Source: University of Buffalo
Prof. Tanya Monestier challenges billion-dollar NAR settlement
Professor Tanya Monestier is raising serious questions about the resolution of a sweeping class-action lawsuit intended to make it simpler and cheaper to sell a home.
The National Association of Realtors and other defendants, in a settlement reached in March, have agreed to pay approximately $1 billion in damages to home sellers who say the Realtors’ commission structure violated antitrust rules. In the settlement, the association agreed to changes in how those commissions—which forced selling agents to advertise compensation for buyer’s agents in their listings—are handled.
The settlement now goes before the U.S. District Court for the Western District of Missouri, where the case was filed, for approval.
But Monestier, who sold her house in Rhode Island in 2022 and thus is a member of the affected class, is arguing that the settlement falls far short of addressing the issues that sparked the lawsuit.
Her 132-page formal objection, filed Oct. 28 with the district court, urges the court to reject the settlement and demand further consumer protections for home selling transactions. She also disputes the massive fees expected to be awarded to the plaintiffs’ attorneys in the case, Burnett v. National Association of Realtors. [Read the ObjectionDownload pdf(4.3 MB)]
“The goal of the settlement was laudable,” Monestier writes. “It was based on the premise that buyer brokers were using commission rates posted on the [Multiple Listing Service] to steer buyers to properties that provided higher levels of compensation. … The settlement makes sense—but only on paper. It is an example of something concocted by lawyers without a full appreciation of how this would play out in the real world. In the real world, the implementation of the settlement has been a disaster.”
Specifically, Monestier argues that the agreement, as it stands, is susceptible to workarounds by real estate agents, counteracting the goal of reducing commissions that sellers pay, and that agents are adopting practices designed to maintain artificially high commissions. She also notes that the settlement makes no provision for enforcement outside the industry itself; and that the monetary relief available to the tens of millions of people in the affected class—estimated to be less than $25 per person—is absurd compared to the inflated fees they paid their seller’s agent.
In addition, Monestier urges the court to reject the plaintiffs’ attorneys’ request for $333 million in fees for their work on the case, arguing that a lower standard than one-third of the total damages should apply in a case of this magnitude.
“This gives the legal profession such a bad name,” she says. “The more I read about the attorneys’ fees and looked into their billing rates, I felt really uncomfortable with the judge just rubber-stamping the agreement. The more the attorneys take, the less the class members get. It’s about the perception that this is lawyers driving litigation for lawyers, not to benefit consumers.”
The case next goes to a fairness hearing at the Kansas City court scheduled for Nov. 26.
Monestier, whose research and expertise includes contract law, acknowledges that her objection may be the only objection by a member of the affected class that delves so deeply into the flaws of the settlement. But as a lawyer and a law professor, she says, she felt compelled to speak up.
“It feels like there is this vacuum, that it’s just the realtors and the lawyers talking to each other,” she says. “There’s no one from outside the industry who has skin in the game. I don’t have any interest other than trying to see a system that’s fair and doesn’t exploit people.”