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About three months after West Penn Multi-List agreed to pay nearly $1 million to be covered under the National Association of Realtors’ antitrust settlement, the broker-owned multiple listing service and fellow defendant Howard Hanna have been dismissed from a commission suit outright.
This resolution is unusual in that some two dozen commission suits have been filed across the country and nearly all appear to be heading toward resolution via settlements rather than being dismissed on the merits or other court processes.
On Monday, Oct. 7, Judge William S. Stickman of the U.S. District Court for the Western District of Pennsylvania granted a June 4 motion to dismiss filed by West Penn MLS, Howard Hanna and Everest Consulting Group, which does business as Berkshire Hathaway HomeServices The Preferred Realty. The motion terminating the three companies as defendants was granted “with prejudice,” meaning permanently. Other defendants in the case have settled and therefore the judge has closed the case.
“We are grateful that the Court has recognized that this case was meritless,” said Howard ‘Hoby’ Hanna IV, CEO of Howard Hanna Real Estate Services, in a statement to Inman.
“Howard Hanna has always operated independently to prioritize our clients, and we will continue to uphold this commitment moving forward.”
The plaintiffs may still choose to appeal the ruling.
“[A]t present we are weighing our options concerning an appeal, as we believe the Court’s decision is incorrect on the law and the facts,” plaintiffs’ attorney Bruce Fox of Obermayer Rebmann Maxwell & Hippel told Inman in a statement.
The suit, brought by homesellers and known as Moratis, alleged a West Penn MLS commissions-related rule violates the federal Sherman Antitrust Act and is part of “nation-wide collusion within the real estate industry to maintain inflated commissions.” The rule is similar to NAR’s recently-defunct Participation Rule, which required listing brokers to offer buyer brokers compensation to submit a listing to the MLS.
The West Penn MLS rule at issue requires a listing broker to: “include and designate … the compensation being offered by the listing broker to the Seller [i.e., Buyer] Broker. This section of the form is mandatory and must be completed. For those listings which do not offer compensation to the Buyer’s Agent, this section of the form should not be left blank. Rather, the form should be completed by indicating $0.00 if no compensation is being offered.”
In his ruling, Stickman agreed with the defendants that the plaintiffs had failed to establish the existence of an agreement between the defendants as required under the federal Sherman Antitrust Act.
“Plaintiffs allege that by implementing, maintaining, and enforcing the buyer broker rule, West Penn MLS and Brokerage Defendants ‘require[] sellers to pay Buyer Brokers, to pay an inflated buyer broker commission, and an inflated total commission,’” Stickman wrote.
“Further, Plaintiffs allege that the buyer broker rule ‘mandates a “blanket offer,” meaning that the ‘same compensation must be offered to every buyer’s broker.’
“As written, the rules do not require home sellers to pay a buyer broker commission at all. In fact, the rule expressly permits the listing broker to offer the buyer broker no compensation. The buyer broker rule simply requires that the listing disclose the compensation, if any, that the buyer broker will receive.”
Because the West Penn MLS’s rule expressly allows offers of zero dollars, it’s not the same as the NAR rule that has been challenged in the majority of antitrust commission lawsuits, according to Stickman.
“The difference between the West Penn MLS rule and the NAR rule is that the NAR rule required listing brokers to offer compensation to the buyer broker,” he wrote.
“It did not permit listing brokers to offer no commission at all.”
NAR did not begin allowing offers of compensation of zero dollars until last year.
Stickman also said the plaintiffs had not satisfied the requirements to proceed under the Pennsylvania Unfair Trade Practices and Consumer Protection Law.
“Plaintiffs have failed to plausibly allege that Defendants engaged in deceptive or fraudulent conduct as proscribed by the CPL,” Stickman wrote.
“Plaintiffs allege that the West Penn MLS buyer broker rule is deceptive because home sellers will not know that the rate urged by their listing broker stems from anticompetitive collusion.
“Even assuming anticompetitive collusion is occurring, the complaint fails to allege how an internal MLS rule requiring disclosure of offered commissions could deceive, confuse, or mislead customers of a broker. The buyer broker rule at issue requires that the listing broker disclose the commission, if any, that will be offered to the buyer broker.
“The rule is merely a listing requirement, it does not have the capacity to deceive.”
Stickman denied the plaintiffs’ request to amend their complaint, saying “any amendment by Plaintiffs would be futile in the eyes of the Court.”
In June, West Penn MLS was one of several non-Realtor MLSs who chose to opt in to NAR’s proposed settlements of multiple commission suits. West Penn MLS agreed to pay $895,000 to opt in to the NAR deal, which contains a formula to allow non-Realtor MLSs to be covered if they pay 100 times their 2023 subscriber count.
Inman has reached out to West Penn MLS for comment. We will update this story if and when a response is received.
Editor’s note: This story has been updated with a comment from plaintiffs’ attorney Bruce Fox.
