Above, the Everett McKinley Dirksen Courthouse in Chicago where the hearing is taking place. Photo by Clarissa Garza.
CHICAGO—Zillow, Midwest Real Estate Data (MRED) and Compass squared off in a Chicago courtroom Wednesday in a preliminary injunction hearing, kicking off two days of testimony, where a federal judge will decide whether Zillow can continue banning MRED listings from its platform (or whether MRED can cut Zillow off from its feed) while the companies’ broader antitrust fight heads toward trial.
The preliminary injunction hearing, before Judge John Tharp in the Northern District of Illinois, will allow Tharp to weigh in on whether to lift a temporary restraining order that has blocked Zillow from implementing its rules as it relates to MRED’s listings since May, with a ruling expected in the weeks following the hearing. Simultaneous post-hearing briefs from both sides are due July 9, with responses due July 13. Tharp’s decision on the preliminary injunction will follow those briefs.
The first few hours of the hearing largely revisited arguments that Zillow, Compass and MRED have made in public, focused on the value of listings and who has market power.
A source familiar with Compass’s legal strategy told RISMedia ahead of the hearing that the parties had far less time to prepare compared to the last meeting between the brokerage and Zillow in court, and Compass would be focused on simplifying the issues as much as possible. The source also said that a decision in the hearing would not be a binding precedent that could instantly decide other cases as other MLSs contend with similar issues, but will be probative, or “persuasive” if cited in other cases.
In opening statements, Zillow’s counsel Bonnie Lau argued that access to listings—particularly new-to-market listings—is critical to Zillow’s business model. She said Compass and MRED are coordinating to fight Zillow’s “listing access standards” through private listing networks (PLNs) that harm consumers.
Lau argued that Zillow would suffer “immediate and irreparable harm” without an injunction. She said forcing Zillow to abandon its standards nationwide would present a “false lose-lose choice.”
Counsel for MRED Stephen David Libowsky countered that an MLS functions only as a neutral intermediary. He framed the case as “a breach of contract case, not an antitrust case,” saying MRED repeatedly told Zillow of its concerns before cutting off the feed.
Compass attorney Nathan P. Eimer argued the case centers on what he called Zillow’s shifting “stale listing” rationale. He said Compass “acted unilaterally and entirely on its own interest” in a manner that doesn’t violate antitrust law, calling any harm to Zillow “self-inflicted.”
Zillow’s Chief Industry Development Officer Errol Samuelson was the first to take the witness stand Wednesday, walking the court through the company’s listing access standards, which bar brokerages from keeping listings off the open market through private networks while marketing them through side channels like registration-gated websites.
Samuelson testified that Zillow has no alternative MLS option in Chicago outside MRED, which it joined in 2021. He said Compass—the largest brokerage and franchisor in the country—has a seat on MRED’s board through Regional Vice President Fran Broude.
MRED cut Zillow’s feed entirely on May 20, Samuelson testified, and Zillow immediately lost its Chicago listings before backup broker feeds restored less than half of that inventory. A Zillow spokesperson told RISMedia after the hearing that that even this kind of temporary loss of listings trains consumers to “stop coming back,” especially when it is highlighted by a Compass marketing campaign (something the brokerage planned, according to court documents).
Asked about the risk to Zillow’s brand, Samuelson warned, “Once a consumer abandons a brand, it’s very hard to get them back. When an internet brand dies, it dies for good.”
The back-and-forth
Cross-examined by Compass counsel Alec J. Solotorovsky, Samuelson was pressed on Zillow’s financial motive, asking whether he was testifying “on behalf of the whole industry” or “on behalf of Zillow’s self interest.”
Solotorovsky pushed Samuelson on the timing of Zillow Preview’s launch, which he pointed out coincided with Zillow’s updated listing access standards this spring. Samuelson acknowledged that Compass’s new listing-syndication partnership with Redfin was certainly “one of the factors” behind the timing.
Solotorovsky turned to Compass’s three-phase marketing program, focusing on phase one, Compass’s private exclusive listings. Shown a Compass webpage advertising private exclusives as homes “you won’t find anywhere else,” Samuelson testified the advertisement itself triggers a violation.
“You are advertising to the world that these aren’t truly private,” Samuelson noted, adding that the practice makes buyers feel “obliged to work with Compass” and allows agents to “double end” deals.
Testimony will continue Wednesday afternoon and is expected to include Chris Haran, MRED’s managing director and chief technology officer; Fran Broude, Compass’s regional vice president; Jeremy Hofmann, Zillow’s chief financial officer; Ron McColly, a broker at McColly Real Estate; and Lawrence Wu, an expert witness.
Stay tuned to RISMedia.com for ongoing coverage from Chicago.
Editor’s note: this story was updated with comments from a Zillow spokesperson on July 2.
