Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
Judge denies CoStar’s amicus brief in Zillow MRED Compass case
On June 10, CoStar requested to file an amicus brief—a brief filed by a non-party, or a “friend of the court”—in the U.S. District Court for the Northern District of Illinois before Judge John Tharp, which would have marked the first formal intervention by Zillow’s chief portal rival in the closely watched case.
On June 16, Judge Tharp denied CoStar’s motion to file its amicus brief. The brief had urged the judge to deny Zillow’s request to prevent Midwest Real Estate Data (MRED) from cutting off its listing feed, arguing the portal giant is seeking court-ordered access to MLS listings while hoarding its own exclusive pre-market inventory.
CoStar is separately suing Zillow for copyright infringement based on alleged misuse of listing photos, and CoStar leadership have been sharply critical of Zillow as the company promotes its own residential consumer portal, Homes.com.
In a statement to RISMedia, a Zillow spokesperson said that the U.S. housing market is one of the most transparent in the world, and that MLSs are a big reason why.
“That’s why we support them. They play an important role in keeping the housing market fair and open, making it easier for buyers and their agents to see all the homes for sale and for sellers and their agents to reach as many potential buyers as possible,” they continued. “CoStar and Compass are making the same flawed argument: that pre-marketing and private marketing are the same thing. They are not, and the distinction matters enormously.”
NWMLS defends its countersuit against Compass
On June 18, Northwest MLS (NWMLS) defended its countersuit against Compass, urging Judge Jamal N. Whitehead to allow the MLS’s fraud, Consumer Protection Act and tortious interference claims to proceed against the mega-brokerage.
Responding to Compass’s characterization of the countersuit, NWMLS contends that it has “plausibly” identified likely violations of the law and harm, with factual disputes to be decided at a later point in the lawsuit.
Part of the alleged deception, NWMLS writes is that Compass submitted, or caused brokers to submit, listings into NWMLS’s database without material history reflecting that those properties had already been available for purchase and had already undergone private marketing, testing and possible price changes.
CoStar hit with proposed class-action suit
CoStar and a handful of high-profile commercial real estate brokers are being sued for alleged antitrust violations centered on how CoStar shares competitively sensitive data, which a Florida-based tenant claims drives up prices.
Filed June 12 in the Northern District of Illinois, the tenant—FitFactariDC, LLC—says that CoStar has become a “behemoth” in the commercial real estate space through aggressive acquisitions that reduced competition, and then enabled “price coordination” among competing brokers.
“CoStar (has) a direct financial incentive to facilitate coordination among the Broker Defendants, because the more effectively brokers can use CoStar’s data to align their pricing, the greater their willingness to pay for—and renew—CoStar’s services,” the lawsuit claims.
This conduct was both encouraged and enabled by CoStar, the lawsuit claims, as the company provided granular data to competitors, which resulted in brokers and landlords being able to “fix, stabilize, or otherwise coordinate effective rents and lease concessions by eliminating or reducing uncertainty over competitors’ pricing and pricing strategies.”
The lawsuit is seeking to represent essentially anyone who leased industrial, office or retail properties from a landlord that was a CoStar client (or used a broker who was a CoStar client) going back three years. Plaintiffs are seeking unspecified damages and a court preventing the allegedly illegal behavior.
CoStar Group General Counsel Gene Boxer, in an emailed statement to RISMedia, said the company looks forward to a swift and complete victory in court.
“This slapdash Complaint, riddled with basic errors, betrays a serious lack of knowledge about our products, our customers, and the industry at large,” he continued. “The claim that CoStar Group is part of a ‘conspiracy’ to raise rents for commercial tenants is contrary to common sense, lacking in any facts, and frankly frivolous.”
