What should other real estate agents learn from the dismissal of Howard Hanna’s commission lawsuit?
“The first rule of real estate is that all real estate is local,” Gringer said. “I’m in New York and I know the real estate market here is very, very different than outside of Pittsburgh, or in Ohio, or in Missouri. And so you can’t look at a few counties in Missouri and extrapolate a national practice.”
“In fact, different regions do things differently,” Gringer added. “In the West Penn MLS, they had different rules and different practices than Missouri. The plaintiff tried to argue that the various practices were the same as those in Missouri, but to the court’s credit, he took the time to look at the arguments and realized that this is not the way things are done here.
According to Gringer, although the court’s ruling only removes Howard Hanna from the Moratis lawsuit, the outcome is still “significant.” He’s not the only one who thinks this way.
“There are a lot of large regional real estate companies that have not entered into settlements, and I think this will certainly give them a boost,” said Charles Cain, attorney at Sterbcow Law Group and the chairman of Alliance solutions.
Cain takes a similar view to Gringer in noting that real estate is not traded the same way in every county in the country.
“Much of the real estate is highly localized, and as these lawsuits develop, we may see a real discrepancy on the ruling or decisions of the courts,” he said. “The slightly different factual scenarios about how the multiple listing services in question function could lead to different rulings.”
For Cain, the multi-district court panel’s refusal to consolidate multiple commission lawsuits was a key indicator that they are not as similar as they are often treated.
“West Penn MLS is independent of NAR and they do not have the same rules as the MLSs at the center of the Sitzer/Burnett suit,” Cain said. “As each of these cases develops and there are factual differences, we may see more of this.”
Paul Rogers, a professor of antitrust law at Southern Methodist University, said it is not unusual for cases with similar issues to have different outcomes.
“Cases are based on facts and judges certainly try to apply the law consistently, so given different facts it is conceivable that they will reach different rulings,” Rogers said. “It’s surprising on some level because we had the ruling and then had everyone settle, but West Penn MLS is an independent MLS with its own rules that are different from NAR.
“So, with those different facts, if you get a really good law firm to defend you, and you decide to litigate, yes, the outcome could very well be different.”
While a different outcome could be positive news for other defendants who may want to litigate these lawsuits, Cain believes Howard Hanna’s firing will only cause more chaos and confusion for the industry.
According to him, if a brokerage like Howard Hanna is able to get a case against them dismissed, they might still be able to publish buyer agent compensation offers on the MLS, if the local MLS still allows it. Importantly, however, franchise brokers such as Anywhere or RE/MAX – which have agreed to end this practice as part of their settlements – operating in the same MLS would not be able to engage in this practice, creating a regulatory patchwork.
“It just adds to the confusion. Clarity is not coming – at least not in the near future,” Cain said. “For real estate companies, any win is a win at this point, but what really matters is how things move forward over the next two years as the sector sorts itself out.”
