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Homeseller plaintiffs and MLS Property Information Network are fighting back against the U.S. Department of Justice’s opposition to a proposed settlement in the Nosalek commission lawsuit.
Judge Patti Saris of the U.S. District Court for the District of Massachusetts on Wednesday granted motions by plaintiffs and defendant MLS PIN to respond to a DOJ supplemental statement of interest in a case named for its lead plaintiff.
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“After seventeen months, the Department’s [supplemental] Statement still does not specify to Plaintiffs or the Court what Settlement terms the Department would find acceptable,” attorneys for the homeseller plaintiffs wrote in their response. “The Department wrongly claims that the Settlement maintains the ‘status quo’ … without addressing Plaintiffs’ and MLS PIN’s previous filings about how the Settlement changes the landscape in MLS PIN’s service area.”
“In any event, the Department is wrong. Since MLS PIN implemented the Settlement term allowing sellers to offer no cooperative compensation in July 2024, approximately three-quarters of sellers have indeed chosen not to,” the filing adds.
In its March 17 statement, the DOJ indicated it remained unsatisfied with the $3.95 million settlement the two parties negotiated, arguing that the deal would only make “cosmetic changes” to MLS PIN’s rules regarding agent compensation and would “neither protect nor restore competition to this important market,” but rather, encourage agents to steer buyers away from listings with lower commission offers.
The DOJ also argued the proposed monetary relief for an expanded class of plaintiffs is “similarly lacking” and that the settlement should be denied preliminary approval by the court. An approval hearing is set for April 1 at 9:30 a.m. Eastern.
The proposed MLS PIN settlement continues to allow sellers to make offers of compensation to buyer brokers via the multiple listing service, in contrast to the National Association of Realtors’ nationwide settlement, which resolves similar commission-related antitrust claims. But the Nosalek plaintiffs suggest this is a distinction without a difference.
“The Department incorrectly focuses on the fact that the [MLS PIN] Settlement allows offers of compensation to continue to be posted on MLS PIN’s listing platform when the seller so desires,” the filing states.
“But disallowing offers of compensation from MLSs, as the NAR settlement does, is illusory: for example, the exact same information can be posted on the exact same brokers’ own websites.”
According to the Nosalek plaintiffs and MLS PIN, the DOJ seems to be trying to accomplish policy changes through private litigation that it could allegedly better address itself.
“The Department continues to argue, in essence, that the underlying structure of the residential real estate market needs to be rebuilt from the ground up to altogether ban the payment of cooperative compensation from sellers to buyer-brokers,” the plaintiffs’ filing says.
“Plaintiffs take no position on whether, as a matter of public policy, cooperative compensation should be completely banned. But the present litigation is a private class action on behalf of a class of sellers in the MLS PIN service area. In a competitive residential real estate market, it may be in seller’s best interests to offer cooperative compensation to generate interest in their property.
“Accordingly, the Department’s sweeping change must be accomplished through legislation, public rulemaking, or a Department enforcement action, rather than in the context of a private Rule 23 class action on behalf of a seller class.”
Regarding the antitrust enforcer’s complaint regarding continued buyer steering, the homeseller plaintiffs argue that, if it exists, their suit is not the vehicle to address it.
“If steering were a concern, it is unlikely that, as discussed above, 75 percent of sellers would offer no compensation since July 2024,” the plaintiffs’ filing reads.
“In any event, ‘steering’ raises individualized class certification issues. For example, to the extent that individual buyer brokers are choosing to act contrary to their clients’ interests by steering them away from three-quarters of listed properties.
“If the Department believes that ‘steering’ in the residential real estate market is not addressed by the NAR settlement or MLS PIN Settlement, it has the authority to regulate or enforce existing law after related private lawsuits have been filed.”
Attorneys for the plaintiffs point out the proposed settlement explicitly allows the DOJ to bring an enforcement action event if the court grants the deal final approval.
“If the Department believes that the residential real estate market should be restructured on behalf of buyers as well as sellers, it remains free to file such a case,” the filing says.
“The Department’s inaction on buyer-broker conduct is no reason to derail a settlement on behalf of sellers that does not, and likely could not, encompass such conduct.”
Regarding the DOJ’s concern regarding the settlement’s monetary relief, the plaintiffs’ attorneys said they analyzed the NAR settlement and determined that MLS PIN would have been required to pay $3.95 million had it chosen to opt in to that deal and so the relief was raised so that it would be “exactly the same” as in under the NAR settlement. The scope of the MLS PIN deal was also expanded to match the scope of the NAR deal, they added.
“Notably, the Department raised no concern before Judge [Stephen] Bough about the size of the NAR settlement fund,” or about the scope of the released parties in that deal, the filing notes.
In its own reply to the DOJ’s statement of interest, MLS PIN emphasized that the federal agency had not addressed how its position that cooperative compensation should not be offered in the MLS would contradict state and federal authorities’ findings that such offers “are legal, procompetitive, and in some circumstances, required by law,” and how its position would allegedly violate the First Amendment, harm homebuyers, and “create an antitrust problem where none existed by requiring MLS PIN, as a listing service, to intercede in the free market and prohibit sellers from offering broker compensation to buyers.”
“DOJ’s supplemental response addresses none of these points,” attorneys for MLS PIN wrote.
Even though the deal has not yet received preliminary approval, MLS PIN has already made rule changes that are part of the deal, including removing a requirement that homesellers must offer compensation to buyer brokers. Those rule changes “are not cosmetic; they are meaningful and fully resolve the issues presented in this case,” according to MLS PIN’s filing.
“Since implementing that change in July 2024, approximately three quarters of sellers have elected to offer no compensation on the MLS PIN platform,” the filing says.
“DOJ is simply wrong when it suggests that some irresistible force will result in only a small number of sellers offering no compensation even when they wish to do so.”
