The “high-stakes” Chicago-based legal battle between Zillow, Midwest Real Estate Data (MRED) and Compass continued to evolve today as parties argued expectations about discovery and the path ahead for the case.
Following a hearing last Friday where Judge John Tharp stepped between the parties in regard to the cut off of listing feeds from MRED to Zillow, members of the suit gathered again (via phone conference) today for a hearing on the schedule moving forward.
During last Friday’s hearing, Tharp had partially denied Zillow’s request to stop MRED and Compass from carrying out what it calls an illegal boycott, but forced the MLS to continue feeding Zillow listings as both parties gear up for a protracted battle.
The portal was also required to restore a handful of Compass listings it previously banned due restrictions it placed on listings that were previously marketed “privately,” which Compass simultaneously celebrated as an affirmation that its “seller choice” principals would hold up in court.
In beginning today’s hearing, counsel for Zillow—Bonnie Lau—noted that the portal had received the list of zip codes the MRED restored Zillow’s access to as of 8:45 p.m. the night before, and had not had “any opportunity to meet and confer…to evaluate the zip codes for conformity” to Zillow’s own list of zip codes provided Friday.
Lau said her understanding is that there was a discrepancy of “roughly 50 zip codes” that she wanted to follow-up on with Judge Tharp’s guidance.
Tharp said that any disagreement about the list of zip codes not addressed by his guidance today could be addressed in a filing, but noted that “at this point both sides should be governed by the thought that I’m quite adverse to modifying the scope of the TRO (the temporary restraining order from Friday).”
As expressed on Friday, counsel for MRED—Steven Lobowski—said that there is still an expectation of moving toward arbitration from the MLS, and wanted the schedule laid out expeditiously for this reason.
“We filed our motion to compel arbitration a week ago,” he said. “We’re hoping to get it decided quickly so it’s efficient and we can move forward in arbitration, and that’s where this case ought to be.”
Lobowski also argued that pushing the deadline for arbitration forward would prevent any duplicated efforts for all involved parties. Lau, however, disagreed about moving toward arbitration faster and the potential of duplication, as Compass “is in federal court” and “does not have an arbitration provision.”
“Whether or not MRED elects to try to move its case into arbitration, this case is going to proceed in federal court and MRED will be producing discovery,” said Lau. “It’s just a question of whether it’s a party or a non-party.”
Lau added that Zillow was “certainly amenable to a slightly earlier arbitration opposition deadline,” but argued for a further deadline of June 5 rather than MRED’s originally proposed May 28 deadline.
Vanessa Jacobson, counsel for Compass, went on to interject that the brokerage’s position was that “it may actually be appropriate to stay the proceedings” against it, however, Lau rebutted that case law shows co-conspirators “are not necessary parties,” so there is “no basis to stay the case as to Compass while any arbitration as to MRED might be proceeding in parallel.”
With all the arguments on the table, Tharp agreed to move forward with an expedited discovery process, but also said the court will brief the arbitration motion “in an expedited fashion.” He agreed with Lau’s standpoint that duplications “would not be wasted effort from the standpoint of obtaining information.”
Counsel for Compass and MRED also offered up the two company’s CEOs as custodians for the discovery phase to gather and deliver the necessary data and information to Zillow, meaning they will be deposed and will act as witnesses if the case moves to trial.
Lau argued, however, that this was not sufficient for several reasons. One of which was that having only one custodian per company to deliver the necessary information was not enough, as in former Compass litigation there were five custodians. In addition, Lau noted that “conspiracies often need to be inferred from the totality of the circumstances,” and that “individuals as sophisticated as the two CEOs typically would not speak openly about their conspiracy.”
“We already have concrete evidence in the record that each of the individuals that we have requested, particularly on the Compass side, have played key unique and independent roles in perpetuating and implementing the conspiracy,” she continued. “I do want to underscore, Your Honor, that when you look at whether there has been a group boycott conspiracy, you cannot narrowly isolate it to two individuals who are smart and savvy enough not to say the word conspiracy out loud.”
Lobowski noted that in Lau’s discussion of the alleged conspiracy, she “talks about a conspiracy as if these are people that are not in business together and are part of a joint venture who have a longstanding relationship.”
“Case law is very clear that it’s a joint venture (meaning an MLS). They have to put a new product out and they do talk and they do try to put these things together and try to make sure they understand and follow the rules,” he continued. “That’s why we think if there is any reason to find evidence in documents or in the records or in testimony, it would be amongst the participants that they are alleging created what they would call a conspiracy.”
Tharp did not order more custodians to be selected following this discussion, agreeing one was enough per party.
The schedule moving forward was set by Judge Tharp as follows:
- Document requests, interrogatories and identity of custodians due by May 29
- Document production and responses to written discovery due by June 5
- Completion of the depositions of the custodians by June 12
- Disclosure of any expert testimony by June 16
- Completion of any expert deposition by June 22
- Response to arbitration motion by June 29
- Preliminary injunction hearing on July 1-2, with post-hearing briefs on the preliminary injunction due by July 9
