Compensation Rule."

As for those that claim the settlement amount is too low, the judge again referred to overseeing this litigation for five years, adding, "there is no suggestion or evidence of collusion or other wrongdoing that would merit additional analysis of the Settling Defendants' ability to pay.

"The Court finds that Class Counsel acted diligently on behalf of the Settlement Class in obtaining meaningful recoveries for the class without risking bankruptcy by the Settling Defendants," Bough wrote. "The Court observes that, given the Burnett judgment, Class Counsel's interests are aligned with the Settlement Class to obtain as high of a settlement amount as possible."

At the end of last October, a jury in the Burnett case overseen by Bough awarded damages of nearly $1.8 billion.

An objection raised by home builder Pulte Group received some specific attention in the ruling. "First, courts repeatedly hold that parties do not need to include a detailed allocation formula in class notice or formulate one before final settlement approval, rejecting Pulte's contention."

A second point for rejecting Pulte's objection, that no mechanism for home builders to make bulk claim submissions exists, was found by the judge to be meritless, as the lawyers for the class submitted evidence that the case administrator worked with bulk filers making multiple claims.

Pulte did not return a request for comment.

Besides the Mullis objection, the judge also rejected filings from plaintiffs in South Carolina and Pennsylvania.

"This is not a case where there are different groups of plaintiffs with non-overlapping claims that might conflict," Bough said after discussing all three of those objectors. "And of course, if a home seller believed that they would be better off by opting out of the settlement to be able to pursue additional buyer claims, they were entitled to do so."