The legal team behind the historic verdict against the National Association of Realtors and brokerage firms is now directing their focus towards Warren Buffett’s Berkshire Hathaway.
In their latest move, they have added a major subsidiary of Berkshire Hathaway as a defendant in one of their ongoing lawsuits. This subsidiary is HomeServices of America, owned by Berkshire Hathaway Energy, in which Buffett’s Berkshire Hathaway holds a 92% stake.
Although this new filing won’t directly impact the previous case that resulted in a $1.8 billion verdict against NAR and two brokerages, it could exert pressure on HomeServices and Berkshire Hathaway to settle the national lawsuit and others on a larger scale.
Michael Ketchmark, one of the lawyers representing the plaintiffs, emphasized that their goal is to demonstrate that the issues alleged in the lawsuit are not isolated incidents but extend to the upper echelons of Berkshire Hathaway.
The plaintiffs’ new legal approach highlights the potential hurdles they may encounter in securing significant damage awards from the National Association of Realtors (NAR). By targeting Warren Buffett’s conglomerate and attempting to link it to the alleged conspiracy to inflate real-estate commissions, they aim to bypass NAR’s comparatively limited financial resources and access Berkshire’s substantial wealth.
In contrast to the relatively modest settlements reached with the three other brokerages initially named in the Missouri case, totaling around $210 million, the move reflects the plaintiffs’ recognition of the financial capacity of these companies to settle without facing bankruptcy. NAR, as the remaining defendant, possessed approximately $1 billion in total assets by the end of 2022.
In stark contrast, Berkshire Hathaway boasted over $160 billion in cash and equivalents by the close of 2023, illustrating the potential financial resources available for a significant settlement or judgment.
Berkshire Hathaway stated in its 2023 annual report that HomeServices might incur losses potentially reaching $5.4 billion as a consequence of the October verdict, excluding legal fees and other potential expenses.
In response to the verdict, HomeServices expressed its intent to vigorously appeal on multiple grounds, citing the jury’s findings and the damage award. The company underscored that the appeals process and subsequent actions could extend over several years.
Following their success in the Missouri case, the same legal team initiated a nationwide lawsuit, which is one of more than 15 similar lawsuits filed since October against entities including NAR, local Realtor associations, and numerous real-estate brokerages. The recent filing on Monday was part of the national lawsuit.
Greg Abel, who oversees all noninsurance companies within Berkshire Hathaway and is slated to eventually assume the role of CEO from Buffett, previously served as CEO of Berkshire Hathaway Energy. The plaintiffs argue in their complaint that despite Abel’s ascension within Berkshire, he has maintained involvement in HomeServices’ operations as the chair of Berkshire Hathaway Energy.
Moreover, plaintiffs assert that Buffett has endorsed the use of Berkshire Hathaway’s name to promote its real-estate brokerage. Buffett is quoted on a company website as saying, “We think the Berkshire Hathaway name will be good for HomeServices and HomeServices for Berkshire.”