While many brokerages have made the decision in recent weeks to settle the commission lawsuits, white-label brokerage Side is taking a different tack.
On Friday, the firm filed a motion to dismiss the QJ Team copycat commission lawsuit. The suit was filed in Texas in November 2023, roughly two weeks after the jury verdict in the Sitzer/Burnett suit was issued. Like Sitzer/Burnett, at the center of the QJ Team suit is the National Association of Realtors’ (NAR) Participation Rule, which requires listing brokers to make a blanket offer of compensation to buyer brokers in order to list a property on the MLS.
In its motion, Side claims that the plaintiffs fails to allege any facts showing that Side agreed with anyone — including NAR and its competitors — about the Participation Rule, which the plaintiffs refer to as the “Compensation Rule.”
“The Complaint never attempts to link Side specifically to NAR; it never asserts that Side is a member of NAR, that any of Side’s affiliated agents is a member of NAR, or that Side requires its affiliates to join NAR,” Side’s motion states. “Additionally, the Complaint does not attempt to explain how Side could have conspired with NAR to implement the Compensation Rule, which was promulgated by NAR more than 20 years before Side was founded.”
Side’s motion also claims that the complaint fails to allege any facts showing any restraint of trade.
“According to several documents quoted in the Complaint, the Compensation Rule does not require a seller’s agent to offer the buyer’s agent a specific commission — neither a specific dollar amount nor a percentage,” the motion states. “The Compensation Rule does nothing to dictate what level of compensation any party’s broker receives on a home sale. Thus, the Complaint alleges no facts showing the Compensation Rule could be a restraint on competition.”
The motion also dives into whether or not the court would be able to apply the per se rule or rule of reason in making a judgement on the suit.
Side claims that the court would not be able to apply either, as with the per se rule there is no “long history of experience showing the Compensation Rule inevitably has anticompetitive effects.” With the rule of reason, the complaint “fails to allege facts showing a plausible product market because the Plaintiffs’ proposed market is too broad and vague, and the Complaint fails to allege facts showing the relevant geographic market is the entire State of Texas.”
Many of the other defendants in the suit, including Keller Williams, Fathom Realty and HomeServices of America, have already reached nationwide settlement agreements.
