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Crye-Leike Inc. is walking back figures it provided for a prominent industry ranking and alleging that it is therefore covered under the National Association of Realtors nationwide antitrust settlement.
The Feb. 5 legal filing is asking a federal court in Missouri to stay a case against Crye-Leike known as Gibson until all appeals of the NAR deal have been exhausted. The Gibson suit was the first antitrust commission suit filed after an October 2023 jury verdict in the Sitzer | Burnett case awarded billions to a class of homeseller plaintiffs in Missouri.
NAR reached a nationwide settlement of Sitzer | Burnett, Gibson and other, similar suits last year and member brokerages whose total residential home sales volume did not exceed $2 billion in 2022 were covered under the deal.
In its 2022 Annual Report, Crye-Leike touted the company’s $8.5 billion in sales volume.
Now, Crye-Leike is challenging the metric used under the settlement to decide whether a member brokerage is covered or not: the T360 Real Estate Almanac. The terms of the settlement explicitly say that “The ‘Sales Volume’ reflected in the T360 Real Estate Almanac shall serve as an irrebuttable presumption of a Person’s ‘Total Transaction Volume.’”
Harold Crye
According to Crye-Leike’s filing, the Almanac’s sales volume for “Crye-Leike Realtors,” includes the total sales volume for six brokerages 100 percent owned by Harold Crye but which are independent corporations.
Since the Gibson suit named Crye-Leike Inc. as a defendant and Crye-Leike Inc. itself only closed $1.75 billion in residential sales in 2022, the firm says it is covered under the NAR settlement.
“Crye-Leike is only in the position of defending this lawsuit because the T3 Sixty Report Form requests information for only two types of brokerages,” the filing says.
“The form requested three items: total sales volume, number of agents, and transaction sides closed. The form provided a line for company owned brokerages and a second line for franchised brokerages.
“The Controller did as she did every year and grouped together the transactions volume, transactions size, and agents of the six independent Crye-Leike owned companies.”
Those companies are Crye-Leike, Inc., Crye-Leike of Arkansas, Inc., Crye-Leike of Mississippi, Inc., Crye-Leike of Nashville, Inc., Crye-Leike South, Inc. and Adaro Realty.
According to the filing, the companies are not subsidiaries or divisions of one another, have their own management teams, and keep separate accounting records.
“CryeLeike, Inc. provides accounting support, human resources, information technology, in-house legal, and group procurement services for the others,” and they pay fees to Crye-Leike inc. for those support services, the filing said.
The filing contends that plaintiffs can’t prove Crye-Leike Inc. had “total control” over the six firms to treat them all as one larger entity with more than $2 billion in total transaction volume.
“In order to exclude Crye-Leike from the [NAR settlement] release, the Plaintiffs must show the group of companies acted as a single entity or alter-egos so that they should be viewed collectively, not individually,” the filing says.
“Where corporations act at arms-length, pay one another for resources used, and operate independently, common ownership and shared officers will not be enough for them to be treated as a single entity.”
Michael Ketchmark
In a statement, Michael Ketchmark of Ketchmark & McCreight, lead counsel for the Gibson plaintiffs, told Inman, “The terms of the settlement agreement make it clear that Crye-Leike is not covered.”
In addition to making the Almanac “irrebuttable” regarding transaction volume, the NAR settlement’s definition of “total transaction volume” includes “the aggregate dollar value of all residential home sales and purchases of that brokerage’s direct and indirect parents (including holding companies), subsidiaries, affiliates, associates … and of each’s franchisees, in which each such Person represented the buyer, the seller, or both in a real estate brokerage capacity.”
The plaintiffs have 10 days after Crye-Leike’s filing to respond. “We are in the process of responding in court,” Ketchmark said.
Crye-Leike’s filing asserts that Crye-Leike Inc. provided real estate consulting firm T3 Sixty “with a list of residential transaction volume for each [Crye-Leike Entity] and a total for all” and that “T3 Sixty determines how to present the information and, in 2023, grouped together all the companies’ transactions.”
“The clerical process of totaling company owned brokerage sales cannot create a unified entity,” the filing adds.
Steve A. Brown
However, a declaration by Steve A. Brown, president of residential sales for all six Crye-Leike entities, and exhibits included with the motion to stay appear to show that Crye-Leike did not provide T3 Sixty with separate transaction data for each of the six named entities.
According to a January 2023 emailed request from T3 Sixty to Crye-Leike, T3 Sixty asked for 2022 sales volume, transaction side and agent count data for T3 Sixty’s annual Mega 1000 ranking of the nation’s largest brokerages. In its request, which was included as an exhibit in the filing, T3 Sixty asked for 2022 totals for company-owned brokerages and franchises.
The request also asked for “a list of all brokerages with Sales Volume greater than $200M in 2022” and to “For each brokerage, submit full-year data for Sales Volume, Transaction Sides and year-end Agent Count.”
According to Brown’s declaration and the exhibits, Crye-Leike Inc.
The total residential sales volume for “Company-Owned Brokerages” for all six companies combined was $7.019 billion in 2022. Crye-Leike Realtors ranked No. 31 in the Almanac, surpassing its previous No. 35 spot. Additionally, Crye-Leike reported $1.34 billion in total 2022 sales volume for its franchise brokerages. Inman has contacted Crye-Leike for comment and will update the story accordingly.