The list of lawsuits that the National Association of REALTORS® (NAR) is fighting has shortened by one, as its legal battle with REX Real Estate has been laid to rest.
A U.S. District Court Judge dismissed REX’s antitrust claims against NAR and Zillow with prejudice on Wednesday after finding that REX didn’t adequately make its case that both entities conspired to steer buyers away from non-NAR-connected listings on Zillow’s website.
“The 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,” wrote Judge Thomas S. Zilly in a 31-page order filed Wednesday.
The issue stemmed from Zillow’s decision in 2021 to transition from a real estate search portal into its buying-and-selling entity. Part of the shift included Zillow joining Multiple Listing Services (MLS) and gathering listing data from the service’s IDX feeds.
The shift came with a website change that included two tabs in its listing search feature to include “agent listings” and “other listings.” The latter tab includes for-sale-by-owner listings or coming-soon listings not on the MLS.
Zillow made the move to comply with NAR’s no-comingling policy, which lets local associations choose whether non-MLS content can appear with theirs or whether it has to be posted separately.
REX claimed that Zillow’s “two-tab” change gave preferential treatment to NAR broker listings by segregating, concealing and demoting listings that weren’t from the NAR-affiliated MLS.
Being part of said group, REX alleged that the actions harmed its business to the point where it shut down its residential real estate operations.
The 31-page court order ultimately poked holes in REX’s arguments that Zillow and NAR conspired to restrict competition.
Addressing REX’s claims that “Zillow had no choice but to enforce the no-comingling rule,” given the rule’s prevalence in the real estate market, the court found that the argument ignored that the policy is optional.
While 71% of NAR-affiliated MLSs adopted the no-comingling rule in the industry, the court acknowledged the 21% of MLSs that hadn’t.
Furthermore, Zilly pointed out that while Zillow made changes to comply with NAR’s co-mingling rule, the company did so on its own.
“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,” read an excerpt from the case file.
It also states that as Zillow decided how it wanted to comply with the rule, the company “experimented with a number of different options” before Zillow “ultimately chose, without input from NAR or any MLS, to implement the two-tab display on its platforms.”
“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,” the order read.
Unless REX appeals the ruling, Judge Zilly’s dismissal of the Texas-based startup’s antitrust claims at least partially turns the page on a legal saga that began more than two years ago for Zillow and NAR, which has now been removed from the list of defendants.
The trade group celebrated the decision in a statement obtained by RISMedia.
“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,” said Mantill Williams, NAR VP of Communications.
Williams also noted that “local MLSs benefit competition and fair housing and provide consumers with the most accurate, transparent and up-to-date information on home listings.”
While the antitrust claims against Zillow have been thrown out, the real estate portal giant still has to contend with three of REX’s claims that Judge Zilly let persist after he denied Zillow’s motion for summary judgment on August 4.
As it stands, Zillow is still contesting allegations of unfair or deceptive trade practices, defamation and false advertisement claims under Section 43 of the Lanham Act, which REX raised against the company.
Zillow and REX are slated to head to a two-week jury trial starting September 18. Despite still being tied up in the legal bout with REX, Zillow believes Wednesday’s ruling may increase the likelihood of a successful outcome for the real estate tech behemoth.
“Today’s ruling is a significant victory for Zillow in this case,” said Zillow spokesperson Will Lemke in a statement emailed to RISMedia. “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,” Lemke added.
REX did not immediately respond to RISMedia’s requests for comment on this story.