By Jordan Grice | RISMedia
Real Estate Exchange Inc. v. Zillow and National Association of REALTORS® et al.
While some industry pundits may think this case isn’t as problematic as others on the list, the legal battle pitting NAR and Zillow against Real Estate Exchange (REX) offers a mix of potential impacts that real estate professionals can’t ignore.
Since filing the lawsuit last year, the Texas-based discount brokerage has maintained—and fervently advertised—its claims that NAR and Zillow have been colluding to steer house hunters toward listings connected to NAR.
Conversely, NAR has also maintained that the allegations made in REX’s lawsuit are “without merit,” going as far as filing a counterclaim, alleging that the startup has been deceiving consumers with false advertisements and misleading statements about its services and NAR.
NAR’s counterclaim was recently dismissed by U.S. District Court Judge Thomas S. Zilly, who claimed NAR failed to support its claims that REX alleged false statements harmed NAR’s reputation.
What we know
- REX initially filed the lawsuit in March 2021 against Zillow, Trulia and NAR, alleging that the online real estate marketplaces were giving preferential treatment to NAR broker listings.
- The lawsuit takes issue with a website change that Zillow implemented last year, claiming it segregates, conceals and demotes listings that aren’t from the MLS.
- The website change implements two tabs included in its listing search feature to include “agent listings” and “other listings.” The latter tab includes for-sale-by-owner listings or coming soon listings, not on the MLS.
- The lawsuit is aimed at NAR co-mingling policy which lets local associations choose whether non-MLS content can appear with theirs or whether it has to be posted separately.
- The rule reads: MLSs cannot prohibit participants from downloading and displaying or framing other brokers’ listings obtained from other sources, e.g., other MLSs, non-participating brokers, etc., but can, as a matter of local option, require that listings obtained through IDX feeds from REALTOR® Association MLSs be searched separately from listings obtained from other sources.
- In June 2021, Judge Zilly ruled that REX did not adequately support its claim that there was any deception injuring a substantial portion of the purchasing public.
- On September 3, Zilly denied NAR and Zillow’s motions to dismiss the lawsuit after finding that REX “adequately pleaded” that it was harmed by alleged anti-competitive aspects of NAR and Zillow’s actions.
What’s at stake?
“We are disappointed with the Court’s recent decision to dismiss the suit, but it is important to note that the Court did not address NAR’s allegations that REX made false and misleading statements comparing REX’s services to those provided by brokers who are also REALTORS®,” said a NAR spokesperson. “And, a win in and of itself, REX has discontinued making the false claims on places such as its website since we filed this claim.”
The lawsuit between PLS.com, an agent-only pocket listing service, and NAR serves as an example that some issues don’t just end when a judge dismisses a case.
In late April, a three-judge U.S. 9th Circuit Court of Appeals panel reversed a lower court’s dismissal of an antitrust lawsuit filed by PLS.com against the NAR’s Clear Cooperation Policy (CCP).
While the district court judge threw the case out because PLS didn’t “adequately allege” its antitrust injury, the Circuit court argued the contrary.
“At the outset, we hold that the district court erred when it held that PLS did not adequately allege antitrust injury because it did not allege harm to home buyers and sellers,” Circuit Judge Milan Smith Jr. wrote in a recent memorandum.
What we know
- PLS.com filed its lawsuit in May 2020, seeking monetary damages and “injunctive relief.”
- The lawsuit names NAR, Bright MLS, Midwest Real Estate Data, LLC. and California Regional Multiple Listing Service, Inc. as defendants; at issue is NAR’s Clear Cooperation Policy, which requires REALTORS® to add all of their off-MLS listings to their regional MLS within a business day.
- PLS was formed as the “Pocket Listing Service” that allowed real estate professionals privately share pocket listings with others in the industry outside of the NAR-affiliated MLSs.
- PLS alleges that NAR “eliminated the possibility of a more competitive future in the market” by establishing the CCP, harming consumers and their PLSs business.
- The case was dismissed by the U.S. District Court of California’s Western Division in February 2021.
- U.S. 9th Circuit Court of Appeals panel reversed the dismissal in April 2022.
- PLS is seeking monetary damages and for the court to permanently prohibit the Defendants from enforcing the CCP or any variant of that policy.
What’s at stake?
“The Clear Cooperation Policy was created to protect the best interest of consumers and promote equal opportunity for all,” said Rouda Smith. “Absent the CCP’s protections; a secondary market is possible where a small group of brokers could develop and limit consumers’ access to those listings.”
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Related:
Lawsuits Threatening Agent Commissions: Moehrl v. NAR
Lawsuits Threatening Agent Commissions: Sitzer et al. v. NAR
Lawsuits Threatening Agent Commissions: PLS.com v. NAR