It’s been a busy couple of weeks in the courtroom. At least, that’s been the case in the ongoing legal battle between the National Association of REALTORS® (NAR), Zillow and REX.
As the Texas-based discount brokerage’s lawsuit wages on, a series of recent volleys have come to a head in the case, with U.S. District Court Judge Thomas Zilly doling out a mix of rulings that could have untold implications as both sides gear up for the upcoming trial in June.
The latest in the saga came after Zilly dealt a partial win to REX late last month, granting the brokerage’s motion to compel NAR to comply with the court’s “electronically stored information” (ESI) order. Zilly also denied the discount brokerage’s request to gain documents related to the Moerhl and Sitzer antitrust lawsuits.
The ruling came a couple of weeks after Zilly partially granted Zillow’s motion to compel REX to provide a list of all employees who left the brokerage and retained a REX-issued laptop.
REX urged the court in August to compel NAR to add seven new data custodians that the brokerage claimed would likely have information relevant to the case.
The motion called for the following executives to be added to the list:
- Bob Goldberg, NAR’s CEO
- Katie Johnson, NAR’s General Counsel and Chief Member Experience Officer
- Kate Lawton, NAR’s Vice President of Membership Experience
- Kevin Milligan, NAR’s former Vice President of Board Policy and Programs
- Diane Mosley, NAR’s Director of Training and Policy Resources
- Clifford Niersbach, NAR’s former Associate General Counsel and Vice President of Board Policy and Programs
- Lawrence Yun, NAR’s Chief Economist
REX got four out of seven proposed additions as Judge Zilly granted the brokerage’s requests for Goldberg, Johnson, Milligan and Niersbach to be added to the custodian list. He wrote in the order that “the designation of these additional custodians will not impose a significant burden on NAR” during the case.
REX argued that each person has had some “significant responsibility for NAR’s response to competition from internet-based providers” and helped develop and enforce NAR’s rules and policies, which allegedly limited how homes are listed online and the negotiation of commissions.
“Relevant to this case, many of these high-level employees are responsible for NAR’s efforts to exclude low-cost tech-based competitors from the residential real estate brokerage market,” read an excerpt from the filing.
NAR had previously identified Rodney Gansho, director of engagement, and Rene Galicia, its former director of MLS engagement, as its two ESI custodians.
However, while criticizing NAR, REX’s attorneys argued that it was inadequate. The court’s ESI Order required each party to identify up to five custodians most likely to have discoverable information pertinent to the case.
“NAR’s position flouts the express terms of the ESI Order to the extent it asserts that only two employees in the entire association are likely to have discoverable ESI. NAR’s position is all the more remarkable given that in other cases alleging related anticompetitive misconduct, NAR designated almost twenty custodians,” read the filing.
In particular, REX argued—among other things—that Goldberg should be on the list for his involvement in Zillow’s decision to join NAR. The case also cited his history of “strongly emphasizing NAR’s efforts to maintain its technological competitive advantage” in real estate.
Since filing the lawsuit last year, the Texas-based discount brokerage has maintained—and fervently advertised—its claims that NAR and Zillow have been colluding to steer house hunters toward listings connected to NAR.
REX’s lawsuit is primarily aimed at NAR’s co-mingling policy—REX refers to it as the Segregation Rule—which lets local associations choose whether non-MLS content can appear with theirs, or whether it has to be posted separately.
The legal dispute between REX, Zillow and The National Association of REALTORS® has had its share of highs and lows over the past year and a half.
Despite granting its additional custodian designations, Zilly denied REX’s other request for the court to compel NAR to turn over documents relating to or produced by NAR in the Moehrl or Sitzer antitrust lawsuits.
Both lawsuits aim at NAR and several prominent franchisors, accusing them of conspiring to inflate commissions through NAR’s Buyer Broker Commission Rule—also known as the Participation Rule.
REX tried to draw parity between its case and the two antitrust lawsuits, claiming its suit also challenged the NAR policy, which requires listing brokers to offer buyer brokers a commission to list a property in a REALTOR®-affiliated MLS.
“REX contends the Buyer-Broker Commission Rule is deeply implicated in this case because the Segregation Rule serves to protect and further the Buyer Agent Commission Rule,” read the file.
It stated, “the presence of these proposed custodians on the working group lists is sufficient to establish that their inclusion in ESI searches is reasonably calculated to lead to relevant evidence.”
Zilly opined in his order that REX’s request “is overly broad, and the court is not persuaded that all documents produced by NAR in those actions are relevant to this case.”
NAR doesn’t view Zilly’s recent ruling as an issue.
NAR spokesperson Mantill Williams said in a statement emailed to RISMedia that “we remain confident we will ultimately prevail.”
“These decisions address issues common in this phase of the litigation and have nothing to do with the underlying merits of the case,” Williams said. “NAR remains committed to defending local broker marketplaces that create highly competitive markets, empower small businesses and ensure equitable homeownership opportunities, superior customer service, and greater cost options for all buyers and sellers.”
REX did not immediately reply to RISMedia’s requests for comments on this story.
