DOJ Joins Appeal Against NAR and Zillow Over Real Estate Practices

The Ninth Circuit allows the DOJ to argue against the NAR and Zillow in a lawsuit over real estate practices affecting competition and listings visibility.

The Ninth Circuit Court of Appeals has agreed to let the Department of Justice (DOJ) present its arguments in an appeal from the now-closed REX Real Estate.

This appeal is part of a lawsuit against the National Association of Realtors (NAR) and Zillow, set to take place on Thursday, February 13.

DOJ Participation in Appeal

In January, the DOJ requested permission to participate in the proceedings, asking for an extra five minutes to speak in addition to the 20 minutes allotted to the other three parties.

The court granted this request.

The DOJ raised concerns about the district court’s interpretation of optional association rules and their potential classification as collective actions under Section 1 of the Sherman Act.

They argued that the court’s view was too narrow and overlooked instances where these optional rules might still represent coordinated behavior.

The DOJ recommended that the appeals court overturn the district ruling and remand the case for further legal analysis.

Background of the Lawsuit

The lawsuit, initiated by REX in March 2021, claims that changes to Zillow’s website harmed the visibility of certain property listings, thereby affecting competition among real estate agents.

Specifically, REX alleged that an optional NAR rule led Zillow to move homes not listed on the Multiple Listing Service (MLS) from the main search results to a secondary tab, despite Zillow’s opposition to this rule.

In response, NAR countered in January 2022 with accusations against REX for false advertising under the Lanham Act, but this countersuit was dismissed in April 2022.

By May 2022, REX had halted its brokerage operations, and over a year later, all parties filed motions for summary judgment.

Judge Thomas Zilly, who oversaw the case, upheld REX’s claims of false advertising and a state law violation for unfair trade practices but dismissed antitrust claims against NAR and Zillow.

In September 2023, after a trial, the court ruled in favor of Zillow on the remaining claims.

REX subsequently sought a new trial, claiming it was denied the chance to present evidence on agent commissions.

Ultimately, a jury found that REX failed to prove allegations of false advertising regarding Zillow’s listing separation and determined that Zillow had adequately defended against REX’s claims of deceptive practices.

DOJ’s Stance on NAR’s Rules

The DOJ initially joined REX’s appeal in June 2024, filing an amicus brief that refrained from taking a definitive position on the case’s outcome.

They argued that while NAR’s no-commingling rule is optional, it could still encourage anticompetitive practices.

This isn’t the first time the DOJ has had a say in a real estate industry appeal; it was previously granted five minutes to contribute to oral arguments in another Ninth Circuit case regarding NAR’s Clear Cooperation Policy.

Source: Housingwire