A commission lawsuit is filed in Arizona. But NAR isn’t the target

The wave of commission lawsuits have arrived in Arizona. In a copycat suit filed last Friday in U.S. District Court in Arizona, Joseph Masiello, an Arizona resident and home seller, accuses several real estate companies of colluding to artificially inflate real estate agent commissions.

Masiello sold a home on an Arizona MLS through HomeSmart “in or about October 2021.” According to the filing, Masiello was “required to pay a 2% commission ($8,200) to the seller broker and a 2.5% commission ($10,250) to the buyer broker.”

Like the other commission lawsuits, the Masiello suit takes aim at the National Association of Realtors’ Participation Rule, which requires listing brokers to make a blanket offer of compensation to the buyer’s broker in order to list a property on a Realtor-affiliated MLS.

“This archaic commission structure has remained insulated from market forces for almost 30 years because of a long-running conspiracy among Defendants to implement and enforce anticompetitive restraints in the residential real estate market,” the complaint reads. “No pro-competitive justification exists for Defendants’ conspiracy, which functions to perpetuate inflated commissions to the detriment of Arizona homeowners. Even if some pro-competitive benefit did come from Defendants’ conspiracy, that alleged benefit would be substantially outweighed by the conspiracy’s anticompetitive effects and would therefore not be justified.”

Though the suit takes aim at NAR’s Participation Rule, it does not name NAR as a defendant. Instead the suit lists the state’s largest Realtor organizations, including Arizona Association of Realtors, Phoenix Association of Realtors, Scottsdale Area Association of Realtors, and West and Southeast Realtors of the Valley Incorporated, as well as several local and national brokerage firms, including, HomeSmart, My Home Group, Realty One Group Arizona, West USA Realty, Hague Partners Holdings, Realty Executives, Arizona Best Real Estate, North&Company, Silverleaf Realty, Walty Dailey Local Luxury, Christie’s International Real Estate, Brokery, Roy H Long Realty Company, and Tierra Antigua Realty.

The complaint argues that the local Realtor organizations “participate in and further the conspiracy by agreeing to adopt, implementing, and enforcing rules in Arizona identical to those promulgated by the NAR, including through their control of the Arizona MLSs.”

Similar to all of the other copycat suits filed after the Sitzer/Burnett jury verdict in late Oct. 2023, the Masiello suit is seeking class action status for all persons who used any brokerage defendant to list and sell a home on an Arizona MLS and paid a buyer broker commission between Jan. 5, 2020, and the present.

The plaintiffs are also seeking treble damages of an amount to be determined at trial or by the court, injunctive relief preventing the defendants from engaging in what the plaintiff believes is “unlawful” behavior, and a jury trial.

The defendants did not immediately return a request for comment.