Boban John
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 noting that it did not support this rule, Zillow claims it was forced to adopt it to obtain IDX feeds from MLSs that had. This precipitated the two-tab design for MLS listings and “other listings.”
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, along with 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. It also found that Zillow proved its defense on REX’s second claim that Zillow acted deceptively and unfairly.
REX filed its appeal in February 2024 after Zilly denied REX’s motion for a new trial.
In its ruling, the appeals court wrote that “the no-commingling rule itself is not direct evidence of concerted action that ‘joins together separate decisionmakers.’”
“Each NAR affiliated multiple listing service (“MLS”) independently chose whether to adopt the rule, and indeed twenty-nine percent of them did not,” the ruling states. “The rule was in fact optional and does not establish a Section 1 agreement by itself.”
The panel also wrote that Zillow made the decision to redesign its website to comply with the rule on its own. It added that REX did not provide “either direct or circumstantial evidence demonstrating that NAR agreed to this website design, or that Zillow did anything more than ‘merely accept‘ and comply with the optional no-commingling rule promulgated by NAR and adopted by some MLSs.”
Additionally, the ruling notes that the rule does not direct how Zillow or others should separately display listings from MLS and non-MLS sources.
“Thus, REX cannot prove that Zillow and NAR committed to a common, anti-competitive scheme and the district court correctly granted summary judgment,” the ruling states.
The ruling also addresses claims made by REX in oral arguments that Zillow conspired with individual MLSs to enforce the no-commingling rule.
“REX never made a concrete allegation of a separate conspiracy involving Zillow and individual MLSs,” the ruling states. “In its Amended Complaint, REX referred repeatedly to the ‘NAR/MLS regime’ or ‘NAR/MLS cartel.’ REX also alleged a nationwide conspiracy ‘[b]ecause Zillow’s universal display change concealing non-MLS listings is implemented nationally’ and did not limit its allegations to only those jurisdictions where an MLS had adopted the no-commingling rule.
“Any conspiracy between Zillow and MLSs alone was not clearly raised before the district court and accordingly need not be considered on appeal.”
In an emailed statement, a NAR spokesperson wrote that the decision emphasizes NAR’s claim that the no-commingling rule never constituted an antitrust violation.
“The rule is optional, leaving MLSs the choice whether to adopt it, and, in fact, 29% of them chose not to,” the spokesperson wrote. “We are pleased to put this meritless lawsuit behind us and maintain our focus on delivering value for our membership.”
Zillow and REX did not return HousingWire’s requests for comment.
