Editor’s note: RISMedia will be on the ground in Chicago this week to provide live coverage of the hearing. Stay tuned to RISMedia.com for the latest updates.
A long-simmering dispute between Zillow and Chicago-based MLS Midwest Real Estate Data (MRED) exploded into a public battle last month, ending up (like many recent industry disputes have) in a federal courtroom, as Zillow sued to block MRED from cutting its listing feed.
MRED, though, is hoping to escape the lengthy and expensive judicial process sooner rather than later. Back in May, the MLS immediately argued the lawsuit belongs in front of a mediator, and today again urged the judge overseeing the case to send the dispute to arbitration, arguing that the contract language applies to Zillow’s claims of antitrust violations.
“(T)here is simply no credible basis for concluding that the claims are not within the scope of the arbitration clauses,” MRED wrote.
The case centers on private listings, and the entire real estate industry is closely watching how the dispute plays out. Zillow previously delayed enforcing its rules on what listings can appear on its platform in the Chicago area as it negotiated with MRED over a longstanding internal private network.
MRED, though, after striking a partnership with Compass and updating a rule governing IDX filter criteria, briefly cut Zillow’s listing feed based on alleged violations of those criteria. Zillow has called that reasoning “pretextual,” filing the lawsuit (which also names Compass) and claiming that both MRED and the mega-brokerage are conspiring to undercut its own pre-marketing business.
But as MRED denies this, it is also hoping to see the case ended early and heard by an arbitrator. As Zillow contends that its lawsuit goes beyond the kind of disputes covered in its listing contract, MRED says that the language of that contract should be read broadly, and argued the case is really about listing feeds.
“This case turns on Zillow’s claim that MRED is improperly enforcing rules governing Zillow’s IDX and VOW feed access,” MRED wrote.
Zillow, for its part, has argued in court that its agreement was not with MRED, but MLS GRID—the vendor that MRED contracts for its platform—and is also asking the court to see its claims as more about antitrust actions than contracts.
“This case is about an overarching conspiracy between Compass and MRED—a classic group boycott—to coerce Zillow into abandoning its pro-transparency Listing Access Standards nationwide,” Zillow wrote. “After Compass failed to enjoin Zillow’s Standards nationwide in New York federal court, Compass pivoted to a different approach and co-opted MRED as its cat’s paw.”
Paths forward
MRED’s push comes just days before executives and experts are scheduled to testify in Chicago July 1 and 2 as Zillow seeks a temporary court order preventing the MLS from cutting off the feed again.
A ruling on that request will set the stage for the rest of litigation, and has enormous implications for the near-term private listing debate. Judge John Tharp, who is overseeing the lawsuit, previously ordered the parties to recreate the “status quo,” with MRED restoring Zillow’s feed and Zillow hosting MRED listings that it had previously banned (in violation of MRED’s rules).
But Tharp could also choose to send the lawsuit to arbitration, which would pause the proceedings at least as long as the arbitration process plays out. MRED asked that he decline to rule on Zillow’s request for a court order at all, while Zillow asked that a decision be made on that subject regardless of whether the case ends in arbitration.
Blocking MRED from once again cutting off its listing feed during arbitration will “prevent the real and present danger of Compass expanding the conspiracy to other MLSs and significantly hampering Zillow as a competitor,” Zillow claimed.
And while the case itself is broadly about listing policy and access, the dispute seems to boil down to the contract. Zillow presented the issues as simple: MRED was not a party to the arbitration agreement with MLS GRID, and therefore that clause does not apply.
“MRED cites no precedent where a court compelled arbitration based on plaintiff’s agreement with a third party when there was an applicable agreement directly between the parties commanding the plaintiff’s selected forum,” Zillow wrote.
MRED, on the other hand, claimed that it can “enforce” the MLS GRID agreement as “an intended third-party beneficiary,” urging Tharp to focus on “the plain language” and view the contract “as a whole.”
Additionally, Zillow asked that Tharp allow some of its claims to go forward in court—in particular against Compass—even if others are sent to arbitration. MRED is asking that the entire case be paused if the claims against MRED are sent to arbitration, arguing that there is a “strong likelihood” that arbitration “may streamline or resolve overlapping issues.”
