BAM Key Details:
- On Monday, January 9, 2023, the Supreme Court denied a petition by the National Association of Realtors (NAR) to challenge a lower court’s ruling.
- Supreme Court justices will not weigh in on whether NAR’s Clear Cooperation Policy violates antitrust laws, but neither will it shut down antitrust claims against the group.
On Monday, January 9, the Supreme Court denied a petition by NAR (National Association of REALTORS®) to challenge a lower court’s ruling that greenlights an antitrust claim against the group.
NAR’s petition for a “writ of certiorari” asked the Supreme Court to review a ruling by the Ninth U.S. Circuit Court of Appeals from last April—and received an unequivocal and unexplained “No, thanks” from the highest court in the nation.
So, while it refused to weigh in on whether NAR’s Clear Cooperation Policy violates antitrust laws, neither did it challenge a ruling that allows such a claim to be made.
Here’s what you need to know.
The case against NAR
The Supreme Court’s decision to decline NAR’s petition in defense of its pocket listing policy will allow the antitrust case by former pocket listing service The PLS* to proceed after a ruling by the 9th U.S. Circuit Court of Appeals overruled a decision by a lower court to throw it out.
(*The PLS now goes by the name The NLS, but it remains The PLS in legal filings.)
The San Francisco-based appeals court reviewed claims by The PLS that NAR’s Clear Cooperation Policy was in violation of the federal Sherman Antitrust Act and California’s Cartwright Act by requiring listing brokers to submit a listing to their MLS within one business day of putting a property on the market.
This policy includes marketing a listed property in a private listing service such as the one formerly provided by The PLS.
An opposition brief submitted by The PLS in December argued NAR’s policy harmed not only competitors like The PLS but both listing and buyer agents by limiting competition to Realtor-affiliated MLSs and going so far as to threaten agents with suspension of their MLS membership if they don’t comply.
In 2017, The PLS launched an alternative, more discreet database of “pocket listings” for owners who wanted to share less information publicly than would otherwise be required.
In recent years, demand for these houses has exploded in Washington, D.C., Miami, San Francisco, and other markets. Lawyers for The PLS said NAR-affiliated listing services perceived the new platform as a threat. In 2019, NAR enacted their “clear cooperation policy” to require homes listed on The PLS to also be added to a multiple listing service within 24 hours.
In 2020, The PLS filed a complaint against NAR in Los Angeles federal district court, seeking damages for lost profits and a court order blocking the enforcement of NAR’s cooperation policy.
Rather than compete on the merits with an upstart, MLSs conspired to destroy it. It would be hard to fathom a more obviously anti-competitive agreement” than the cooperation policy.
The U.S. Department of Justice (DOJ) has taken notice of NAR’s policy and is currently investigating the group over that and other rules. A DOJ attorney also spoke in court in The PLS’s appeal in January 2021.
In NAR’s defense
Regarding the Supreme Court’s decision, a NAR spokesperson said they were “disappointed” in its blanket refusal to hear their case. But they “remain confident” of their ultimate victory.
The spokesperson, Mantill Williams, argued the Clear Cooperation Policy was needed to protect consumers and to provide them with access to more information on housing market conditions, enabling them to make more informed decisions about the real estate brokerage services best suited to their needs.
It was the same argument made by the federal judge who initially dismissed The PLS”s claim.
According to NAR, the CCP ensures that publicly marketed property listings are accessible to all consumers and is NAR’s response to a service they consider objectively harmful.
PLS wants to pursue a business model that would harm buyers and sellers by injecting more exclusivity and secrecy into the home buying process through ‘pocket listings’ showed only to a privileged few.
Whether NAR’s argument will prevail is now up to the U.S. District Court in the Central District of California.
Top takeaways for real estate agents
Realtors across the U.S. are likely to take notice of what happens with the antitrust case against NAR, whether they back the trade group or sympathize with its smaller competitors.
It’s worth looking into what could happen if The PLS (nka The NLS) wins their case—or if NAR ultimately prevails against them, mainly because agents aren’t the only ones likely to be affected by the outcome.
We’ll keep you posted.