The third week of the Sitzer/Burnett commission lawsuit trial kicked off Monday with some final testimony from the defendants before making way for closing arguments from both parties.
The final witness to testify on Monday morning was Jen Davis, the vice president of MAPS Coaching at defendant Keller Williams. Davis has served in this role since June 2022, which she disclosed during her cross examination by Michael Ketchmark, the lead attorney for the plaintiffs.
During her testimony Davis stressed that there is no mandatory coaching for agents at Keller Williams.
“It would be inappropriate for MAPS program to tell agents what to charge,” she said.
Davis also discussed the MLS and how the National Association of Realtors’ Clear Cooperation and Cooperative Compensation (known internally as the Participation Rule) policies impact both buyers and sellers.
According to Davis, the MLS has more up to date information than portals such as Zillow and the information on portals is not always accurate, a point she stressed when she told the jury that the internet makes it harder to buy a house, as it often means more incorrect information is available to potential buyers. She also said that she would join her local MLS even if NAR’s Clear Cooperation policy (which requires agents to list a property on the MLS within 24 hours of marketing) was not in place.
Like the defendants who testified before her, Davis noted that buyers’ agents help both buyers and sellers, as they help bring qualified buyers to the bargaining table. When asked if sellers ever complained about paying buyers comp Davis said, “No, there are other options if they don’t want to do that.”
Davis also told the jury that if a buyer does not use an agent, the listing agent is still likely to charge a roughly 6% commission because they are working harder to get the deal done, meaning that the buyer forgoing an agent is not financially helping the seller keep more of the sale price of their home or bringing the cost of the home down for the buyer.
When discussing what would happen if the Participation Rule went away, Davis again echoed the other defendants, stating that it would hurt buyers who would have to come up with extra funds at closing to cover the cost of their agent’s services.
“You can’t negotiate with a buyer for a fee if they don’t have money after the down payment,” Davis told Ketchmark after he asked if she was “afraid of a free and fair market.”
The jury deliberates
At the conclusion of Davis’ testimony, Judge Stephen Bough, who is overseeing the case, gave the jury its instructions. As this is a civil trial, the standard the jury has to evaluate is if there is a “preponderance of the evidence,” or if it is more likely than not that the plaintiff’s claims have been proven to be true. The jury must determine if the defendants, NAR, Keller Williams and HomeServices of America, are guilty of colluding with one another to maintain high agent commission rates.
The jurors will have to decide whether they believe a conspiracy exists and, if they do, if that conspiracy raised, inflated or stabilized broker commission rates paid by home sellers. If they believe a conspiracy exists, they must also decide if each of the defendants knowingly and voluntarily joined the conspiracy with the purpose of furthering its goals. Finally, they must say whether they believe the conspiracy caused the plaintiffs to pay more for real estate brokerage services than they would have without the conspiracy.
If they believe this to be true, they must also state the amount of damages proved by the class plaintiffs.
The route to the final jury instructions was not smooth as Keller Williams objected to the language used in the instructions and HomeServices objected to the language used to describe how the jury might calculate damages.
Closing arguments commence
Ketchmark was back on the floor to present closing arguments for the plaintiffs. While Ketchmark displayed photos of all the CEO defendants on a screen, including Bob Goldberg, Gary Keller and Gino Blefari, he was unable to play clips from their depositions after Bough granted Keller Williams’ motion to bar deposition videos from use in closing arguments.
“Everything I’ve done in my life has prepared me to stand in front of you right now. Today is the day of accountability,” a passionate Ketchmark told the jury.
Throughout his arguments, Ketchmark stated that NAR’s cooperative compensation policy is evidence of a conspiracy between agents and brokerages to maintain high commission rates, in and of itself.
“It’s right here in the written rule. They entered into a formal written agreement. It’s so brazen — putting it in writing. They used to get away with this, but now with technology, not only is it easier to buy houses but you can’t get away with it,” Ketchmark said. “Their own documents show that they’re not being honest.”
“What is the direct evidence? The written rule…Knowing that rule is enough. The law is straightforward. We’re only here for one reason and one reason only — the amount of money that will be awarded,” he continued.
During his time on the floor, Ketchmark called NAR the “enforcement arm” of the conspiracy, stating that proof of the conspiracy lies in the data.
“In a seven-year time period in Kansas City — 95% of buyers paid 3%,” Ketchmark said. “The mandatory rule stabilizes commissions.”
He also argued the fact that St. Louis’ average commission is 2.7% shows that commissions in other Missouri metros are “not just stable but inflated.” Ketchmark also brought up charts used by the defense attorneys listing average commissions in eight major metropolitan areas, highlighting the exclusion of major metro areas like Springfield, Independence, and Lee Summit, while towns with a population of just 10,000 people were included.
“It was an attempt to be deceitful,” Ketchmark said.
He added that the defendants’ testimony has been a “deliberate attempt to confuse you or fool you about what a conspiracy is. Like they met in some smoke-filled room — they don’t have to meet at all.”
The defense’s final push
Ethan Glass, the lead attorney for NAR, was the first defense attorney to take the floor. Glass noted that the plaintiffs have failed to show the jury any documents or proof that NAR has spoken about the cooperative compensation rule.
“The plaintiffs came to testify: none of them said anything about a conspiracy, not even the rule,” Glass said.
Glass also referenced the testimony of plaintiff witness Craig Schulman, an associate professor of economics at Texas A&M.
“He had access to every single document in this case, every single deposition, every single computer file, working 6,000 hours on this case, still had no opinion whether there was a conspiracy,” Glass said.
Glass then moved on to discuss Linda O’Connor, a whistleblower who sent a letter in 2012 to NAR’s Professional Standards Committee, warning the committee that the Participation Rule was “the ultimate form of restraint of trade.” O’Connor told the 112-member committee in her letter that the rule should be eliminated.
In his opening remarks, Ketchmark told the jury they would meet O’Connor, however he failed to bring her to the stand or even air her deposition.
Glass also addressed Ketchmark’s remarks on NAR CEO Bob Goldberg’s statement that he was unsure if he would change the rule even if the jury found a conspiracy existed, pointing out that NAR is a democratically run organization and the Goldberg does not have the power to single-handedly change the policy.
He then moved on to discuss the brokerage senior executives and CEOs called as witnesses and their lack of knowledge about the Participation Rule.
“Senior execs — none of them had heard of the rule,” Glass said. “What kind of conspiracy is it where you follow and enforce a rule you never heard of?”
Glass said the NAR’s cooperative compensation rule helps competition.
“The purpose and effect of the rule is to provide more choices and more competition…in the 90’s, buyers didn’t get their own agents…if the plaintiffs’ lawyer has his way, buyers won’t get their own agents again,” he said.
He also stressed that NAR’s legal guidance warns agents not to discuss pricing with other agents in the trade association and that they should distance themselves if they find themselves in such a discussion.
“Brokers must not agree with other brokers on commission rates. It’s the opposite!” Glass said in regard to the alleged conspiracy.
He also addressed Ketchmark’s comments that the Participation Rule itself is a conspiracy.
“We’re not saying they met in some smoke-filled room — even he said it! The plaintiff’s attorney has said it (the conspiracy) is the rule itself,” Glass said. “He also said it’s a price fix, but oddly, the price that’s fixed changes where the wind blows. The price is fixed at 6%, 5%, 3%, 2.7%.”
But even without a buyers’ agent, Glass said sellers’ agent will still charge a 6% commission even if they don’t have to split it with another agent.
“You would still pay 6% — someone has to do the work. In the end, all the seller cares about is selling their home for a price they agreed to,” he said.
Glass added that NAR does not receive anything from commission and that it is a voluntary trade group that allows agents to associate with other agents who want to abide by NAR’s Code of Ethics.
According the Glass, the plaintiffs are claiming “1.6 million people conspired with these corporations on a rule that’s been there for 30 years.”
“The law matters. Evidence matters. Common sense matters,” Glass said. “These are the three things you take back with you: law, evidence, common sense. Don’t leave out common sense.”
Brokerage defense lawyers have their say
Like Glass, Robert MacGill, the lead attorney for HomeServices of America, and Timothy Ray, the lead attorney for Keller Williams, told the jury that no proof of a conspiracy had been given by the plaintiffs.
In reference to Ketchmark’s statement that proof of alleged collusion is in the data, MacGill said: “Data alone does not create an inference of conspiracy. Schulman said, ‘I can draw an inference of conspiracy from the data’. No, he can’t. The data shows competition.”
He also addressed Schulman’s statement that 95% of contracts have a 3% buyer agent commission, stating that clustering does not establish the existence of a conspiracy.
Ray, who took the floor after MacGill, state that “not a shred of evidence” shared pointed to Keller Williams being part of a conspiracy.
“What is this conspiracy? It’s changed with each passing day and each theory has been said to cross the antitrust law,” Ray said. “None of what you’ve heard about Keller Williams is true. There has been an intense focus on everything except the rule — emails from 10-15 years ago, uses of the word commission were counted…the plaintiffs never answered who, what, when and how did Keller Williams engage in a conspiracy?”
Both attorneys then focused on specific facets of the companies they represent to show what they believe is their respective firm’s innocence.
MacGill homed in on the fact that HomeServices was never a member of NAR or any real estate association and that the firm did not exist in 1993 when the NAR policy was established. According to MacGill, after the firm was founded, no direction was given to follow or enforce the rule, but even if HomeServices wanted to enforce the rule it has no authority to make that call for subsidiaries and franchisees.
MacGill also discussed the HomeServices training videos in which Blefari told viewers how he dealt with commission rate negotiations. MacGill defended these videos, pointing out that Blefari kept saying “I did this” making it clear that he was telling agents what he did to succeed, not directing agents to do exactly as he did.
Like MacGill, Ray noted that Keller Williams is a franchise company and that franchisees are independently owned and operated. He also pointed out, that like HomeServices, Keller Williams is not a member of NAR and that the firm has not negotiated any commissions in Missouri.
“Keller Willians has absolutely nothing to do with the conversation between agents and home sellers. Commission rates are set locally — we have nothing to do with what goes on in Kansas City,” Ray said. “I find it odd that they (plaintiffs) didn’t call a single KW agent to ask about their involvement in the local board of Realtors.”
He added in reference to the plaintiffs’ expert witness from Australia: “The plaintiffs brought you Todd all the way from Australia, but they didn’t go down the street to find a Missouri agent.”
Ray also addressed the Keller Williams Family Reunion events in which Keller discusses historic national averages for commissions.
“Yes, there are competitors in the audience — they are recruits. Nothing he (Keller) says is in violation of antitrust laws,” Ray said. “Historic national averages are not competitively sensitive information.”
Next, Ray discussed Keller Williams policies, which Ketchmark said was evidence of a conspiracy. According to firm policies, agents are instructed to become MLS members, but they can decline to do so with a manger’s permission, which makes room for exceptions.
“Gary Keller believes the MLS is the lifeblood of this business, but still allows exemptions,” he said.
Ray also noted that Keller’s book was written seven years prior to the rule being put in place.
“How did he join a conspiracy seven years before it started?” Ray asked the jury.
The attorneys closed out their arguments by discussing how they feel the plaintiffs themselves, as well as homebuyers nationwide, benefit from the NAR’s rules.
In a parallel to Ketchmark displaying photos of brokerage and NAR executives, MacGill took each plaintiff in turn and displayed charts of their real estate transaction history, which showed that they had been both homebuyers and sellers.
“Did you benefit from this cooperative compensation practice? They were transacting as buyers, then sellers. They sold houses There were two legs to it — buy and sell,” he said.
He also noted the benefit the policy has on first-time as well as low-income buyers. MacGill claimed that the practice has not, in fact, injured a whole class of people.
“Cooperative compensation is good for buyers and sellers,” MacGill said.
Ketchmark gets the final word
In his rebuttal, it was clear that Ketchmark wanted to set up the suit to look like it was regular Missourians against big corporations.
“Where are the corporate titans who came here and testified and then scurried out of here — they’re not here now,” he said.
Ketchmark also took it as a personal insult that the attorneys for the defense had not answered the who, what, when, where and how, of the allegations. He also said that if the firms had wanted to hear from local agents that they should have brought them in themselves.
Ketchmark also addressed the issue of the testimony of Linda O’Connor, claiming that he had played her deposition.
He also asked the courtroom why the Participation Rule had to be a mandatory rule if it was in fact so beneficial to consumers.
“Hit the reset button on the housing market,” Ketchmark said. “Our system doesn’t have to forget people. You can hold corporations accountable.”
The jury will reconvene on Tuesday morning at 9 to deliberate.
