A lawsuit that alleges the powerful National Association of Real Estate Agents and the real estate ads giant Zillow Illegal conspiracy to stifle competition survived NAR and Zillow’s petition to dismiss the case.
Federal Judge Thomas Zilly issued a written order on Thursday which found the complaint by the real estate brokerage REX plausibly states that “brokerage firms, agents and even clients have no choice but to comply with the so-called voluntary NAR rules.”
The Seattle-based judge’s ruling is the latest example of legal hot water for NAR, a guild of realtors that also represents brokerages and consumer advocates. The Biden administration’s Justice Department announced in July that it had withdrawn from a consent decree with the trade group to “allow a broader investigation into the rules and conduct of the NAR to take place. unfolds without restriction “.
Additionally, the Biden administration has intervened in lawsuits against NAR – including REX’s complaint. According to Zilly’s decision, âthe United States Department of Justice has filed an expression of interest requesting this tribunal to decline to make any finding in favor of NAR from the 2008 consent decree, which is now expired â.
This consent decree dealt with whether NAR-sanctioned multiple listing services could withhold data from consumer-facing websites like Zillow – a resolution that arguably enabled Zillow and other websites like Red tuna to bloom.
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REX’s lawsuit stems from Zillow changing the way it collects information about real estate listings it displays publicly. Zillow entered into syndication agreements with various parties late last year to obtain Internet Data Display Feeds, or IDXs, from Multiple Listings Services.
To get these flows, Zillow had to comply with the vast majority of MLSs that adopt the NAR’s âno mixâ rule. Under the rule, Zillow was instructed to separate ads from MLS agents from those that were not part of MLS. These include homes listed for sale by REX agents, as the brokerage is not part of the NAR.
As a result, there is now an âAgent Announcementsâ and âOther Announcementsâ tab on the Zillow website. REX lists are relegated to the âotherâ tab.
REX calls such separation “the rule of segregation”, alleging that it “falsely states that REX’s ads are not represented by authorized agents” and suggests to the consumer that REX’s ads are somehow inferior.
The Austin, Texas-based brokerage, which hires salaried agents and advertises to offer consumers a reduced commission payment, says its sales have “plummeted” since Zillow’s reign.
Part of what REX wanted from the filing of the lawsuit was for the judge to issue a preliminary injunction against Zillow’s “other announcements” tab. But in a written order from June, Zilly categorically rejected REX’s call to enjoin Zillow’s behavior. “The plaintiff did not support his claim that there is deception that hurts a substantial portion of the buying public,” Zilly said.
On Thursday, however, the judge made an entirely different ruling.
Zilly cites with approval REX’s complaint that the NAR “is the rare trade association that establishes the rule of competition among its members,” and these combined actions “constitute illegal restrictions on trade.”
As for Zillow, the judge said the ad website, which is now largely iBuying, “has positively redesigned its website to enforce an allegedly deceptive labeling scheme” that could mislead consumers. consumers.
The judge’s decision simply examines REX’s legal claims and not the possible facts of the case. If the trial is unsuccessful, the next step is for each party to produce evidence to support their arguments.
NAR responded to questions with a written statement from spokesperson Mantill Williams.
âWe are disappointed with the decision but remain confident that we will deliver in court,â Williams said in part. âNAR remains committed to championing local brokerage organizations that create highly competitive markets. “
Zillow also responded with a written statement.
“We believe and continue to maintain that REX’s complaints are without merit,” the statement read. âAs participants in MLS, we are required to abide by MLS rules and regulations. “