A federal judge in Seattle has paused the discovery process in a high-stakes class-action lawsuit against Zillow, and gave at least some signal that the case could get tossed in its entirety relatively soon.
U.S. District Judge James L. Robart granted Zillow’s request to pause discovery on March 23, halting all fact-gathering in the case while he rules on the company’s pending motion to dismiss.
The lawsuit, filed in the Western District of Washington, accuses Zillow and several real estate partners of “predatory practices”—specifically, defrauding buyers, inflating home prices and steering customers toward Zillow’s own home products.
The case, now known as Taylor v. Zillow, has been building since last September, when plaintiff Alucard Taylor first alleged that Zillow’s referral program tricked consumers into working with Zillow-affiliated agents and drove up home prices. The suit was amended in November to add charges that Zillow compelled agents to steer buyers toward Zillow Home Loans—an alleged violation of the Real Estate Settlement Procedures Act (RESPA).
In December, Judge Robart merged the Taylor suit with a second class-action, Armstrong v. Zillow, after concluding the two cases involved substantially similar allegations and overlapping proposed classes. It is the fourth complaint filed against Zillow related to its Flex program.
The plaintiffs—11 individuals suing on behalf of a proposed class—had already fired off 58 discovery requests to defendants. That effort is now on ice, after Zillow argued that a pause could save it—and the court—time and resources if the lawsuit is thrown out in the early stages.
But the more consequential line in Robart’s order may be this one: after taking a “preliminary peek” at the arguments in Zillow’s motion to dismiss, he wrote that a “favorable ruling would dispose of the entire case.”
Motions to dismiss are decided purely on the complaint as written—no depositions, no document dumps, no discovery. If the judge concludes the plaintiffs haven’t alleged a legally sufficient claim, he can throw out the case entirely, potentially without any of the expensive discovery that typically follows a suit of this scale (though plaintiffs would likely be given an opportunity to amend or refile their lawsuit).
Defendants in the case include Zillow, Inc., Zillow Group, Inc., Zillow Homes, Inc. and Zillow Home Loans, LLC, along with real estate firms GK Properties, Real Broker, LLC and the Frano Team. The real estate defendants also challenged the court’s jurisdiction over them—another issue that could further shrink the case even if it survives dismissal.
Robart noted that the stay is expected to be brief, that no case schedule has been set, and that the case has only been pending a few months.
