NAR Challenges Sitzer/Burnett Verdict in Post-Trial Motions

LEGAL CORNER: New Legislation Affecting Tenant’s and Landlord’s Rights in NYC and NYS—the Good Cause Eviction Law

It is important to note that while the new Good Cause Eviction Law went into effect in New York City immediately, other municipalities throughout New York State will need to opt-in by enacting this legislation if they so choose.

By REALTOR® Magazine Staff

KANSAS CITY, MO—In post-trial motions in a U.S. District Court in Kansas City, Mo., where the case was tried in October, the National Association of Realtors asked a federal judge Monday to enter judgment as a matter of law in NAR’s favor in the Sitzer/Burnett case, arguing that the jury lacked a “legally sufficient basis” to find for plaintiffs. The association also requested a new trial if the judge declines to enter judgment as a matter of law.

It’s the first step in NAR’s formal challenge to the verdict, which found defendants liable for keeping agent compensation artificially high. NAR has long maintained that compensation is always negotiable between agents and their clients, which is reinforced by the organization’s MLS rules. NAR expects to appeal the case to the court of appeals if the federal judge in Missouri does not grant NAR’s motions.

“The verdict was wrong and defied precedent, logic and the evidence,” spokesperson Mantill Williams said on behalf of NAR. “We believe we have solid grounds for our continuing objections to the verdict. Our motions detail our arguments that the verdict was wrong on the facts and that the judge applied the wrong law to the case, which played a large part in the jury reaching the incorrect conclusion.”

The case stems from a complaint by a group of home sellers in Missouri who alleged that commission rates are too high, buyer brokers are being paid too much and NAR rules lead to fixed pricing. The sellers argued that buyer representation is obsolete and should only be afforded to wealthy buyers who can pay for the services out of pocket.

At trial, NAR presented evidence that its policies—including the cooperative compensation rule—promote competition and pro-consumer local broker marketplaces that ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers. But the judge’s legally erroneous instructions to the jury limited how much the jury could consider such evidence, NAR says, adding that the plaintiffs presented no evidence to support their allegations of a conspiracy and did not substantiate their claims that home sellers were harmed.

The case covers the Missouri markets of Kansas City, St. Louis, Springfield and Columbia.

While buyer agency remains intact during the appeal process, members can continue to focus on ensuring transparency with clients around compensation, NAR attorneys say. In particular, members should stress the negotiability of their compensation in every single transaction. NAR Chief Legal Officer Katie Johnson urges every member to use buyer representation agreements, which offers a prime opportunity for members to explain their value in the transaction, the services they provide and how they’ll be paid. Members also can take the time to talk about how local broker marketplaces benefit buyers and sellers.

When working with sellers, NAR attorneys encourage members to explain how it works in their favor to make an offer of compensation to the buyer’s agent: It makes the home purchase more affordable for buyers, and thus, widens the pool of potential buyers for a property. “Everything you do contributes to a vibrant marketplace,” NAR Senior Counsel and Director of Legal Affairs Charlie Lee said at NAR NXT in November. “We encourage you to continue focusing on your clients and serving them well.”