Apparently, there’s a difference between open and closed. At least that’s the case for what was once an ongoing investigation by the U.S. Department of Justice (DOJ), which has been looking into the National Association of REALTORS®’ (NAR) MLS policies.
Mere weeks after being dealt a sizable blow by the Supreme Court, NAR secured a significant victory when a U.S. District Court judge sided with the association in its dispute with the DOJ.
“Because the agreement included the Antitrust Division’s commitment to close its investigation into NAR’s current Participation Rule and Clear Cooperation Policy, the government breached the agreement by reopening the investigation into those same rules and serving the new CID (civil investigative demand),” wrote Judge Timothy Kelly in a Wednesday filing that called for the DOJ to “set aside” its investigation into NAR’s Participation Rule and the Clear Cooperation Policy.
Kelly argued in his ruling that not closing the probe would “deprive NAR of the benefit for which it bargained.”
“The government, like any party, must be held to the terms of its settlement agreements, whether or not a new administration likes those agreements,” Kelly wrote in his ruling, which effectively closes the DOJ’s probe into the Participation Rule and Clear Cooperation Policy.
It’s been nearly two years since the Justice Department shocked the industry by announcing that it would withdraw from a settlement with NAR to continue investigating NAR’s multiple listing service (MLS) policies.
For the past 18 months, there had been little to no movement or updates on the DOJ’s probe after NAR filed its petition to quash its request to withdraw.
News of Judge Kelly’s ruling was met with a modest celebration from NAR, which maintained that its guidance for local MLS broker marketplaces has “long been recognized to ensure fair, transparent and competitive real estate markets for consumers and businesses.”
“We are pleased the court has granted our petition to set aside the Department of Justice’s (DOJ’s) action and agree it is a violation of the executed settlement agreement,” said Mantill Williams, NAR’s VP of Communications, in an email statement sent to RISMedia.
The DOJ and NAR have had a contentious relationship for decades over different aspects of NAR’s policies and how real estate has operated; however, both have managed to find ways of settling those disputes amicably.
In previous interviews, pundits have told RISMedia that both entities have had a pattern of working things out that has helped develop “relative certainty” that issues could be resolved and both parties could trust each other.
This latest dispute between NAR and the DOJ dates back to 2019 when the latter’s Antitrust Division began investigating certain practices and policies of NAR. A year later, the two parties began hashing out a possible settlement.
According to the filing, NAR began changing its policies to comply with the terms it and the Justice Department agreed upon toward the end of the year.
“The Participation Rule and Clear Cooperation Policy were not a part of the Stipulation and Proposed Final Judgment, though,” read an excerpt from the filing. “Thus, those rules ‘have not been changed, modified, or amended since the Antitrust Division closed its investigation in 2020.'”
In July 2021, the Antitrust Division reopened the investigations, and the DOJ requested to back out of the settlement.
The move set off a series of courtroom and public volleys between the two entities, ultimately leading to NAR filing a lawsuit to quash the DOJ’s request to back out of the settlement claiming that it was a “complete, unprecedented breach” of their agreement.
The Justice Department retorted in an October 2021 filing with the U.S. District Court asserting that it “never committed to refrain from further investigation into NAR and its practices.”
The DOJ’s October 2021 motion argued that the agreement from which the Justice Department withdrew in July wasn’t finalized.
The DOJ admitted in its petition that it sent a letter to NAR confirming that it closed an investigation of NAR’s two practices. However, the agency argued that the letter didn’t include a commitment to avoid future investigations.
That wasn’t the case according to Kelly’s ruling on Wednesday.
“Here, the settlement agreement encompasses several written and oral commitments made by both sides in exchange for consideration,” Kelly wrote.
Recounting the negotiation process between the DOJ and NAR, Kelly concluded that the DOJ’s renewed investigation into the Participation Rule and Clear Cooperation Policy “violates the agreement” the two parties came to in 2021.
Kelly ultimately agreed with NAR that the terms the two entities had agreed on in 2021 were still valid and opted to set aside the Justice Department’s investigation.
“The Antitrust Division’s commitment to close its investigations into the Participation Rule and Clear Cooperation Policy and effectively rescind the (civil investigative demand)—and to confirm those actions in writing—was essential to the parties reaching a settlement and is consistent with the partially integrated written agreement,” read an excerpt from the ruling.
The ruling also stated, “Those commitments must be considered part of the overall agreement. “With that common-sense interpretation of the parties’ settlement in hand, it is not hard to conclude that the new CID violates the agreement.”
The Department of Justice didn’t immediately respond to RISMedia’s requests for comment on this story.
