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  • The DOJ filed a non-binding amicus curiae brief on June 20 urging the Ninth U.S. Circuit Court of Appeals to nullify its previous ruling in favor of Zillow and NAR and to send the case back to District Court for reconsideration. 
  • If the DOJ gets its way and the courts agree to reconsider the ruling, the Real Estate Exchange (REX) could potentially win its bid for a “do over” of the trial. 

The Department of Justice (DOJ) filed an amicus curiae brief on June 20, 2024 urging the Ninth Circuit Court of Appeals to reconsider its ruling on the case between Real Estate Exchange (REX) and Zillow earlier this year—a ruling that ultimately benefits the National Association of Realtors (NAR)

As the DOJ argues in the filing, the ruling judge took an “incomplete approach that creates risk that associations like the NAR could evade antitrust scrutiny with optional rules.” 

In other words, while NAR insists its “no commingling” rule is optional, Zillow followed the policy because it was necessary to retain the benefits of MLS access. That should sound familiar. 

Now, the DOJ is calling out NAR and warning the trade association that just saying their policy is “optional” is not enough to prevent the kind of anticompetitive behavior for which REX decided to sue Zillow. 

In its brief, the DOJ recommends the complete nullification of the previous ruling in Zillow’s (and NAR’s) favor, remanding it to District Court for reconsideration. 

If the DOJ prevails, the REX case could potentially get a new trial, the outcome of which could depend on this year’s election

What the REX vs Zillow lawsuit is all about

NAR’s “no-commingling” rule prohibits real estate sites like Zillow that rely on IDX feeds from mixing MLS listings and non-MLS listings, giving equal visibility to listings in conformity with NAR policies and listings from for-sale-by-owner (FSBO) sellers and brokers who don’t subscribe to an MLS. 

As a discount brokerage, Real Estate Exchange bypassed the MLS, opting instead to promote its listings on Zillow, on social media, and in search. 

“To keep commissions low, REX attempted to bypass listing properties on MLSs to avoid mandatory buyer-broker or agent commissions that NAR required for its affiliated MLSs.” (DOJ brief)

Zillow, for its part, moved its non-MLS listings—including those from REX—to a separate tab, which ultimately reduced user traffic to those listings. REX hasn’t been operational since May 2022, but hasn’t ruled out restarting. 

Zillow separated its MLS and non-MLS listings to maintain its access to IDX data, which it would have forfeited by flouting NAR’s no-commingling policy. In suing Zillow, REX argued that Zillow’s move hurt its visibility on the platform and constituted an “unreasonable restraint of trade.” 

The position in which NAR put Zillow and other MLS users is at the core of the DOJ’s filing. Because while NAR has stated that its “no-commingling” rule is optional, any entity that adopts NAR policy must fully implement it because, according to the NAR handbook, the rule “cannot be modified.”  

By ruling in favor of Zillow, the judge effectively absolved NAR and, per the DOJ filing, may have set a dangerous precedent. 

“The judge’s decision created a loophole that could allow associations to sidestep antitrust scrutiny by cloaking restrictive rules as optional.”

The brief also brought forth a Supreme Court precedent showing rules described as “optional” (by the one imposing them) may involve “concerted action” that essentially makes those rules “mandatory in practice.” 

Optional rules like the “no-commingling” policy can also “invite others to participate in a common plan,” such that any entity choosing not to participate would suffer real consequences. In this case, MLSs and Zillow complied with NAR’s “no-commingling” rule, whether they agreed with it or not, because the cost of defying it was greater than the cost of acquiescing. 

“This Court should vacate the judgment below and remand the case for the district court to fully consider whether there is adequate evidence of concerted action under this [common plan] theory.” 

Optional in name, mandatory in practice

In complying with NAR’s “no-commingling” policy, Zillow aptly demonstrated NAR’s power in the industry to effectively mandate compliance with a rule that limits competition from non-MLS listings—a policy that ultimately benefits NAR and Realtor-owned MLSs more than anyone else. 

In regards to the DOJ filing, NAR issued the following statement: 

“NAR continues to believe this lawsuit is without merit and that the district court’s determination on summary judgment that there was no antitrust violation should be affirmed. As we have long said, local MLSs benefit competition and fair housing, and provide consumers with the most accurate, transparent and up-to-date information on home listings.”

A spokesperson for Zillow made the following statement: 

“Zillow was founded on increasing transparency in real estate — and we have a long history of advocating for consumers through our products and services. We were required to comply with the no co-mingling rule to obtain our IDX feeds, but we’ve publicly advocated against this rule for several years because we believe all listing data should be displayed in one place. We look forward to the jury’s verdict and judge’s ruling being affirmed.”

A possible reversal in REX’s favor?

REX failed to persuade a Seattle jury and later requested a new trial. In January 2024, U.S. District Court Judge Thomas Zilly denied that request, having already ruled that REX’s antitrust claims were “without merit.” 

With that, he effectively removed the National Association of Realtors as a party to the case. 

And now, the DOJ has come forward in open disagreement with that decision, arguing for reconsideration of the judge’s ruling in favor of Zillow (and, by extension, NAR).

That said, it’s up to the Appeals Court to decide what comes next and whether REX has a shot at a new trial. 

Stay tuned as we learn more.