In a legal filing Nov. 12 in New York’s U.S. District Court ahead of a high-stakes hearing starting Nov. 18 to address Compass’s preliminary injunction motion, Zillow defended its new rules around private listings amid its ongoing court battle with Compass.
The standards, which took effect in June, prohibit listings on Zillow that are publicly marketed but not shared through local MLSs and syndicated to Zillow (and other outside websites). Compass sued Zillow over the rule and requested an injunction to block its enforcement.
In the filing, Zillow stressed that overturning the rule would force the court to act as an “industry regulator” and compel Zillow to display Compass listings for free, undermining its commitment to transparency. Zillow also asserted that the injunction would harm both consumers and the company, noting that restricting access to listings inhibits the market, reduces exposure for sellers and makes it more difficult and costlier for buyers to find homes.
“Compass’s injunction risks serious harm to consumers and to Zillow,” the brief states. “Home sellers will be harmed by a fragmented market that reduces exposure for their listings, and buyers will be harmed when it is more difficult and more expensive to find listings hidden away by brokerages like Compass. Zillow will be harmed by being forced to carry advertisements that undermine its mission, underwrite a competitor’s business strategy, and support an anti-consumer business model that degrades Zillow’s platform and impairs its ability to compete on the merits.”
In response to an inquiry from RISMedia, a Compass spokesperson pointed to its own court arguments, noting that “Compass has options, not a mandatory policy.”
“If competition and the free market agreed with Zillow, Zillow would not need the Zillow Ban at all,” the spokesperson wrote.
Zillow, in its filing, claimed that it has the right to control what appears on its platform, denied having a monopoly or conspiring with Redfin, and posited that its policy supports competition and fairness.
“A preliminary injunction is a ‘drastic’ remedy, and ordinarily requires a plaintiff to show that: (1) it is likely to succeed on the merits; (2) it will likely suffer irreparable harm absent relief; (3) the balance of equities supports an injunction; and (4) an injunction is in the public interest,” the filing states. “Here, Compass’s burden is higher, and requires ‘a strong showing of irreparable harm’ and ‘a clear or substantial likelihood of success on the merits.’”
In Compass’s previous supplemental brief concerning its legal challenge to Zillow’s new listing rules, the company alleged that Zillow implemented an anticompetitive “Zillow Ban” that punishes agents who allow homeowners to publicly market their listings with competing websites or brokerages, before listing on Zillow.
“Zillow’s recent announcement shows that it has the power to intimidate agents into depriving home sellers of options they want,” the filing read. “And agents should be terrified: if a home seller wants to publicly market her property outside of Zillow and later put that listing on Zillow, the home seller must fire both her agent and her agent’s brokerage company, terminate the listing agreement and hire a new agent and brokerage. In that situation, the agent would have done significant work and paid upfront marketing expenses, but be paid nothing.”
Compass CEO Robert Reffkin had voiced strong words a few months ago regarding the ongoing lawsuit against Zillow for the property search giant’s ban on private listings not publicly marketed on the MLS (and its platform) within 24 hours.
“The consistent new theme we are hearing from agents that join this quarter is that they want to be at a company that stands up for agents and stands up for their clients,” Reffkin said on the firm’s Q2 earnings call. “No agent wants to be told by a portal or an MLS how they must work, and none of their clients want to be limited in when, where and how they market their home.”
But Zillow also sought to turn Reffkin’s words against him in the court battle, noting that Reffkin downplayed the effect of the Zillow rules to investors, even as the company claims it faces “irreparable harm” through the litigation.
“Compass cannot tell this Court that it will be irreparably harmed, yet tell investors, agents, and customers the opposite,” Zillow wrote, also noting that Compass did not disclose any risk from the new Zillow rules during its acquisition of Anywhere. “On this record, Compass cannot establish that it will be irreparably harmed absent an injunction, and the (preliminary injunction) should be denied on this basis alone.”
