Litigation team wins lawsuit for “2.4 trillion won compensation” in real estate brokerage commission manipulation trial
Buffett and his successor Abel, who have a lot of cash, are targeting the expansion of lawsuits nationwide.
Wall Street reported that the plaintiff in the litigation group that reached a massive compensation verdict of $1.8 billion (approximately KRW 2.3976 trillion) against the National Association of Realtors (NAR) filed a lawsuit for compensation against Berkshire Hathaway, chaired by Warren Buffett, Wall Street reported. The Journal (WSJ) reported on the 4th (local time).
In October of last year, the plaintiffs filed a lawsuit seeking $1.8 billion in compensation, claiming that NAR and two real estate companies had used a commission system to artificially increase real estate brokerage fees in Missouri, and won the case. In this regard, the court is allowed to increase the compensation in the final ruling to more than $5 billion, which is three times the amount claimed.
One of the defendants in the lawsuit filed last October is HomeServices of America, 92% owned by Berkshire Hathaway Energy, a Berkshire Hathaway subsidiary.
The new lawsuit filed by the plaintiffs is not directly related to the ruling against NAR and others in October of last year. However, by filing a new lawsuit against Berkshire Hathaway Energy, the purpose is to pressure Home Service and Berkshire to reach a compensation agreement in the upcoming trial.
“We want to show that this case is not limited to a few companies,” said Michael Kechmark, the plaintiffs’ attorney. “It is connected to the top floor of Berkshire Hathaway.”
The plaintiffs appear to have filed this lawsuit following a strategy of targeting the well-funded Berkshire Hathaway, believing that NAR lacks the ability to pay huge compensation. The goal is to accuse the conglomerate owned by Buffett of being involved in a conspiracy to increase brokerage fees.
NAR, the defendant in last October’s lawsuit, will have total assets of about $1 billion in 2022, while the other three real estate brokerages will have assets of only about $210 million. The amount falls short of Missouri’s compensation payment.
In comparison, Berkshire Hathaway holds cash assets worth $160 billion (about 213 trillion won) as of the end of last year.
Berkshire said in its year-end report last year that Home Service could lose up to $5.4 billion in addition to legal costs due to a losing verdict, and announced its intention to appeal, emphasizing that “the appeal process could last several years.”
After winning the case in October of last year, the plaintiffs expanded the lawsuit nationwide and filed 15 lawsuits against NAR, local real estate brokerage associations, and numerous real estate brokerage companies.
Greg Abel, the likely successor to Buffett as head of Berkshire Hathaway’s non-insurance division, is the former CEO of Berkshire Hathaway Energy. The plaintiffs argued that Abel remained involved in HomeServices’ operations as chairman of Berkshire Hathaway Energy.
The plaintiff also pointed out that Buffett authorized the promotion of real estate brokerage under the name of the company. On one company’s website, Buffett is quoted as saying, “We believe the Berkshire Hathaway name will be helpful to Home Services, and Home Services will be helpful to Berkshire.”
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.