BAM Key Details: 

  • On day one of the Sitzer/Burnett trial, jury selection took several hours as lawyers for both the plaintiff class and the defendants reduced a jury pool of at least 80 to nine. 
  • A pro-plaintiff-leaning Wall Street Journal editorial published Monday morning could make it more difficult for remaining jurors to avoid bias from outside influences. 

The first day of the Sitzer/Burnett trial has come and gone, and much of it was spent paring down the jury pool of at least 80—one of the largest ever convened for a civil trial in the Federal District Court of Western Missouri. 

Lawyers for both sides questioned the jurors and weeded out those with any discernible bias or any with a strong potential for it—including any Missouri home sellers who had sold a home between 2015 and 2022 (i.e., potential members of the plaintiff class). 

When they were finished, nine jurors remained. Judge Steven R. Bough reminded them of the responsibility entrusted to them and urged them to avoid any outside influences. 

That could be difficult given the national coverage of this case, including an unflinching Wall Street Journal editorial published Monday with the title, “Realtors Face an Antitrust Reckoning.” 

Those folks at WSJ do not pull punches. It starts off by referring to the National Association of Realtors as “the cartel.”  

Meanwhile, an attorney for Keller Williams reminded jurors that the burden of proof in this case rests on the plaintiffs. 

Day One of Sitzer/Burnett vs NAR, et al

The trial is taking place in Kansas City in a courtroom at the Charles E. Whittaker U.S. Courthouse. The Honorable Stephen R. Bough presented the crux of the plaintiffs’ allegations against NAR, et al—namely that a conspiracy exists among the defendants to impose NAR rules that inflate or standardize real estate commissions, violating the Sherman Antitrust Act. 

Again, the burden of proof rests on the plaintiffs. And it doesn’t help their case that Judge Bough ruled last week against using the relationship between franchises and subsidiaries to prove the existence of a conspiracy. Defense attorneys took that as a minor victory, but now they’re accusing the plaintiffs of doing exactly what the judge ruled against. 

Based on a court filing, plaintiffs are planning to use the recording of the “volatile” deposition of Rosalie Warner, the senior VP of network services for HSF Affiliates, who was asked how a real estate executive could be CEO of two competing real estate companies. 

The issue of price fixing—specifically whether real estate companies overtly set commission rates for both buyer and seller agents—also took center stage. In their depositions, both Warner and Gino Blefari (CEO and chairman of HomeServices of America) were questioned about agent training that argued for a 6% commission rate. 

According to the plaintiffs’ lead attorney, Michael Ketchmark (of Kansas-based Ketchmark & McCreight), the class action lawsuit represents a total of 263,000 transactions that took place within the 2015–2022 time frame, with each member of the plaintiff class paying an average of $7,000 in unjustified commissions—hence the requested settlement of $1.8 billion. 

From 80 jurors to 9

As expected, multiple attorney teams showed up for the defendants:

  • NAR
  • Anywhere Real Estate
  • HomeServices of America, Inc.
  • BHH Affiliates, LLC
  • HSF Affiliates, LLS
  • RE/MAX, LLS 
  • Keller Williams Realty, Inc

Attorneys for both the plaintiffs and defendants questioned the jurors to identify any biases that ruled them out, eventually reducing the pool of around 80 to a small group of nine. 

Most of the juror candidates were homeowners, and many had sold homes of their own. Some came with fond memories of working with agents while others had negative experiences. Some even had previous training as real estate agents, and several had real estate professionals within their families. 

In addressing the jurors, Ketchmark, lead attorney for the plaintiffs, reminded them that, unlike with a criminal case, the verdict in a civil case relied on a “preponderance of evidence.” 

On the other hand, the judge reminded them they could change lives (for better or worse) with their verdict—all to emphasize the importance of remaining impartial, not discussing the case with anyone during the trial process, and generally avoiding influence from outside sources. 

Ketchmark also asked jury candidates how they felt about internet commerce, antitrust rules and trade associations. 

Timothy Ray, representing Keller Williams, asked the jurors if they feel “consumers should have choice and be free to make decisions that benefit themselves.” He also stressed that neither KW nor its agents “conspired with anyone to do anything.” 

The WSJ editorial

Expecting the jurors to avoid any outside influence regarding the case could be a big ask with nationwide media coverage—especially articles like the Wall Street Journal editorial published the day before the trial officially started. 

Aside from the “cartel” comment, the WSJ referred to NAR’s commission practices as “standard antitrust violations.” 

The conclusion of the editorial reads:

“We’re no fans of most antitrust suits, but the evidence is strong that Realtors’ practices are classic antitrust violations that harm consumers. The Realtors may own the U.S. Congress, but perhaps independent courts won’t be so intimidated.”

An attorney for the defendants complained about the article’s clear pro-plaintiff stance. On the other hand, it should come as no surprise that the plaintiffs’ attorney was pleased with the press in WSJ. Ketchmark told Inman:

I continue to have agents and brokers from all across the nation reach out to me directly to express their frustration with the mandatory nature of [the buyer broker commission] rule…. We were happy to see that the Wall Street Journal today called for the dismantling of this real estate cartel, which is strangling our housing market.

Michael Ketchmark

Lead attorney for the plaintiffs

Long Road Ahead

The trial is expected to last three weeks, and between Anywhere and RE/MAX settlements, along with NAR’s reversal on allowing listings with a buyer commission of zero dollars, it is gearing up to be a challenging case. 

But the ripple effects this will create in the industry extends far beyond the three-week trial. 

In a 75-page report, analysts from Keefe, Bruyette & Woods, stated that there is a good possibility that the Sitzer/Burnett and Moehrl class action lawsuits will lead to a ban on cooperative commissions by early 2024. If this happens, the annual $100 billion commission pool could shrink by 30% over time, and up to 80% of agents could leave the industry.

Excluding the U.S. and Canada, the ratio of home sales to agents generally ranges from about 10 to 20, with a median of 16. This suggests that the agent count in the U.S. could theoretically decline to approximately 300,000 to 600,000 over time, or by 60-80% based on current NAR membership of 1.6 million.

Keefe, Bruyette & Woods report

It’s a bold prediction, but one worth considering as the Sitzer/Burnett trial gets underway. 

Stay tuned for more details on the trial as it develops.