A federal judge in Georgia has rejected a bid to transfer a case against eXp Realty and Weichert to a federal court in Missouri over allegations the companies negotiated a “sweetheart deal” to resolve commission-related antitrust claims against them nationwide.
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On Friday, March 28, Judge Mark H. Cohen of the U.S. District Court for the Northern District of Georgia denied a motion to intervene and transfer a case known as Hooper to the U.S. District Court for the Western District of Missouri, under Judge Stephen R. Bough.
The filing was submitted by Missouri plaintiffs in a similar case known as Gibson, in which eXp and Weichert are also defendants. Both suits challenge a now-defunct National Association of Realtors rule requiring listing brokers to offer compensation to buyer brokers in order to submit a listing to a multiple listing service, which the plaintiffs allege violated the Sherman Antitrust Act.
Both Weichert and eXp attempted to reach settlements in the Gibson case last year, but negotiations broke down, and the companies instead mediated nationwide settlements with attorneys for plaintiffs in Hooper, agreeing to pay $8.5 million and $34 million, respectively.
The Missouri court is currently weighing claims by the Gibson plaintiffs that eXp and Weichert engaged in a “reverse auction,” or a legal strategy in which a defendant negotiates a settlement with attorneys who are willing to accept settlement amounts less than attorneys in a separate case.
Back in October, the Gibson plaintiffs filed a motion to intervene and transfer the Hooper case to the Missouri court. Five months later, the Georgia court has denied that request, arguing that the Gibson plaintiffs will be able to object to the proposed settlements in the Georgia court.
“Proposed Intervenors also argue that Plaintiffs’ counsel and counsel for eXp engaged in a ‘reverse auction’ and reached a settlement agreement that does not provide sufficient value for the class,” Cohen wrote in his order.
“Consequently, Proposed Intervenors maintain that they ‘will suffer irreparable harm if their claims are released through an improper process.’ Proposed Intervenors have not argued that their ability to object to any settlements will be prejudiced if they are not parties to this case.
“Additionally, Proposed Intervenors do not explain how a review of the fairness of the settlements by this Court … will be an ‘improper process’ or how their proposed intervention will ensure a ‘proper process’ that would avoid the irreparable harm caused by the alleged reverse auction.”
Hooper defendants eXp, Weichert, Mark Spain Real Estate and Atlanta Communities Real Estate have motions for preliminary approval of their settlements currently pending in the Georgia court. According to Cohen, the Gibson plaintiffs won’t suffer any harm if they aren’t allowed to transfer the case because they’ll be able to fully litigate their issue during the court’s settlement approval process, including by raising objections to settlements on reverse auction grounds.
“The argument that Proposed Intervenors will suffer prejudice because the proposed settlements will be approved (and Proposed Intervenors’ claims released) without any opportunity to object lacks any merit,” Cohen wrote.
“This Court’s ruling on the present Motion to Intervene will have no effect on Proposed Intervenors’ rights to object to or opt out of any settlement agreement Plaintiffs reached with the Settling Defendants …”
According to Cohen, the Gibson plaintiffs will be able to protect their stated interests by choosing to object to any settlement at its fairness hearing. By contrast, Cohen emphasized that the Hooper plaintiffs and defendants would be harmed if the motion were granted.
“There is no question that permitting intervention in this case will thwart, or at least delay, the settlements reached between Plaintiffs and the Settling Defendants, resulting in prejudice to the existing parties,” Cohen wrote.
Read the judge’s order (re-load page if document is not visible):
