Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
After Zillow defeat, Compass wants judge to distinguish MLS power
In two major legal battles over private listings, Compass is seemingly seeking to draw a distinction between listing service market power and what it is describing as a “classic” monopoly by at least one local MLS.
Compass has separately sued both Zillow and Washington-based Northwest Multiple Listing Service (NWMLS) for allegedly attempting to undermine its private listing focused strategy. Earlier this month, a federal judge in New York City handed Compass a significant defeat when she declined to block Zillow’s rules from going into effect.
Shortly after, NWMLS asked the judge overseeing its case to take that ruling into consideration as it seeks to have Compass’s lawsuit thrown out entirely. Compass is now hotly disputing that the two lawsuits are comparable—at least legally—despite the focus on private listing restrictions.
Urging Judge Jamal Whitehead in the Western District of Washington to ignore the Zillow ruling, lawyers for Compass said its argument that NWMLS controls a local monopoly are unrelated to the assertion that Zillow has a national monopoly (a claim which Judge Jeannette Vargas in New York found unconvincing).
Compass also sought to differentiate conspiracy claims it leveled against both NWMLS and Zillow, noting that brokerages openly collaborate through the MLS system.
“The central issue in Zillow was whether two independent technology companies, Zillow and Redfin, entered into a secret agreement to boycott Compass,” the Compass lawyers wrote. “In contrast, the agreement alleged here is the publicly-acknowledged agreement between the NWMLS and its members (brokerages that compete with Compass and each other) to adopt and enforce the rules of NWMLS to make it harder for Compass to compete.”
Compass CEO Robert Reffkin has repeatedly described the MLS system at large as a monopoly as his company pushes forward with larger private listing goals.
Compass further claimed that “NWMLS’s complete control over multiple listing services in the Seattle-area cannot be credibly contested,” and that rules allegedly adopted by the MLS constitute “classic abuse of monopoly power.”
Whitehead had not ruled on the issue at press time.
Anywhere reveals settlement amount, defends copycat negotiations
Shortly after it was formally acquired by Compass, Anywhere Real Estate—one of the first defendants in Batton, the largest commission lawsuit by homebuyers—sought to opt into a copycat settlement, which Batton plaintiffs strongly objected to.
Last Friday, lawyers for Anywhere wrote to Judge LaShonda Hunt in the Northern District of Illinois to defend their settlement, claiming that efforts to pause or reassign the cases involved are “improper” and unnecessary, defending the process and the settlement amount.
“Plaintiffs suggest or outright contend that something improper or collusive occurred, with absolutely no proof of it,” Anywhere’s lawyers wrote.
Anywhere agreed to pay $9.6 million in the copycat case, which the Batton plaintiffs pointed out was a tiny fraction of the $83 million the company paid in Burnett, and less than half of what Keller Williams paid to settle buyer claims.
But Anywhere’s attorneys said that their settlement was only to cover buyers who did not also sell, while Keller Williams paid for claims by people who bought and sold homes in the relevant time period.
“As is typical, objecting counsel claim they could get a better deal. But in fact, the settlement they negotiated with Keller Williams obtains almost exactly the same amount,” Anywhere wrote.
An appellate court is currently mulling whether to allow sellers who also bought a home to essentially sue again, after a district judge previously ruled they could not. An expert analysis by plaintiffs in the Batton case estimated that only around 20% of buyers did not also sell a home.
Multiple hearings are scheduled this week in both Batton and the copycat case (known as Tuccori), with almost a dozen other smaller companies also opting into the settlement.
Howard Hanna wins pause in buyer case
While an appellate court decides where buyers who also sold homes can sue real estate companies again after the Burnett settlements, independent Pennsylvania-based brokerage Howard Hanna will not have to actively litigate those claims, with a judge pausing a buyer commission lawsuit until that issue is decided.
Judge Wendy Beetlestone in the Eastern District of Pennsylvania formally paused proceedings, with the support of both Hanna and the plaintiffs, asking for status reports every 90 days until then.
Howard Hanna had previously been a defendant in Batton, but successfully argued the court did not have jurisdiction based on its lack of presence in that district (Illinois). Plaintiffs subsequently refiled the same claims in Pennsylvania.
Zillow moves to throw out RESPA mortgage case
A lawsuit targeting Zillow’s Flex program and home loans referral process is “heavy on filler but thin on substance,” the company argued in court last week.
Facing allegations that it steered buyers into subpar programs, using incentives and quotas to pressure Flex agents, the portal giant claimed that buyers are free to use other mortgage providers and disputed that buyers got a worse deal from Zillow Home Loans.
The lawsuit also contends that Zillow deceives buyers who inquire about homes, claiming they expect to reach the listing agent but are instead diverted to buyer agents who pay Zillow for leads.
While denying that any of these practices amount to fraud or harm consumers, Zillow also contested the RESPA claims on technical grounds, arguing that free, non-binding pre-approval letters don’t qualify as “settlement services” under the statute, and that its commission-sharing arrangement with Flex agents is explicitly protected under RESPA’s cooperative broker exemption.
