DOJ Weighs In on Zillow vs. REX Appeal

Last week, a Department of Justice (DOJ) attorney raised concerns about potential antitrust violations in the ongoing legal battle between Zillow and the now-defunct brokerage REX. At the center of the case is NAR’s no-commingling rule, which prevents MLS and non-MLS listings from appearing together on real estate platforms.

Zillow won the lawsuit in 2023, but the DOJ is now urging the Ninth Circuit Court of Appeals to reconsider the ruling. The argument? The lower court may have failed to address how this rule could unfairly limit competition in the real estate industry.

The DOJ Questions If ‘Optional’ is Really Optional

At a hearing in Honolulu on February 13, DOJ attorney Alice Wang argued that the 2023 ruling should be overturned because the court missed key points.

Wang explained that while NAR’s no-commingling rule is technically optional, in practice, it was effectively mandatory for Zillow.

“An optional rule could be mandatory in practice. Second, the adoption of an optional rule can itself be concerted action. And third, an optional rule can serve as an invitation for others to join in a common plan.”  DOJ attorney Alice Wang

Wang warned that if the ruling stands, industry groups like NAR could use ‘optional’ rules to dodge antitrust laws—a move that could have major consequences.

REX Argues Zillow and NAR combined in ‘An Anti-Competitive Scheme’

REX first sued Zillow and NAR in 2021, alleging that Zillow’s compliance with NAR’s rule resulted in a significant drop in traffic to REX’s non-MLS listings. As a result, the company argued, its business suffered—and eventually shut down.

At the hearing, REX’s attorney Ursula Ungaro argued that the rule wasn’t truly optional. She said Zillow had no choice if it wanted access to MLS listings through IDX.

She also made a direct accusation against Zillow and NAR, stating, 

“Zillow, had it not combined with the NAR, could have taken any position that it wanted to as to REX. The problem is that Zillow combined with NAR in an anti-competitive scheme.” REX attorney Ursula Ungaro

Zillow and NAR Reject Claims

Zillow and NAR, however, flatly rejected claims of a conspiracy.

Christopher Michel, an attorney for NAR, emphasized that individual MLSs—not NAR—chose to implement the no-commingling rule. He noted that Zillow made its own business decision to separate non-MLS listings.

Zillow’s attorney, Steven Engel, also stated there was no anti-competitive scheme:

“There was no contractual obligation to carry REX’s listing. Frankly, its principal goal was to help consumers, but it also wanted to keep all the listings on its website. So there was no conspiracy to boycott REX, no effort to harm REX.” Zillow attorney Steven Engel

What’s Next?

The Ninth Circuit panel’s line of questioning suggested skepticism toward REX’s argument, with Judge Daniel Aaron Bress stating, “What seemed like what was most problematic for your clients was the website layout and design.”

While the final decision from the Ninth Circuit is still pending, if the court ultimately rules in favor of REX and vacates the 2023 decision, the case could be sent back to a lower court, reopening the possibility of Zillow facing liability.