IN THE UNITED STATES DISTRICT COURT FOR THE
`WESTERN DISTRICT OF MISSOURI
`WESTERN DIVISION
`
`CASE NO. 19-CV-00332-SRB
`
`OBJECTION TO NATIONAL
`CLASS ACTION SETTLEMENTS
`FOR REALOGY HOLDINGS CORP.,
`RE/MAX LLC., AND KELLER
`WILLIAMS REALTY, INC.
`AND SUGGESTIONS IN SUPPORT
`OF THE OBJECTION
`
`)
`)
`)
`)
`
`))
`
`RHONDA BURNETT, JEROD BREIT,
`JEREMY KEEL, HOLLEE ELLIS, and
`FRANCES HARVEY, on behalf of
`themselves and all others similarly
`situated,
`
`Plaintiffs,
`
`vs.
`
`
`)
`)
`)
`)
`)
`THE NATIONAL ASSOCIATION OF
`)
`REALTORS, REALOGY HOLDINGS
`)
`CORP. (n/k/a ANYWHERE REAL
`)
`ESTATE, INC.), HOMESERVICES OF
`)
`AMERICA, INC., BHH AFFILIATES,
`LLC, HSF AFFILIATES, LLC, RE/MAX )
`LLC, and KELLER WILLIAMS REALTY, )
`INC.,
`
`))
`
`)
`
`Defendants.
`
`In compliance with the Preliminary Approval Order and the Long Form Notice of
`
`Proposed Settlements of Realogy Holdings Corp., Re/Max LLC., and Keller Williams the
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`following members, none of whom have ever objected to a class action settlement before, object
`
`on behalf of a proposed class of individuals who sold a home on a Multiple Listing Service
`
`servicing the District of South Carolina:
`
`Robert Benjamin Douglas
`Rdoug2172@gmail.com
`
`Address: 631/2 Maple Street
`Charleston, SC 29403
`Phone # (859)-699-3952
`Home sold: 14 N Tracy Street
`
`
`
`.
`
`1
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`Case 4:19-cv-00332-SRB Document 1441 Filed 04/12/24 Page 1 of 14
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`Charleston, SC 29403
`Date of Sale: 2/28/2023
`Listing Broker: Daniel Ravenel
`Sotheby’s International Realty
`Buyer’s Broker: Maven Realty
`
`Benny D Cheatham
`Benny_cheatham@yahoo.com
`101 Five Oaks Drive, Landrum, SC 29356
`Home Sold: 513 Minnow Drive, Pawleys Island, SC 29585
`Date of Sale: 7/24/2023
`Listing Broker: The Litchfield Company
`Buyers Broker: The Litchfield Company
`
`Douglas W. Fender II, Dena Marie Fender
`doug.w.fender@gmail.com
`134 Lancelot Court
`Lexington, SC
`(803)542-8019
`Home sold: 208 Spring Water Dr
`Columbia, SC 29233
`8/30/2023
`Listing Broker: Century 21 Vanguard
`Buyer’s Broker: Coldwell Banker Realty
`
` I.
`
`Introduction
`
`The Objectors oppose the national class action settlements in their present form and
`
`propose that the settlements be denied final approval for a number of reasons.
`
`To begin, the class settlement significantly exceeds the narrow scope for which the
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`classes were certified and for which discovery was conducted. The Moehrl and Sitzer/Burnett
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`classes were originally certified for a total of 24 Multiple Listing Services (MLSs). This
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`settlement attempts to expand that class certification to more than 600 MLSs around the country.
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`This despite the fact that real estate is, at its base, local. Many of those 600 MLSs operate and
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`enforce their rules differently from other MLSs even within the same state, let alone across the
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`2
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`country. It is also easy to conflate the illegal activity these MLS engaged in with the means by
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`which it was accomplished. These MLSs may have used many of the same rules, but often
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`enforced them in various ways. The participants in these MLSs took part in fixing prices for
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`commissions, the actual illegal activity, using rules adopted for its particular MLS, though they
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`may have used similar instrumentalities to do it.
`
`Realogy Holdings and RE/MAX settled their cases pretrial for $83,500,000 and
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`$55,000,000 respectively. As a condition of these settlements, both parties agreed to certain
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`“practice changes” and to cooperate with the Plaintiff lead counsel in the trial of the Burnett and
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`Moerhl cases. This cooperation agreement does not benefit most of the absent class members.
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`Indeed, it only benefited those Plaintiffs in the trial of the Burnett action and, should Moerhl
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`proceed to trial, it may benefit those litigants. (Plaintiff’s Motion for Preliminary Approval for
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`Realogy and RE/MAX Settlement Agreements, dkt. 1192 at 11) This use of a nationwide
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`settlement class to benefit particular groups of litigants at the cost of other, absent class members
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`is a theme running throughout these settlement agreements.
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`Keller Williams proceeded to trial in the Burnett case, with Mr. Williams even testifying
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`in the trial of the case. Having lost at trial in which only four (4) MLSs were at issue, Keller
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`Williams has agreed to pay a total of $70 million to a national class numbering in the “tens of
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`millions” in order to settle a $1.7 billion verdict (subject to trebling) awarded to half a million
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`Missourians. Keller Williams has agreed to similar “practice changes” as are present in the
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`Realogy and RE/MAX settlements, such as they are. They have further agreed to cooperate with
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`the Plaintiff’s counsel in the Moerhl, Burnett, and Umpa actions, meaning that Keller Williams
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`need not cooperate with any other actions alleging the same or similar conduct for any absent
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`3
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`class member against the Defendants sued in those actions or any other bad actor. (Keller
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`Williams Settlement Agreement, dkt. 1371-1 at 24)
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`Further, the settlement amount, $208,500,000, in the aggregate, is far too low to
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`adequately compensate the massive number of injured parties here. While the outcome of the
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`trial and appeals is uncertain, that uncertainty does not mean that Plaintiffs should be able to
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`handicap other absent class members’ ability to effectively try their own cases, in their own
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`states, with their own evidence. In other words, Plaintiffs in these cases have bargained away
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`rights of the citizens of other states in order to ensure that their own cases were settled, their own
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`clients received cooperation at trial, and their own fees and expenses of trial paid. They did not
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`conduct even the barest of discovery into the conduct of this conspiracy in other states because
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`they could not. Yet it is their contention that $208,500,000 is sufficient to make whole absent
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`class members in radically different circumstances and in radically different conspiratorial
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`environments. While it is true that two other defendants are presently jointly and severally liable
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`for the damages verdict delivered in the Burnett case, that does not help absent class members
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`because the National Association of Realtors’ purported settlement has not even requested
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`preliminary approval and the remaining defendant has not settled and is apparently continuing to
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`litigate.
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`Next, the settlement agreements at issue here release Franchisees despite not requiring
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`anything of them. The national brands in this case are able to act only through franchisees. As
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`will be discussed below, those franchisees are not required to pay any remuneration to those
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`people they harmed. The fact that they pay a franchise fee of course does not provide
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`consideration for these releases because they would be required to pay that anyway. They are
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`4
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`further not required to change any practices or procedures. Antitrust law is designed to deter bad
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`actors. Here, by requiring the franchisees to neither pay nor change, it is unclear how these
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`settlements further the purposes of antitrust law.
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`Lastly, the practice changes, to the extent that they require any changes at all, sunset after
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`only five years. The price fixing activity, which is set out as well as it can be in the DOJ’s
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`Statement of Interest in Nosalek v. MLS Property Information Network, Inc. et. al., No. 1:20-cv-
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`12244-PBS (D. Mass.), is of a very long vintage. It is foolish to believe that such a long history
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`of price fixing can be undone by five years of mild practice changes, i.e. not providing particular
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`software. (DOJ Statement of Interest by the United States in Nosalek, Exhibit 1 at pp. 6-8)
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`For these reasons, more thoroughly set out below, objectors from South Carolina ask this
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`Court deny Final Approval to these three settlement agreements in their present form.
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` II.
`
`Pre- Certification Settlements Require Careful Scrutiny
`
`Rule 23 of the Federal Rules of Civil Procedure requires that a class action settlement
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`may only be approved after a hearing and only on finding that it is fair, reasonable, and adequate
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`Marshall v. NFL, 787 F.3d 502, 508 (8th Cir., 2015). In determining that the settlement terms are
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`fair, adequate, and reasonable the court must also act as a fiduciary “serving as a guardian of the
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`rights of the class members.” In re: Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d 922,
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`932 (8th Cir. 2005). In determining whether a settlement is fair, adequate, and reasonable, the
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`court must consider four (4) factors: (1) The merits of the Plaintiffs’ case weighed against the
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`terms of the settlement; (2) The Defendants financial condition; (3) The complexity and expense
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`of further litigation; and (4) The Amount of opposition to the settlement Id. The most important
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`5
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`consideration... is “the strength of the case for Plaintiffs’ on the merits balanced against the
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`amount offered in settlement.” Petrovic v. Amco Oil Co., 200 F.3d 1140, 1150 (8th Cir. 1999),
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`although the District Court cannot value the claims with a high degree of certainty the court must
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`“insist that the parties present evidence” that would at least enable it to make a “ball park
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`evaluation” before deciding whether to approve a settlement. Synfuel Technologies, Inc. v. DHL
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`Express (USA), Inc.,463 F. 3d 646, 653 (7th Cir. 2006).
`
` III. The Class Has Been Impermissibly Expanded
`
`In Blue Shield of Virginia v. McCready, the Court said that “Congress sought to create a
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`private enforcement mechanism that would deter violators and deprive them of the fruits of their
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`illegal actions, and would provide ample compensation to the victims of antitrust violations.”
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`Blue Shield of Virginia v. McCready, 457 U.S. 465, 472 (1982). These three settlement
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`agreements all purport to expand the relevant classes from 24 MLSs to the entire country. Under
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`the policies explicated by McCready and its progeny, this is not permissible. This current
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`iteration of the industry's price fixing activity, namely using the MLS rules to facilitate and hide
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`price fixing by real estate agents, may very well have been initiated by the NAR. It may also be
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`that the large national brokerages in their capacity as franchisors drove the NAR to take on that
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`mantle. It cannot be maintained, however, that the violators are only the national brokerages in
`
`their capacity as franchisors. Likewise, the NAR’s rules would have been hollow verbiage
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`without willing participation by the local MLSs. As detailed in the previously cited Statement of
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`Interest, six of the enforcement actions taken against MLSs were not against the National
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`Association of Realtors. They were rather against local MLSs. In one of the other enforcement
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`actions, the seminal Supreme Court case United States v. National Association of Real Estate
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`6
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`Board, 339 U.S. 485 (1950), a jury found that the local real estate board was guilty of price
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`fixing while the national association was not.
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`This is important because, while the framework and incentive for this iteration of the
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`conspiracy was made by NAR and the franchisors, it was accepted, promulgated, and enforced
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`differently by franchisees and independent real estate brokerages in 600 MLSs throughout the
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`country. That framework was enforced in various ways by the franchisees within the corporate
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`umbrellas of the settling Defendants. This fact that franchisees are at least as complicit in this
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`conspiracy as the national brokerage as franchisor is borne out by the Burnett complaint in
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`paragraphs 78 – 84. (Third Amended Complaint, dkt. 759 at ¶¶ 78-84). Franchisees within the
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`four subject MLSs at issue in Burnett served at very high levels within the NAR and the state
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`association. Yet those Franchisees were neither sued nor will they pay any penalty in this
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`settlement.
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`An antitrust settlement must serve to deter violators. Here, because discovery was
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`necessarily circumscribed to the 24 MLSs at issue in the various suits, Plaintiff counsel cannot
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`have determined, with any granularity, which franchisees, which violators, need to be deterred in
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`South Carolina. They likely could not have determined that in any of the MLSs outside the 24
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`MLSs. As such, almost no bad actor will be deterred and, as discussed below, victims will not
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`be remunerated either.
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`Further, because the conspiracy was necessarily carried out in individual MLSs by their own
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`MLS rules, even though many of the operative rules may have been modeled after the NAR’s
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`Handbook, the correct measure of damages, the availability of proof, and the egregiousness of
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`the illegal activity would all be different among the hundreds of individual MLSs. As such, this
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`7
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`Court and these Plaintiffs should not bargain away absent class members ability to discover their
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`own evidence and try their own cases where the likelihood of success for those absent class
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`members is unknowable. Plaintiffs are essentially asking this Court to generalize the likelihood
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`of success in each MLS based on the likelihood of success in their two cases, one spanning four
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`MLSs and the other twenty, despite the fact that the conspiracy operates differently throughout
`
`each MLS.
`
` IV. The Settlement Agreements are Insufficiently Compensatory and The Financial
`Condition of Two of the Companies are in Much Better Condition that Plaintiffs
`Claim. The Financial Condition of the Third Company Cannot Be Determined By
`the Class Members and Objectors Based on Currently Available Information
`
`As to the financial condition of the three settling parties, Objectors would offer the
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`Declaration/Affidavit of Dr. Charles Alford as Exhibit 2. It does bear pointing out, however,
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`that both Realogy and RE/MAX both tout EBITDA as their preferred forms of determining the
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`health of their corporations. Operating EBITDA in 2023 was positive $200 million for Realogy.
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`It has also been positive in terms of Free Cash Flow and Adjusted Net Income Further, over the
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`total damages period, from 2015-2023, Realogy’s operating EBITDA was $5.8 billion, or an
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`average of $649,000,000 each year. (Exhibit 2 at ¶ 10 c). This is a massive EBITDA, much of
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`which resulted from illegal price fixing activity. The proposed settlement amount is 1.4% of that
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`EBITDA figure. Similarly, RE/MAX, the financial condition of which the Plaintiffs view very
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`pessimistically, has also reported positive EBITDA, adjusted net income, and free cash flow.
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`(Exhibit 2 at ¶ 11). Further, over the damages period, RE/MAX earned a total adjusted EBITDA
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`of $928 million, making the $55,000,000 settlement amount 6% of that original figure. As this
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`Court pointed out in the pretrial conference which addressed the Plaintiff’s motion in Limine No.
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`6, “…defendants here in this case obviously made huge profits.” (Plaintiff’s Opposition to
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`8
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`Defendant’s Motion in Limine No. 20, dkt. 1159 at p.2)
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`Unfortunately, Keller Williams’s financials are not so easy to obtain. As such, Objectors
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`would ask that he be allowed to view the same financial information as the Plaintiffs have so that
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`a similar analysis to the one above may be made by Dr. Alford.
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`As Dr. Alford points out, this settling compensation would, at best, lead to each member
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`of a twenty million member class receiving $10.43 and likely less than that. (Exhibit 2 at ¶ 19).
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`Even adding in the purported NAR settlement, each member of that class would receive at most
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`$31.33. Indeed, Plaintiffs intend to recover the roughly $12,000,000 they spent on the trial of the
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`Burnett case, as well as their fees, from this aggregate settlement amount. Absent class members,
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`then, would bear the costs of trying to verdict a case that led to a joint and several verdict against
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`Keller Williams, NAR, and HomeServices, despite their inability to recover anything at this time
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`against HomeServices. Again, absent class members may have been better placed to extract
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`value of their own based on the conduct of the franchisees. It certainly may be that the Plaintiffs
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`in these cases had valid reasons not to pursue the franchisees. It is just as likely, however, that in
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`other jurisdictions, the absent class members could have pursued those franchisees, resulting in
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`higher or more collectible awards.
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`V. Settlement Agreements Release Franchisees Despite Not Requiring Anything of
`Them
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`It is axiomatic in our law that a release is a contract and subject to contractual principles.
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`It is further axiomatic that, for a contract to form, there must be consideration. Consideration is
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`“the exchange of something of value as between the parties, which may include a promise.”
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`Crutcher v. Multiplan, Inc., 22 F.4th 756, 768 (8th Cir. 2022). These settlement agreements do not
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`bind the franchisees at all because there is no exchange between the parties, despite the fact that
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`9
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`the complaint is replete with examples of franchisees taking active part in the price fixing
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`activities complained of and the formulation of the rules by which much of price fixing was
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`accomplished.
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`It is uncontroverted that the franchisees of the Defendants in this case will pay no money
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`toward the total monetary settlement. While one could argue that, by paying a franchise fee,
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`these franchisees are somehow contributing to that fund, the franchisees were already required to
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`pay that franchise fee. Of course, doing what they were already required to do is not
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`consideration for a new contract. It further cannot be argued that these agreements require
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`franchisees to do anything. The settlement agreements do contain what are denominated as
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`“practice changes,” but those practice changes use no mandatory language when addressing
`
`franchisees. Rather, with respect to the franchisees the settlement agreements contain language
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`like “make clear and periodically remind” and “advise and periodically remind.” (Preliminary
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`Motion for Approval for Realogy and RE/MAX Settlement Agreements, dkt 1192 at pp. 12-17
`
`and Keller Williams Settlement Agreement, dkt. 1371-1 at pp. 21-24). In order to be effective,
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`these settlement agreements should make mandatory adoption of these practice changes as a
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`condition of owning a franchise and the failure to follow those provisions a condition exposing
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`the franchisees to revocation of the franchise. Another alternative would be an injunction that
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`forbids the Seller from making an offer of compensation to the buyer broker at all. This
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`alternative is proposed by the Department of Justice in its Statement of Interest of the United
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`States in Nosalek. (Ex. 1 at pp. 20-22). This would stop the price fixing behavior, the actual
`
`illegal activity, from recurring. That proposal is in the context of an MLS, but would be even
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`more effective when imposed on franchisees of the largest brokerage firms in the nation.
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`10
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`Further, the underlying purpose of antitrust law, that violators be punished, victims be
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`amply compensated, and incentivize private actors to vindicate the public interest in having
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`open, competitive markets, is undermined by the fact that these franchisees are able to escape
`
`any accountability. Plaintiffs made a decision not to sue the franchisees who directly harmed
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`their clients and that decision may very well have been a good one for the facts and
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`circumstances prevailing at the time they made it. Neither the Moerhl nor the Burnett plaintiffs
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`held those franchisees to account, just as this settlement fails to hold them to account, despite the
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`fact that these franchisees accomplished the conspiracy that directly harmed those plaintiffs in
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`the Subject MLSs. Those franchisees, the active participants in the conspiracy, will not have to
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`disgorge their profit from the conspiracy they carried out against those plaintiffs. Those
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`franchisees will not have to change any of their conduct as a result of this trial or these
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`settlements. Now, those plaintiffs are asking this Court to impose that same decision on every
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`single member of a national class. That imposition does not serve the public interest, nor does it
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`serve the absent class members.
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` V.
`
`Sunset Provision
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`Each Settlement Agreement provides for a sunset provision as to the “practice changes,”
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`such as they are, of five (5) years after the effective date of the agreement. As discussed above,
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`the NAR and its local real estate boards have, since 1939, attempted to fix real estate
`
`commissions nationwide. Five years is simply inadequate based on these Defendants’ decades
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`long practice of fixing the commissions for both sides of the sale, and their highly profitable
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`results, the surreptitious return to this practice can almost be guaranteed unless clear prohibitions
`
`against it are put in place for a substantially longer period of time. The history of this industry
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`11
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`shows an incorrigible predilection for the fixing of commissions.
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` VI. There Are No Available Financial Documents To Establish The Earnings, EBITDA,
`
`Or Net Worth Of Keller Williams.
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`Objectors are informed and believe that during the course of the trial regarding this
`
`matter, the presiding judge placed the Keller Williams financial information under seal or it was
`
`otherwise excluded as evidence. Objectors also have no way to otherwise examine the financial
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`condition of Keller Williams. It is impossible to analyze the fairness, reasonableness, and
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`adequacy of the settlement without reviewing those financial records. Paragraph 62 of the
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`settlement agreement refers to a mediation conducted with references made to “materials
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`exchanged.” (Keller Williams Settlement Agreement, dkt. 1371-1 at ¶ 62). Plaintiffs’ counsel
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`have also informally represented to counsel for these Objectors that they were provided with
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`sufficient financial information regarding these companies’ financial status to make an informed
`
`and intelligent decision regarding settlement.
`
`In a Sixth Circuit Case, Shane Group, Inc. v. Blue Cross Blue Shield of Michigan, et. al.,
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`825 F.3d 299 (6th Cir. 2016), Judge Kethledge pointed out that “class members cannot participate
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`meaningfully in the process contemplated by Federal Rule of Civil Procedure 23(e) unless they
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`can review the bases of the proposed settlement.” Shane Group at *309. This is particularly true
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`when that documentation is “the keystone of the settlement agreement.” Id. at *306. Keller
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`Williams’s actual financial condition is one of the keystone factors in this settlement agreement.
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`In every case where a verdict is rendered, the Defendants threaten bankruptcy because that gives
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`them the most possible leverage in negotiating a verdict. They also threaten appeals and post-
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`12
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`trial motions in an effort to drive up costs. It may very well be that Keller Williams is presently
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`teetering on the edge of bankruptcy. It may be that more than $70 million over the next 3 years
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`will bankrupt them. But Objectors, on behalf of the proposed class members of South Carolina,
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`cannot know that without access to sufficient information to make that determination for
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`themselves.
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`These Objectors are informed and believe that they should be entitled to the financial
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`records under seal or subpoenaed for trial, any documents reviewed at mediation, and any other
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`documents provided by Keller Williams used to prove its financial condition to the Plaintiffs.
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`Keller Williams’ financial condition is an essential factor in determining whether the proposed
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`settlement is fair, reasonable, and adequate. Class members need to know Keller Williams’
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`financial condition before they can know if the proposed settlement is fair, reasonable, and
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`adequate.
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`VII. Conclusion
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`For the foregoing reasons, the Objectors object to this settlement. They have been
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`advised solely by the undersigned counsel, who intend to appear on their behalf at the fairness
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`hearing to be held on May 9, 2024 in Kansas City, MO at the Charles Evans Whittaker U.S.
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`Courthouse.
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`*** Signature Pages to Follow ***
`
`13
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`KNIE & SHEALY
`
` /s/ Patrick E. Knie
`Patrick E. Knie
`pat@knieshealy.com
`Federal I.D. No. 2370
`Matthew W. Shealy
`matt@knieshealy.com
`Federal I.D. No. 12823
`P.O. Box 5159
`250 Magnolia Street
`Spartanburg, S.C. 29304
`Telephone No. (864) 582-5118
`Telefax No. (864) 585-1615
`
`Mitch Slade
`MITCH SLADE LAW OFFICE, P.A.
`FEDERAL I.D. NO. 5352
`P.O. Box 1007
`Spartanburg, S.C. 29304
`Telephone: (864)582-4212
`mitch@mitchsladelaw.com
`
`ATTORNEYS FOR PLAINTIFF
`
`
`
`April 12, 2024
`
`
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`14
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`