Warren Buffett is being drawn into the litigation involving real estate commissions
In their latest antitrust lawsuit, the attorneys who prevailed in a landmark decision against the National Association of Realtors and brokerage houses are focusing on Warren Buffett.
They identified Buffett’s Berkshire Hathaway unit as a defendant in one of their lawsuits on Monday.
Plaintiffs claimed that NAR and two brokerages employed a commission system that unfairly maintained fees for Missouri agents high, and they were successful in October, winning a $1.8 billion decision. That sum might be tripled by a court to exceed $5 billion.
HomeServices of America, a brokerage owned by Berkshire Hathaway Energy, was one of those companies. 92% of Berkshire Hathaway Energy is owned by Warren Buffett’s Berkshire Hathaway.
The latest filing, which is a component of a nationwide action against NAR and several brokerages, will not have an immediate impact on the case that was tried earlier this year. However, adding Berkshire Hathaway Energy as a new defendant to the statewide lawsuit may put pressure on HomeServices and Berkshire to settle that and other lawsuits for a sizable sum.
We want to demonstrate that this isn’t a singular incident that happened in a corporate setting. This reaches the highest levels of Berkshire Hathaway “A plaintiff’s attorney, Michael Ketchmark, stated as much.
The plaintiffs’ anticipated difficulties in obtaining damage awards from NAR worth billions of dollars are highlighted by the new legal approach. They are trying to get beyond NAR’s more constrained financial resources and take advantage of Berkshire’s large financial resources by linking Buffett’s conglomerate to what they claim was a plot to raise real-estate commissions.
In the Missouri lawsuit, the three additional brokerages that were initially listed as defendants have settled for a total of almost $210 million. Plaintiff attorneys have stated that these comparatively small settlements show how much these firms could afford to pay without facing bankruptcy. By the end of 2022, NAR, the other defendant still on the case, possessed assets totaling almost $1 billion.
By the end of 2023, Berkshire, on the other hand, had more than $160 billion in cash and equivalents.
Requests for response from HomeServices, Berkshire Hathaway Energy, and Berkshire were not immediately answered.
In its 2023 annual report, Berkshire stated that, excluding attorneys’ fees and other potential charges, HomeServices may suffer damages from the October verdict of up to $5.4 billion.
The company stated in its annual report that “HomeServices intends to vigorously appeal the jury’s findings and damage award on multiple grounds.” “It may take several years to complete the appeals process and other steps.”
Following their victory in the Missouri case, the same attorneys filed a countrywide copycat lawsuit against NAR, many real-estate brokerages, and local Realtor associations. Since October, these lawsuits have been filed over 15 times. In the nationwide case, the updated filing was made on Monday.
Former CEO of Berkshire Hathaway Energy, Greg Abel is in charge of all of Berkshire’s noninsurance businesses and is expected to take over as CEO ultimately from Warren Buffett. Plaintiffs contend in their case that despite Abel’s ascent through the ranks at Berkshire, he has remained active in HomeServices operations as head of Berkshire Hathaway Energy.
The plaintiffs further assert that Buffett has approved of the use of his business name to advertise its real estate agency. According to a company website, Buffett stated, “We think the Berkshire Hathaway name will be good for HomeServices and HomeServices for Berkshire.”
