The DOJ also noted in its motion that the “district court appeared to have a limited view of when optional association rules can represent concerted action under Section 1 of the Sherman Act,“ and that “there are additional ways that optional rules constitute concerted action that the court did not appear to consider.”
Due to this, the DOJ said it was urging the appeals court to “vacate and remand the case for the district court to apply the proper legal framework to the evidence in this case.”
Originally filed by REX in March 2021, the lawsuit alleges that changes made to Zillow’s website “unfairly hides certain listings, shrinking their exposure and diminishing competition among real estate brokers.”
Two months prior to that, Zillow began moving homes not listed on the MLS out of initial user search results and onto a second tab. This adhered to an optional NAR rule, which prevents those who choose to adopt it from commingling MLS listings with non-MLS listings. Despite claiming that it did not support this rule, Zillow chose to adopt it and created a two-tab design for MLS listings and “other listings.”
In January 2022, NAR filed a countersuit claiming that REX uses false advertising and misleading claims to deceive consumers in violation of the Lanham Act. The countersuit was dismissed in April 2022.
In May 2022, REX ceased its brokerage operations. And a little over a year later, the three parties involved in the case each filed motions for summary judgment on either the entirety of the lawsuit or portions of it.
Judge Thomas Zilly, who oversaw the case, dismissed REX’s antitrust claims against NAR and Zillow. But he allowed the discount brokerage’s false advertising claim under the Lanham Act, and a claim for unfair or deceptive trade practices under the state of Washington’s Consumer Protection Act, to stand.
At a trial in September 2023, the court ruled in favor of Zillow on the remaining charges. Roughly six weeks later, REX filed its motion for a new trial. In the request, REX argued that it was unfairly prevented from presenting testimony about agent commissions to the jury.
A Seattle jury ultimately found that REX did not prove Zillow used false advertising in its decision to put non-MLS listings on a different section of the website, and that Zillow proved its defense on REX’s second claim that Zillow acted deceptively and unfairly.
The DOJ first became involved in REX’s appeal in June 2024 when it filed an amicus brief in which it “took no position on the ultimate outcome of the case.”
In its brief, the DOJ claimed that despite being optional, NAR’s “no-commingling” rule may still support anticompetitive behavior.
This is not the first time the DOJ has been granted time to speak at an appeal involving real estate industry parties. The department was previously granted five minutes to participate in oral arguments as an amicus curiae in the Ninth Circuit involving The PLS.com’s suit against NAR. That case deals with NAR’s Clear Cooperation Policy, not its optional no-commingling rule.
