Corporate Counsel Daily, Suit to proceed in part against Hanna Holdings over alleged real estate commission-fixing conspiracy, (Jun 24, 2025)

By Martin A. Steinberg, J.D.

Hanna Holdings, Inc., allegedly conspired with other members of the National Association of Realtors (NAR) to enforce anticompetitive rules that inflated buyer-broker commissions, suppressed competition, and led to homebuyers paying artificially high prices.

The federal district court in Philadelphia allowed the Sherman Act and related state claims to proceed under a rule of reason analysis, while dismissing claims based on a horizontal conspiracy due to insufficient pleading. The plaintiff homebuyers allege that Hanna Holdings engaged in a broad conspiracy with other real estate brokerages to enforce anticompetitive rules established by the National Association of Realtors (NAR) that artificially inflated buyer-broker commissions. The complaint challenges practices such as mandatory blanket compensation offers to buyer-brokers through NAR-controlled MLS systems, limits on fee negotiations, concealment of commission details from buyers, and lockbox access restrictions that exclude non-NAR brokers from the market. The plaintiffs assert these rules caused inflated home prices, reduced service quality, and suppressed competition, violating federal and state antitrust and consumer protection laws. Although the court previously dismissed the federal injunctive relief claim for lack of standing, it now ruled that plaintiffs plausibly allege a vertical antitrust agreement between Hanna and NAR (Davis v. Hanna Holdings, Inc., No. 2:24-cv-02374-WB (E.D. Pa. Jun. 23, 2025)).

Factual allegations. Hanna is the largest privately held real estate brokerage company in the U.S., operating across 13 states on the East Coast and in the Midwest. Hanna and its employee-brokers are members of the NAR, a 1.4 million-member trade association that represents residential and commercial real estate brokers, salespeople, property managers, appraisers, and others engaged in the real estate industry nationwide. The NAR establishes and enforces rules, policies, and practices that govern the activities of realtors belonging to the association’s 54 state or territorial associations and its approximately 1,200 local boards.

Each local board operates a database of local property listings, known as a Multiple Listing Service (MLS), and does so under rules promulgated at the national level by the NAR. In any particular geographical region of the country, the local MLS serves as the de facto marketplace for home listings, brokers working for home sellers (seller-brokers) list houses on the MLS, and brokers working for home buyers (buyer-brokers) use the MLS to find potential homes for their clients. MLSs also serve as the primary source for listings displayed by popular online real estate companies, such as Zillow. In exchange for access to NAR-controlled MLS data, these companies agree not to compete with NAR members by acting as real estate brokers themselves.

Most homes bought each year—nearly 90%, according to NAR figures from 2020—were purchased with the assistance of NAR-member brokers, who typically use their local NAR-controlled MLS to find properties for sale. Without access to the NAR-controlled MLSs, buyer-brokers would be deprived of the most comprehensive and up-to-date information about local home listings. They would be unable to compete effectively with brokers who have such access. The NAR controls a substantial number of MLSs in the country.

The plaintiffs alleged that Hanna, through its membership in the NAR, helped create and enforce rules via MLSs that serve as de facto marketplaces for home listings. These rules include a mandatory “blanket offer of compensation” requiring seller-brokers to make a predetermined offer to pay buyer-broker commissions as a condition of listing on an MLS. They also argue that this rule, alongside prohibitions against negotiation, concealment of commission data, restrictions on lockbox access, inflated fees, and exclusion of competition from non-NAR brokers, ultimately harmed homebuyers who bore the costs.

The plaintiffs further claimed that Hanna’s executives participated directly in NAR governance, helping draft and promulgate the contested rules. These rules were then enforced across NAR’s 1,200 local boards and over 50 state associations. By maintaining this structure, Hanna and its co-conspirators ensured that buyer-brokers received supracompetitive commissions, regardless of market forces that would otherwise drive those fees downward due to changes in consumer behavior and technology.

The Amended Complaint raised four primary claims: (1) federal antitrust violations under the Sherman Act; (2) violations of state antitrust statutes from 24 states and D.C.; (3) consumer protection law violations from 22 states and D.C.; and (4) unjust enrichment. On March 18, 2025, the court dismissed without prejudice Count I of the Amended Complaint that sought injunctive relief under the Sherman Act for lack of standing. Hanna filed a Motion to Dismiss Plaintiffs’ Amended Complaint, arguing lack of standing, failure to state a claim, and failure to mediate.

Sherman Act §1. Because the plaintiffs have plausibly pleaded a vertical agreement between Hanna and the NAR and have put forth allegations sufficient to rebut Hanna’s arguments based on the rule of reason, Counts I and II of the Amended Complaint survive Hanna’s Motion to Dismiss. To establish a claim under Section 1 of the Sherman Act, the plaintiffs must allege (1) the existence of an agreement and (2) that the agreement unreasonably restrains trade. To satisfy its burden at the pleading stage, a § 1 plaintiff may set forth either direct or circumstantial evidence suggesting that an agreement has taken place.

Horizontal agreement. Plaintiffs first attempted to show a horizontal agreement between Hanna and other competing brokerages. The court rejected this theory, finding the plaintiffs’ allegations insufficient. The Amended Complaint charges Hanna with entering “continuing agreements” separate from and antecedent to the NAR rules in question. Neither the existence of these NAR rules nor Hanna’s alleged role in promulgating them is direct evidence that any prior agreements took place. While plaintiffs pointed to Hanna’s adherence to NAR rules and its executive involvement in promulgating them, such behavior was equally consistent with independent business judgment and not necessarily indicative of a concerted conspiracy. The court found no direct or circumstantial evidence of a horizontal agreement and thus dismissed this component of the claim.

Vertical agreement. Conversely, the court found that the plaintiffs had plausibly alleged a vertical agreement between Hanna and NAR. The complaint described Hanna’s enforcement of NAR rules, participation in NAR boards, and its control over affiliated brokers, all of which pointed to an agreement between entities operating at different levels of the market. Such conduct, if proven, could constitute a vertical restraint of trade.

Rule of reason analysis. The court applied the “rule of reason” standard to determine whether the vertical agreement imposed an unreasonable restraint of trade. The plaintiffs identified the relevant product market as the market for real estate brokerage services and the geographic market as areas where NAR-controlled MLSs operate. Despite Hanna’s objections that these definitions were overbroad or implausible, the plaintiffs’ definitions adequately accounted for the commercial realities of modern home buying and thus sufficed at the pleading stage.

Plaintiffs also alleged that they suffered sufficient harm, including inflated prices, suppressed competition, and lower-quality services. They claimed that NAR’s control of the MLSs, combined with rules that mandated commission payments, prevented meaningful negotiation and excluded disruptive, lower-cost competitors. These allegations plausibly supported the claim that Hanna’s conduct, in conjunction with NAR’s rules, unreasonably restrained trade under a rule of reason framework.

The plaintiffs alleged that the NAR rules inflate buyer-broker fees by suppressing negotiation and competition among brokers, that sellers pass those inflated fees onto buyers who pay them as part of the total home price, and that Hanna is legally responsible. At this early stage of the proceeding, where the Plaintiffs’ well-pleaded allegations set the terms of the analysis, rather than actual market realities, these facts are all a court needs to make a preliminary determination about whether the alleged combination or agreement has produced adverse, anti-competitive effects within the market for buyer-broker services.

Geographic market. The Amended Complaint defined the relevant geographic market as “the geographic areas in which NAR MLSs operate.” The proposed geographical market would encompass the entire area in which the buyer is shopping, such as the New York metropolitan area. It would not be rendered implausible simply because the buyer may not realize he is shopping across the territories of several different MLSs. What matters is simply that the pleaded market covers the area in which a potential buyer may rationally look for the goods or services he seeks. At this early stage in the proceedings, the plaintiffs plausibly establish their pleaded market.

State antitrust claims. The court rejected Hanna’s contention that the amended complaint merely recited statutory citations without specifying how each state's law was violated, thus failing to provide sufficient notice. Most state statutes mirror the Sherman Act and contain harmonization provisions that require interpretation consistent with federal antitrust law. Since the plaintiffs incorporated by reference the factual allegations supporting their federal antitrust claims and identified the states in which they seek relief, this was sufficient to state a claim under the Fed. R. Civ. P. Rule 8 pleading standard.

Because many state statutes are harmonized with the Sherman Act, the same analysis applies. Plaintiffs had realleged their federal allegations and identified the relevant statutes, providing Hanna with sufficient notice. However, the court dismissed claims under the antitrust laws of Arizona, Hawaii, Nevada, and Utah without prejudice because the plaintiffs failed to comply with the pre-suit notice requirements of those states.

Consumer protection claims. The plaintiffs also brought claims under 22 state and D.C. consumer protection statutes. Hanna argued that many of these statutes require specific allegations of deceptive or fraudulent conduct, not merely anticompetitive behavior. The court agreed and found that the plaintiffs’ claims under Colorado, Michigan, New York, Oregon, Pennsylvania, Rhode Island, Virginia, and Wisconsin law were deficient for failing to allege specific deceptive acts. Additionally, claims under statutes that exempt real estate brokers were also dismissed where plaintiffs failed to allege that Hanna was not licensed in those states. All of these dismissals were without prejudice.

Unjust enrichment. The plaintiffs' final claim sought disgorgement and restitution under a generalized theory of unjust enrichment. The court dismissed this count, holding that the claim did not invoke the law of any particular jurisdiction and was too vague under Fed. R. of Civ. P. 8. Since unjust enrichment law varies significantly among states, plaintiffs needed to specify which jurisdictions' common law supported their claim.

The Case is No. 2:24-cv-02374-WB.

Judge: Beetlestone, W.

Attorneys: Peter Demato (Lowey Dannenberg, P.C.) for Scott Davis. Eric G. Soller (Pietragallo Gordon Alfano Bosick & Raspanti, LLP) for Hanna Holdings, Inc.

Companies: Hanna Holdings, Inc.

Cases: Antitrust PennsylvaniaNews GCNNews