Blood in the Water

Yet Another Lawsuit Challenges 'Customary' 10 Percent Yacht Broker Commissions

“Members of the YBAA and IYBA, as well as other yacht broker associations, that do not comply with these anticompetitive rules set forth in the respective organizations’ Code of Ethics, face disciplinary action, including potential expulsion.”

With the American system of six percent real-estate commissions having been gutted by successful litigation earlier this month, sharks are now circling the yacht-sales establishment, which has long embraced a similar system of 10 percent broker payouts.

On Friday, a second federal lawsuit was filed against big brokerage players, alleging that their way of doing business is an enrichment scheme to the detriment of consumers. It comes on the heels of Ya Mon vs. International Yacht Brokers Association (and 14 other associations and brokerages), a lawsuit late last month with the same disruptive goal.

And, with blood in the water, there may be more of the same coming to a federal court near you.

The more recent action is called Kip Lamar Snell vs. Allied Marine and 20 other brokerages and associations. Like the first suit, Snell was filed in U.S. District Court in Miami. The defendants are:

• Allied Marine

• International Yacht Brokers Association

• Yacht Brokers Association of America

• Florida Yacht Brokers Association*

• Denison Yachts International

• Galati Yacht Sales

• HMY Yacht Sales

• International Yacht Corporation*

• Marine Max

• Marine Max East*

• Sharon & Jack Malatich

• Northrop & Johnson Yachts-Ships

• Rick Obey Yacht Sales*

• Ocean Independence Yachts*

• OneWater Marine*

• R.J.C. Yacht Sales

• United Yacht Sales*

• Worth Avenue Yachts*

• Boats Group

• Permira Advisers

• Yatco

(An asterix marks those defendants who were not also named in Ya Mon.)

New York Times economics writer David Leonhardt recently identified the bad-faith behavior that prompted successful class-action lawsuits under the Sherman Anti-Trust Act:

Decades ago, the National Association of Realtors set the standard commission at 6 percent, to be split between an agent representing the seller and an agent representing the buyer. If a home seller tried to negotiate, an agent would often issue a veiled threat: You won’t find a good seller’s agent to work with you, and buyers’ agents won’t show your house to clients.

Does the yacht brokerage system do the same? The answer is yes, according to the 43-page complaint filed on behalf of Snell, a resident of Alabama.