‘Unconstitutional’ Court Order Risks NAR Deal On Appeal: Professor

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A law professor is challenging a court order compelling objectors of the National Association of Realtors’ proposed antitrust settlement to appear in person at the deal’s fairness hearing, saying the order is “unconstitutional” and “a glaring appellate issue.”

University of Buffalo contracts law professor Tanya Monestier submitted a motion for reconsideration of the order on Tuesday, Nov. 12. Monestier is a homeseller objector to the NAR settlement and has become well-known in the real estate industry for her criticism of new transaction forms created in the wake of the deal.

“[T]his Court lacks the authority to compel in-person attendance at a fairness hearing after assuring class members that their voices would be heard if they played by certain rules outlined in the class notice,” the motion to the U.S. District Court for the Western District of Missouri reads.

“A motion for reconsideration should be granted when there is a ‘clear error of law’ or to ‘prevent manifest injustice.’ Denying objectors an opportunity to be heard is a violation of objectors’ due process rights under the Fifth Amendment.”

She also asked the district court to rule on the record on the motion “with detailed factual findings to permit de novo review” by the 8th U.S. Circuit Court of Appeals.

“[I]f the district court denies a motion on legal grounds (here, constitutional grounds), the appellate court does not give any deference to the decision,” Monestier told Inman. “It reviews it ‘de novo’ (from scratch).”

On Tuesday afternoon, after the initial publication of this article, attorneys representing the plaintiffs in the Sitzer/Burnett case filed a response to Monestier’s motion for reconsideration of the court’s order asking that the court “consider and overrule her objection on the merits regardless of whether she attends the upcoming November 26, 2024 hearing.”

“Plaintiffs will respond to it (and the few other timely submitted objections) ahead of the final approval hearing,” they added.

The same plaintiffs’ attorneys did not file a similar request in Gibson, another, similar case in which the court ordered objectors to appear in person for a final approval hearing. Monestier did not file an objection in that case. The plaintiffs’ attorneys also only asked the court to consider her objection regardless of whether she appears, not any other objection.

On Oct. 28, Monestier filed a 136-page objection to the NAR settlement, calling it “the worst of all possible worlds” for consumers. More than a dozen other homesellers also filed objections by that deadline.

Judge Stephen R. Bough | Photo courtesy of the University of Kansas School of Law

Subsequently, on Nov. 4, District Court Judge Stephen R. Bough, who is overseeing the NAR settlement and other related settlements, ordered all objectors to the NAR deal to appear in person at the deal’s final approval hearing on Nov. 26 in Kansas City.

“[T]o ensure due process is satisfied, the Court ORDERS all objectors and their attorneys to appear in person at the November 26, 2024, hearing at 1:30 PM to argue their objections,” Bough wrote.

“Failure to comply with a Court’s order can result in an objection being struck or waived.”

The order was a text entry on the docket with no document attached and contained no requirement to inform any objector of the order.

This is after class notices — the text of which Bough approved — went out months ago explicitly telling potential objectors they did not have to come to the hearing:

Screenshot from class notice for proposed NAR settlement

“Do I have to come to the hearing?” the class notice reads. “No. Class Counsel will represent the Settlement Class at the Fairness Hearing, but you are welcome to come at your own expense.

“If you send any objection, you do not have to come to Court to talk about it. As long as you filed and mailed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend if you wish.”

In a memo accompanying the motion, Monestier said she prepared her comprehensive objection, which took her at least 50 hours over the course of three weeks, with the assurance that it would be considered by the court and she was not required to attend the fairness hearing.

“Due process requires that absent class members have notice and the opportunity to be heard,” Monestier wrote.

“Class members were explicitly told that they would be heard if they followed certain steps. Now they are being told they will not be heard unless they completely disrupt their life, pay large sums of money out of pocket, and orally tell the Court in two to three minutes (max) exactly what is already contained in their written submission that the Court promised it would consider.

“It is hard to imagine a more flagrant deprivation of due process.”

Monestier said she found out about Bough’s order, which she called “completely without precedent,” last week, on Nov. 7, when she, a law professor, happened to check the docket while looking for other documents.

“I don’t get an email or a phone call or a letter telling me this, even though the Court has all my contact information because the class action notice required that I include it and that it be posted publicly for the world to see,” Monestier wrote.

“I just randomly stumble across the information on my own. I don’t get an opportunity to respond to the order; there is no hearing or opportunity to be heard. It does not seem that the Court, or the parties, were ‘desirous of actually informing the absentee’ class member of the order.”

“As a class member, it feels to me like this order is just a convenient tool being used to dispose of my objection,” she added.

The next day, on Nov. 8, she reached out to attorneys on both sides of the case, saying she believe the order violated objectors’ due process rights.

“Although I am sure they were already fully aware, I alerted them to the glaring appellate issue this presents (I believe one of my voicemails used the term ‘unforced error,’” Monestier wrote.

Asked what she meant, Monestier told Inman, “The parties have an interest in making sure everything is done right the first go around — so it doesn’t create an issue on appeal.”

According to her filing, also on Nov. 8, Monestier read the transcript for the Oct. 31 fairness hearing for settlements in the Gibson case. At that hearing, Bough stated he had ordered the objectors in that case to appear in person because of “a somewhat alarming objection that accused me of criminal acts” which made him “somewhat suspect about objectors in this case given the fact that now I have to have the U.S. Marshals monitoring that correspondence.”

“I’m not lumping everybody into that category, but forgive me if I’m a little bit suspect in this particular matter given when I got to turn over information to the U.S. Attorney’s Office because of accusations of federal crimes,” Bough added.

According to Monestier, Bough’s reasoning doesn’t justify “forcing innocent class objectors” to appear in court in person.

“This Court seems to be using its powers of compulsion to investigate and/or address what is purely a personal situation,” the filing reads.

“I am not even clear what the Court was intending to do: ‘Suss out’ potential future interlopers? Ensure that objectors are ‘legitimate’ by being able to see them in person during their two-to-three-minute objection?”

The order is an abuse of the court’s authority and if Bough really harbors suspicions against objectors, he should recuse himself from the case, according to the filing.

“The Court seems to confuse its own personal reason for apparently wanting to see class members in person with an appropriate legal basis for using its powers of compulsion,” the filing reads.

“If the Court is concerned about this one individual, and therefore considers all objectors ‘suspect’ and views them with a jaundiced eye, then the Court should disqualify itself from the case. It should not deny dozens of class action objectors their due process rights.”

Regardless of how Bough rules on Monestier’s motion for reconsideration, the damage may already be done. Because several objectors did not appear in person for the Oct. 31 fairness hearing in Gibson, Bough struck their objections, potentially giving the objectors to the Gibson settlements grounds to appeal the deals’ final approval.

Monestier alludes to this in her filing when she says she is “grateful” that Bough stated his reasons for giving the order in Gibson on the record.

“I am confident that the Eighth Circuit will not justify violating class members’ due process rights because a district Court is ‘a bit suspect’ and ‘somewhat suspect’ about objectors,” Monestier wrote.

“I also believe this statement provides a basis for reconsideration of all objections that were stricken by this Court at the Gibson hearing, and also a re-evaluation of any objections that were considered by this Court.”

Monestier’s filing expresses alarm at Bough’s apparent dismissiveness regarding the personal and monetary impacts of his order.

“I am disheartened that this Court would refer to ‘death in the family’ or ‘family care requirements’ or ‘cost of travel’ as ‘excuses’ …,” the filing reads.

“A more apt characterization would be that these are legitimate reasons why individuals with limited time and resources would not be able to travel thousands of miles to partake in a process for which there is next-to-no-upside for them after being explicitly told by the Court that they would not have to physically appear in person.”

“It is particularly disheartening that the Court shows so little compassion for objectors’ personal circumstances when the Court was clear that the reason for compelling attendance was related to its personal circumstances,” the filing adds.

Monestier also pointed to Bough’s statement in the Gibson ruling saying that objectors’ potentially $1,000 outlay to appear in person “pales in comparison” to the $13 million the plaintiffs’ attorneys had spent to settle the case.

“I do not understand how the due process burdens placed on an objector are even remotely connected to class counsels’ expenses; the sentence is a non-sequitur,” Monestier’s filing reads.

“Moreover, the comparison is inapt. A class member must spend $1,000 in the hopes of getting, say, $50 instead of $25. But class counsel spends $13 million in the hopes of getting $333 million.”

Further, she asked why any objector should have to pay anything to have their voice heard.

“This ‘pay to play’ justice creates a perception that this Court and/or the parties are deliberately stifling the voices of objectors,” the filing reads.

“Whether this is the intent, or simply the consequence, doesn’t matter. Justice must not only be done but must be seen to be done.”

Editor’s note: This story has been updated to note that plaintiffs’ attorneys have asked the court to consider Monestier’s objection to the NAR settlement regardless of whether she appears in person at the final approval hearing.

Read Monestier’s filing  (re-load page if document is not visible):

Email Andrea V. Brambila.

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