California commission suit alleges collusion in the City of Angels

Lights, camera, lawsuit! A copycat commission lawsuit has been filed in Los Angeles.

The suit, known as Fierro, after its lead plaintiff Gael Fierro, a Californian home seller, accuses the real estate industry of colluding to artificially inflate real estate agent commissions. It was filed on Wednesday in U.S. District Court in Los Angeles. Patrick Thurber, a California home seller, is an additional named plaintiff in the suit.

The complaint names 35 entities as defendants, including the National Association of Realtors, local and national brokerages, MLSs and local Realtor associations.   

The brokerage defendants include The Agency; Compass; eXp World Holdings and its local branches eXp Realty of California, Southern California, Great Los Angeles and Northern California; Berkshire Hathaway and its affiliates; First Team Real Estate Orange County; Rodeo Realty; and Pinnacle Estate Properties.

The two MLSs named in the suit California Regional MLS and Combined L.A./Westside MLS.

Additionally, California Association of Realtors, Greater Los Angeles Realtors, Acadia Association of Realtors, Burbank Association of Realtors, Citrus Valley Association of Realtors, Glendale Association of Realtors, Inglewood Board of Realtors, Montebello District Association of Realtors, Palos Verdes Peninsula Association of Realtors, Pasadena-Foothills Association of Realtors, Rancho Southeast Realtors, South Bay Association of Realtors, Southland Regional Association of Realtors, Tri-Counties Association of Realtors, West San Gabriel Valley Realtors, Malibu Association of Realtors, Southwest Los Angeles Association of Realtors, Madera Association of Realtors, Fresno Board of Realtors, Merced County Association of Realtors and Mariposa County Board of Realtors, were also named as defendants.

In the complaint, the plaintiffs take aim at NAR’s Participation Rule, which requires listing brokers to make a blanket offer of compensation to buyers brokers in order to list a property on a NAR-affiliated MLS.

“The conspiracy has led to various illogical, harmful, and anticompetitive effects, including: (a) requiring sellers to pay overcharges for services provided by buyer brokers to the buyer; (b) maintaining, fixing, and stabilizing buyer broker compensation at levels that would not exist in a competitive market; and (c) promoting steering and actions that hinder innovation and entry by new, lower-cost real estate brokerage service providers,” the complaint states.

Like the other copycat commission lawsuits, Fierro is seeking class action status for a class defined as anyone who listed a property of an MLS in Madera, Fresno or Los Angeles Counties using a listing agent or broker affiliated with one of the brokerage defendants and paid a buyer broker commission between Jan. 17, 2020, and the present.

The plaintiffs are also demanding a jury trial, damages, and injunctive relief.

In an emailed statement, Mantill Williams, the vice president of communications at NAR, wrote that the trade group will respond to the complaint in court and that it upholds the belief that “the cooperative compensation practice makes efficient, transparent, and accessible marketplaces possible.”

Brokerage defendant eXp shared a similar view, with a spokesperson writing in an email that the firm “committed to upholding fair and transparent practices compliant with law and we already have mechanisms and a plan in place that enables buyers and sellers to negotiate commissions.”

For his part, David Kissinger, the CEO of Glendale Realtors, stated that the suit is “meritless.”

“The fundamental of the case are simply incorrect and we look forward to vigorously fighting this in court,” Kissinger said.

Compass and CRMLS did not wish to comment and the other defendants did not return a request for comment.