Chicago's largest real estate brokerage, At World Properties, has been hit with a class action lawsuit, accusing the firm over its alleged role in a conspiracy with the National Association of Realtors to allegedly secretly force homebuyers to overpay their agents when purchasing homes, allegedly in violation of federal antitrust law.
At World Properties, however, said it believes this is just a "copycat" lawsuit, seeking to expand on and capitalize from a recent jury verdict against NAR. They said they expect to ultimately prevail.
The company operates under the brand name @properties.
Paul Geske
| Superlawyers
On Dec. 8, attorneys with the firm of McGuire Law P.C., of Chicago, filed suit in Cook County Circuit Court against the real estate brokerage, identified in the complaint as the largest in Illinois by both sales volume and total number of deals, and the eighth largest in the U.S.
The lawsuit was filed on behalf of named plaintiff James Tuccori, identified as an Illinois resident who purchased a home in Chicago using the services of a real estate agent affiliated with At World Properties.
The plaintiffs seek to expand the action to include potentially hundreds of thousands of additional homebuyers in Illinois and throughout the U.S., who purchased homes since 2000 in deals that included commissions paid to real estate agents using multiple listing services (MLS) operated by the National Association of Realtors.
The lawsuit is one of a mounting number filed throughout the country, accusing the NAR and affiliated realty firms of alleged anticompetitive behavior, allegedly using their control of the MLS system to restrict the ability of agents to compete.
Specifically, the lawsuits have leveled accusations that NAR policies have allowed real estate agents to mislead homebuyers into believing that their agents work at no cost to them, because commissions for both the sellers' and buyers' agents are paid by the seller.
Instead, the lawsuits assert the buyers' agents are actually paid through home prices, paid by the buyer, that are allegedly artificially inflated to cover the commissions for both agents.
In October, a jury in Kansas City found against NAR on those claims, ordering the association to pay $1.8 billion in damages.
The new lawsuit seeks to link At World Properties to the NAR and similarly exact payment from the brokerage on similar claims.
"This anti-competitive behavior has led to buyers paying inflated fees for misrepresented 'free' broker services, overpaying for properties (whose purchase price necessarily includes the inflated commissions that cannot be reduced), and receiving overpriced and biased broker services," the new lawsuit says.
The new lawsuit does not list the NAR as a defendant.
The lawsuit asserts At World's "significant market power" and "prominent market position" has made its alleged involvement with NAR "crucial to the success of the conspiracy with NAR and other brokers."
At World Properties' "advancement of the conspiracy has markedly diminished competitive practices in the buyer-agent service sector, negatively impacting homebuyers," the complaint says.
"The result of the conspiracy has been inflated buyer-agent commissions, higher average cost of homes, and lower quality services provided to homebuyers as a result of buyer agents who are incentivized to avoid lower commission properties and receive supracompetitive commissions regardless of their experience or the level of services they provide."
The lawsuit asserts the alleged conduct violates the federal Sherman Act antitrust law; the Illinois Antitrust Act; and the Illinois Consumer Fraud and Deceptive Business Practices Act.
The lawsuit seeks an unspecified payout from At World Properties as damages and restitution, plus attorney fees.
They also seek an injunction to stop At World Properites "from maintaining or reestablishing the same or similar anti-competitive rules, policies, or practices as those challenged in this action in the future."
Plaintiffs are represented by attorneys Paul T. Geske, Evan Meyers and Brendan Duffner, of McGuire Law P.C.
In response to the lawsuit, At World Properties said they believe the claims will fail.
"This complaint is one of many 'copycat' lawsuits filed in the wake of the recent jury verdict in Kansas City against the National Association of Realtors and the nation’s largest brokerages," a company spokesperson said in a prepared statement to The Cook County Record.
"@properties was not named in that lawsuit. The Kansas City case was premised on those other brokerages controlling NAR by having their executives serve on its board of directors and executive committee, which allegedly created, implemented, and enforced the NAR rules at issue. In contrast, the Chicago complaint makes no specific allegation that @properties was or is involved in any such activities.
"In fact, while we are members of NAR, no @properties manager or executive has ever served in any role at NAR with any rule-making authority. This applies to Mabel Guzman, a former @properties agent who is mentioned in the complaint, but who was never an employee or manager with @properties and was never directed by @properties’ management in her volunteer role with NAR.
"We will move to vigorously defend against this complaint and believe that it will be resolved in our favor."