As the National Association of REALTORS®’ (NAR) legal battlefield heats up, the challenges presented by the U.S. Department of Justice (DOJ) have not gone quietly into the night.
What may have seemed like a done deal with the defunct investigation into NAR’s MLS policies could see new life. The Justice Department recently filed an appeal in U.S. District Court to overturn the January 25 motion to set aside the DOJ’s probe into the Participation Rule and the Clear Cooperation Policy.
In a statement provided to RISMedia, spokesperson Mantill Williams said that NAR remains confident in its position and will prevail in the case despite the appeal.
“NAR has upheld our end of the agreement, and we simply expect the DOJ to do the same,” Williams said. “NAR guidance for local MLS broker marketplaces has long been recognized to promote fair, transparent and competitive real estate markets for consumers and businesses.”
The DOJ and its legal counsel didn’t immediately respond to RISMedia’s requests for comments on this story.
Williams also referred back to the U.S. District Court’s original decision in January that sided with NAR.
At the time, Judge Timothy Kelly ruled that the government needed to be “held to the terms of its settlement agreements” that it had hashed out with NAR more than three years ago.
Kelly argued in his ruling that not closing the probe would “deprive NAR of the benefit for which it bargained: the closure of the Antitrust Division’s investigation into its Participation Rule and Clear Cooperation Policy.”
“Here, the settlement agreement encompasses several written and oral commitments made by both sides in exchange for consideration,” Kelly wrote.
“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 January 25 ruling.
It also stated that the commitments reached between the DOJ and NAR needed to 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,” Kelly wrote.
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 found ways of settling those disputes amicably.
However, the Justice Department shocked the industry two years ago when it announced that it would withdraw from its settlement with NAR to continue investigating the association’s MLS policies.
This followed the pair’s latest dispute from 2019 when the DOJ’s Antitrust Division began investigating certain practices and policies of NAR. A year later, the two parties began hashing out a possible 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.
NAR indicated early on that the decision to withdraw was in breach of the pair’s agreement, adding that the association had already begun changing its policies to comply with the terms it and the DOJ agreed upon.
Ultimately, Kelly agreed with NAR in January 2023.
“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.'”
It’s still uncertain whether the DOJ’s appeal will gain traction in court. Its court filing didn’t delve into any details surrounding its position, but the move comes as things are coming to a head for NAR in its other legal troubles.
Both MLS policies have been the subject of intense legal disputes targeting NAR and several real estate companies. Among them are two antitrust lawsuits—Burnett/Sitzer and Moerhl—that pose an existential threat to the commission structure of the industry.
Both lawsuits were filed in 2019, claiming that NAR conspired with four major franchisors to inflate commissions through its MLS policy.
A federal judge recently granted the Moerhl suit class-action status, while Burnett/Sitzer was given a similar status in August last year. Both cases potentially open the door for many recent and future home sellers to jump onboard, posing a sizable threat to the industry—specifically how agents are typically paid in transactions.
