REX antitrust claims against NAR and Zillow dismissed with prejudice

Publish Date: August 16, 2023

Written by Andrea V. Brambila

- Originally published at Inman News - Andrea V. Brambila

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A federal court on Wednesday dismissed all antitrust allegations made by REX Real Estate against the National Association of Realtors and Zillow, capping an 18-month feud as lawyers shift the focus to several lesser claims against Zillow.

Judge Thomas S. Zilly of the U.S. District Court for the Western District of Washington dismissed all of REX’s antitrust claims, saying the discount brokerage had failed to prove NAR and Zillow had agreed to work together to disadvantage non-multiple listing service listings on the portal’s website.

Judge Thomas S. Zilly

“[T]he Court concludes that REX has failed to present evidence of the conspiracy alleged in its Amended Complaint, namely, a purported agreement between NAR, Zillow, and non-party MLSs to segregate, conceal, and demote non-MLS listings on Zillow’s websites and mobile platforms,” Zilly wrote in his Aug. 16 order.

Zilly dismissed the antitrust claims with prejudice, meaning permanently, unless REX decides to appeal the order.

The case is currently scheduled for a two-week trial starting Sept. 18. Because NAR is no longer a defendant in the case, the 1.5 million-member trade group will not have to participate if the trial goes on as scheduled.

The ruling is the latest chapter in an 18-month battle between REX, Zillow and NAR over Zillow’s application of NAR’s “No-Commingling Rule.”

The rule, which is optional for MLSs, reads:

Listings obtained through IDX feeds from Realtor Association MLSs where the MLS participant holds participatory rights must be displayed separately from listings obtained from other sources. Listings obtained from other sources (e.g., from other MLSs, from non-participating brokers, etc.) must display the source from which each such listing was obtained.

Mantill Williams

“We are pleased with the court’s decision that effectively ends this case against NAR,” NAR spokesperson Mantill Williams told Inman in an emailed statement.

“NAR guidelines acknowledge that each real estate market is different, allowing for independent multiple listing services (MLSs) to choose whether their listings are displayed with listings from other data sources. Local MLSs benefit competition and fair housing, and provide consumers with the most accurate, transparent, and up-to-date information on home listings.”

In March 2022 REX filed suit against Zillow and NAR, saying Zillow’s decision to split listings between “agent listings” and “other listings” tabs in order to comply with the No-Commingling Rule dramatically decreased the number of views for REX’s listings on Zillow and lowered sales. Furthermore, REX said the decision negatively impacts consumers, especially sellers who end up “[listing] the home for more days on market and accept lower sales prices” because buyers aren’t searching the “other listings” tab.

In a separate order on Aug. 4, Zilly allowed three of REX’s claims against Zillow to survive: A false advertising claim under the Lanham Act, a claim for unfair or deceptive trade practices under Washington’s Consumer Protection Act (CPA) and a claim alleging defamation.

Zillow believes Wednesday’s ruling increases the likelihood of a successful outcome for the company in the case.

“Today’s ruling is a significant victory for Zillow in this case,” Zillow spokesperson Will Lemke told Inman in an emailed statement.

“The court agreed REX’s antitrust claim was without merit and lacked any evidence to back it up. This ruling affirms Zillow’s business decisions were squarely focused on improving the data on our website for consumers. With REX’s central argument tossed from this case, we believe the public now sees this case for what it is: REX seized upon another company’s website design change to hide its own business failings.”

In his order, Zilly noted that the No-Commingling Rule was optional and that about 29 percent of Realtor-affiliated MLSs had not adopted the rule — without any repercussions from NAR.

“REX does not dispute that … an affiliated MLS will suffer no consequence if it chooses not to adopt the no-commingling rule,” Zilly wrote.

The rule itself, standing alone, “does not constitute direct or circumstantial evidence of an anticompetitive agreement between NAR and Zillow,” he added.

Moreover, Zillow — and Zillow alone — chose how to comply with the rule without any input from NAR or MLSs, Zilly said.

“The undisputed evidence in this action shows that neither NAR nor its affiliated MLSs were involved in Zillow’s decision to implement the challenged two-tab display that allegedly drove REX out of business,” he wrote.

REX did not offer any evidence “that Zillow was not engaging in permissible competitive behavior” when it changed its website display to comply with the rule, according to Zilly.

Zillow also made sure that REX’s listings could be displayed on its site, unlike other brokerages, Zilly added.

“The evidence demonstrates that instead of precluding REX’s listings entirely, like websites such as Redfin did … Zillow expended significant time and resources to ensure that REX’s and other non-MLS listings would remain on its platforms, albeit under a separate tab,” he said.

Moreover, Zillow has repeatedly said it does not like the No-Commingling Rule and began actively campaigning NAR in October 2021 to adopt “a mandatory rule that would require all MLSs to permit the commingling of listings regardless of source,” Zilly said.

Inman has reached out to REX for comment and will update this story if and when a response is received.

Editor’s note: This story has been updated with a comment from NAR and with additional details from the court’s Aug. 16 order.

Email Andrea V. Brambila.

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