BAM Key Details:

  • The second day of the Sitzer/Burnett trial, which took place on October 17, 2023, included opening remarks from attorneys for plaintiffs and defendants, along with testimonies from industry CEOs.
  • The defendants’ attorneys argued that the Participation Rule has been in the public domain for years, benefiting sellers by enhancing demand for their listings, and that there is no substantive evidence of a conspiracy. Plaintiffs presented video depositions challenging these claims.

After narrowing down the jury pool to nine jurors on Monday, the Sitzer/Burnett trial began on Tuesday, October 17, with opening remarks from attorneys for plaintiffs and defendants, along with testimonies from Keller Williams co-founder Gary Keller, HomeServices of America CEO Gino Blefari and National Association of Realtors CEO Bob Goldberg. 

The trial for the class action lawsuit is based on a policy known as the Participation Rule, which requires listing brokers to offer compensation to buyer brokers to submit a listing to a Realtor-affiliated MLS. 

Opening Remarks

Tuesday’s morning session started off with an opening argument from Michael Ketchmark, the plaintiffs’ lead attorney. 

According to reports from Inman, Ketchmark argued that the Participation rule is an alleged conspiracy between the defendants, which elevates commissions homeowners pay when selling their homes. 

It’s about letting the free market decide. Why is this a mandatory rule? If it’s so good, make it voluntary. Don’t put it in the MLS where everyone can see if it’s being followed.

Michael Ketchmark

Plaintiffs’ lead attorney in the Sizter/Burnett trial

After Ketchmark, Ethan Glass, lead attorney for the National Association of Realtors® (NAR) gave opening remarks for defendants. Glass underscored that NAR promotes transparency in compensation agreements, ensuring that everyone has the right to understand their earnings before conducting any work. He argued that the Participation Rule, which is at the heart of the trial, has been in the public domain for years. 

The rule has been around for 25 years and it’s been public (on NAR’s website). What kind of conspiracy is out in public? There isn’t one.

Ethan Glass

Lead attorney for the National Association of Realtors® in Sitzer/Burnett trial

Glass further contended that NAR’s policies ultimately benefit sellers by enhancing the demand for their listings, and any alleged conspiracy lacks substantive evidence. 

Attorneys Robert MacGill and Timothy Ray also presented opening remarks for defendants HomeServices of America and Keller Williams, respectively. 

MacGill, representing HomeServices and its subsidiaries, argued that these companies had not instructed or enforced NAR’s commission rule and contended that the rule had caused no harm whatsoever.

Ray, representing Keller Williams, emphasized that home sellers had willingly entered contracts in which they benefited from their agents’ work and agreed to a “fair commission,” with an understanding that it would be shared with the buyer’s agent. He asserted that Keller Williams had pursued its unique path in the industry and denied any collaboration with NAR or the other defendants to follow or enforce the NAR rule. He indicated that Keller Williams would request a $0 damage award from the jury.

Day Two Testimonies 

After opening remarks, plaintiffs began presenting their case, calling on video depositions from Gary Keller, Gino Blefari, and Bob Goldberg.

Gary Keller, Keller Williams CEO

Keller’s testimony primarily revolved around his statements and beliefs regarding commissions and NAR policies. He confirmed that Keller Williams agents must join NAR to access local MLSs. 

When it came to discussing commissions, Keller emphasized that any previous comments about commissions—both from events and his book, The Millionaire Real Estate Agent—were meant to illustrate the flow of money and were not focused on discussing specific commission rates. 

He also resisted claims that agents steer buyers away from listings with lower buyer broker commissions. When asked about steering buyers, Keller stated, 

I believe it’s wrong…I’ve never seen evidence of it.

Gary Keller

CEO of Keller Williams

When Ketchmark presented a Keller Williams script to the jury, Keller stated “I’ve never seen this document,” before expanding on his thoughts about the use of scripts. 

Script-image

Keller stated scripts are meant to be used as examples during training, rather than directives.

I’m pretty offended with your characterization that a real estate agent would ever try to scare a seller, so I’m going to object to that.

Gary Keller

CEO of Keller Williams

Gino Blefari, HomeServices of America CEO

During his deposition, Blefari was shown a training video in which he talked about pre-writing listing agreements with a 6 percent commission. When asked by the Ketchmark if it was akin to price-fixing to train agents to set a 6 percent commission and inform sellers that they can only go up from there, Blefari disagreed, stating it was merely negotiation, not price-fixing.

I certainly don’t believe that fixing commissions is appropriate. I do believe training is essential.

Gino Blefari

HomeServices of America CEO

Ketchmark challenged Blefari’s stance by pointing out that Blefari had not explained in the training video that he was working for a broker with a minimum commission requirement of 6 percent, which could influence agents’ actions.

During the deposition, Blefari acknowledged that the unilateral offer of compensation is a key rationale for the MLS. He also expressed his belief that it was appropriate for HomeServices affiliates to charge a 6 percent commission and split it with buyer agents.

Bob Goldberg, National Association of Realtors® CEO

In his deposition testimony, Goldberg’s involvement with NAR’s Real Estate Services (RES) group was a focal point. This group, despite being labeled as a committee on NAR’s website, was clarified by Goldberg as an advisory group which includes high-level executives from both the defendants and other key players in the real estate industry. 

Ketchmark brought up the absence of meeting minutes for the RES group, citing a statement by former NAR CEO Dale Stinton, who advocated not keeping minutes to maintain confidentiality. This seemed contradictory to NAR’s general policy of keeping minutes for all committees to ensure transparency and legality. Ketchmark hinted at the possibility of a conspiracy brewing without meeting minutes.

In response, Goldberg denied any allegations of dishonorable intent, explaining that the decision to forgo minutes was “made to foster open conversation.

The Sitzer/Burnett trial resumes today and is expected to reach a verdict around November 10, 2023.  Stay tuned for updates.