The lawyers who won a historic verdict against the National Association of Realtors and brokerage firms are turning to a new target as part of their antitrust litigation: Warren Buffett.<\/p>\n<\/p><\/div>\n
On Monday they named a large subsidiary of Buffett\u2019s Berkshire Hathaway as a defendant in one of their lawsuits.<\/p>\n
In October, plaintiffs won a $1.8 billion verdict after alleging that NAR and two brokerages used a commission structure that kept fees for Missouri agents artificially high. A judge could triple that amount to more than $5 billion.<\/p>\n
One of those brokerages was HomeServices of America, which is owned\u00a0by Berkshire Hathaway Energy. Buffett\u2019s Berkshire Hathaway owns 92% of Berkshire Hathaway Energy.<\/p>\n
The new filing, which is part of a national lawsuit against NAR and a handful of brokerages, won\u2019t directly affect the case that went to trial last year. But naming Berkshire Hathaway Energy as a new defendant in the national case could pressure HomeServices and Berkshire to reach a large nationwide settlement of that and other cases.<\/p>\n
\u201cWhat we\u2019re trying to show is that this isn\u2019t an isolated event in some corporate office. This goes to the top of Berkshire Hathaway,” said Michael Ketchmark, a lawyer for the plaintiffs.<\/p>\n
The new legal strategy underscores the challenges the plaintiffs are likely to face in collecting potentially billions of dollars in damage awards from NAR. By trying to tie Buffett\u2019s conglomerate to what they allege was a conspiracy to raise real-estate commissions, they are aiming to move beyond NAR\u2019s more limited financial resources and tap Berkshire\u2019s deep pockets.<\/p>\n
The three other brokerages originally named as defendants in the Missouri case have settled for some $210 million combined. Those relatively modest settlements reflect how much these companies could pay without being pushed into bankruptcy, plaintiff lawyers have said. NAR, the other remaining defendant, had total assets of roughly $1 billion at the end of 2022.<\/p>\n
Berkshire, on the other hand, held more than $160 billion in cash and equivalents at the end of 2023.<\/p>\n
HomeServices, Berkshire Hathaway Energy and Berkshire didn\u2019t immediately respond to requests for comment.<\/p>\n
Berkshire said in its 2023 annual report that HomeServices could face losses due to the October verdict that could be up to $5.4 billion, excluding attorneys\u2019 fees and other potential costs.<\/p>\n
\u201cHomeServices intends to vigorously appeal on multiple grounds the jury\u2019s findings and damage award,” the company said in the annual report. \u201cThe appeals process and further actions could take several years.”<\/p>\n
After winning the Missouri verdict, the same lawyers filed a similar lawsuit nationwide, one of more than 15 copycat lawsuits that have been filed since October against NAR, local Realtor associations and numerous real-estate brokerages. The revised filing on Monday was in the national lawsuit.<\/p>\n
Greg Abel, who oversees all of Berkshire\u2019s noninsurance companies and is in line to eventually succeed Buffett as CEO, was formerly CEO of Berkshire Hathaway Energy. In their complaint, plaintiffs argue that even as Abel has risen through the ranks at Berkshire, he has continued to be involved in the operations of HomeServices as chair of Berkshire Hathaway Energy.<\/p>\n
Plaintiffs also say Buffett has endorsed using his company\u2019s name to promote its real-estate brokerage. \u201cWe think the Berkshire Hathaway name will be good for HomeServices and HomeServices for Berkshire,” Buffett is quoted as saying on a company website.<\/p>\n
Write to Laura Kusisto at Laura.Kusisto@wsj.com and Nicole Friedman at nicole.friedman@wsj.com<\/i><\/p>\n
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