DOJ Backs Broker’s Antitrust Claims Against Zillow, Realtors

The Department of Justice is backing a real estate broker’s push to revive a lawsuit alleging an anticompetitive business arrangement between the National Association of Realtors and Zillow Group Inc.

The DOJ claims a district court erred when it threw out a claim that the powerful trade association entered into an unlawful agreement with Zillow, a digital real estate platform, to demote the listings on its website of independent brokers.

The dispute centers around the National Association of Realtors’ optional “no-commingling” rule that says its members should separate “multiple service listings” from other types of brokers. The Real Estate Exchange Inc., a broker that bypassed listing properties with so-called MLSs, allegedly saw its business plunge after Zillow started separating listings on its site. It has appealed its case to the Ninth Circuit.

“If uncorrected, the district court’s incomplete approach creates a risk that associations like NAR could evade antitrust scrutiny for many anticompetitive schemes by using optional rules,” the DOJ said in a June 20 amicus brief.

The filing, a so-called statement of interest, comes as the residential real estate brokerage industry faces increasing legal scrutiny over its business practices. The National Association of Realtors in April got preliminary approval for a $418 million settlement with home sellers over commission rules for real estate agents that allegedly inflated their price.

The Real Estate Exchange first brought its case in 2021 in Seattle federal court. The suit targeted Zillow, which is a member of many MLSs affiliated with the realtor’s group. Approximately two-thirds of the multiple-listing databases Zillow joined had adopted the no-commingling rule, according to the DOJ filing, requiring company to comply with that arrangement in certain regions.

The district court granted summary judgment to Zillow and NAR, rejecting the Real Estate Exchange’s claim of an unlawful agreement in violation of Section 1 of the Sherman Act that compelled Zillow to separate its listings.

But the district court failed to follow the Supreme Court’s finding that concerted action may involve an “optional” rule that can “invite others to participate in a common plan,” the DOJ said in its brief.

“There is adequate evidence of concerted action” under that theory, the DOJ said, pushing for the case to be reconsidered at the trial court.

Zillow and the National Association of Realtors have fought the anticompetitive claims, among others. In October, a jury ruled in their favor on separate claims of false advertising brought by the Real Estate Exchange.

The case is Real Estate Exchange Inc v. Zillow Group, Inc., 9th Cir. App., 24-1050, 6/20/24.