The company’s request to pause one case while cutting a deal in another was just denied. The denial highlights a controversy over a settlement method known as a “reverse auction.”
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Weichert hit a roadblock in its efforts to reach a commission lawsuit settlement Thursday, with a judge blocking the company’s attempts to pause one case while cutting a deal in another.
The move highlights the ongoing controversy, and unanswered questions, about a novel settlement method that was also used to still-uncertain effect by eXp Realty.
The gist of what just happened is that Weichert Real Estate Affiliates had asked for a “stay,” or pause, in a well-known antitrust lawsuit known as Gibson. The company wanted the stay because it reached a settlement in a lesser-known case dubbed Hooper.
But on Thursday, the judge overseeing the Gibson case refused to give Weichert the stay. In a five-page order, the judge wrote that the homeseller-plaintiffs in the Gibson case who opposed the stay “raise genuine issues of potentially questionable behavior regarding Weichert’s Hooper settlement which warrant further discovery in this case.”
“Given the alleged lack of financial considerations and quick settlement in the later filed Hooper case, granting a stay would not serve in the best interests of justice due to the possible irreparable harm resulting plaintiffs’ claims in this case being estopped due to a binding, underfunded class settlement in Hooper,” the judge also wrote.
The judge’s order wasn’t necessarily unexpected.
Weichert’s move to settle the Hooper case followed the example of eXp, which did the same thing in early October. EXp also subsequently asked for a stay in the Gibson case, but in November was denied. In failing to get its desired pause, then, Weichert is once again following in eXp’s footsteps.
At issue in both settlements is a method that the Gibson plaintiffs have described as a “reverse auction.” In essence, the method involves a defendant shopping around among similar class action cases to find the cheapest settlement. The plaintiffs specifically accused eXp of getting a “sweetheart” deal and would like to force the company back to the negotiating table.
On the other hand, eXp has defended its settlement, saying in court filings that there would be no ill effects from pausing the Gibson case while its deal is reviewed by the court overseeing the Hooper suit.
In Weichert’s case, the company on Tuesday filed a document with the court saying that it needs the Gibson case paused because it is currently having to engage in “extensive and burdensome discovery” with the plaintiffs in the suit. The company also wrote that it “will be unfairly prejudiced if it is forced to continue expending resources on jurisdictional issues that will be mooted if its settlement is approved.”
Weichert also argued in its Tuesday filing that the accusation it used a “reverse auction” to strike a deal is “completely baseless.”
U.S. District Court Judge Stephen Bough, however, was apparently not persuaded, and in his Thursday order denying Weichert’s stay request ordered the company and the plaintiffs to continue working on the Gibson suit.
“In line with the court’s previous order, Weichert and plaintiffs are ordered to engage in discovery regarding the timing and circumstances of Weichert’s Hooper settlement,” Bough wrote.
Where Weichert and eXp’s settlements head next remains to be seen. But the situation highlights the uncharted waters commission litigation is currently sailing at the moment and raises questions about which methods companies will be able to use to settle a sprawling number of similar antitrust lawsuits.
Read the judge’s order denying Weichert’s request for a stay here (if the document doesn’t appear, refresh the page):
Email Jim Dalrymple II
