Justice Department wants REX-Zillow case reopened

The Department of Justice is calling for the Ninth Circuit Court of Appeals to send an anti-competition case involving the National Association of Realtors and Zillow back to the trial court to be retried.

While the filing is made "in support of neither party," if the case were to be reopened, it would benefit original plaintiff Real Estate Exchange, or REX for short, a discount brokerage.

The filing comes as the Justice Department and NAR battle over whether the full U.S. Circuit Court of Appeals for the District of Columbia should rehear a 2-1 ruling in favor of the federal government allowing it to reopen its investigation into the trade group.

REX filed its lawsuit in 2021 against NAR and Zillow Group, plus a number of subsidiaries including Trulia, alleging that Zillow's search features prevent "transparent access to home inventory."

But several counts were dismissed before trial, including all against parties other than Zillow Group. The only two counts that went to a jury were decided in favor of Zillow on Sept. 29 last year.

In January, Judge Thomas Zilly rejected REX's attempt to get a new trial and an appeal was filed.

"[T]here are additional ways that optional rules constitute concerted action that the court did not appear to consider," the Justice filing said. "Vacatur and remand are appropriate for the district court to apply the proper legal framework to the evidence."

The Justice Department otherwise has no position on the ultimate outcome of the case, the brief stated. 

REX was challenging Zillow's placement of its listings on the latter's website. NAR has an optional rule, the no co-mingling rule, regarding multiple listing service information being placed on a website with non-MLS members.

"Zillow was founded on increasing transparency in real estate — and we have a long history of advocating for consumers through our products and services," a company spokesperson said in a statement. "We were required to comply with the no co-mingling rule to obtain our IDX (Internet data exchange) feeds but we've publicly advocated against this rule for several years because we believe all listing data should be displayed in one place. We look forward to the jury's verdict and judge's ruling being affirmed."

Requests for comment made to NAR and to David Boies, REX' attorney, were not responded to by press time.

The DOJ in its filing, looked at whether even though the rule is labeled as optional, it was in fact mandatory.

"REX has argued that there was such a 'meeting of minds' here, for although Zillow disliked the rule, Zillow felt compelled to follow it to obtain the benefits of MLS membership, and thus complied with the rule by adopting the two-tab display," the filing said.

"Zillow thus allegedly acquiesced in the alleged common scheme."

Even if how Zillow participated was left to its discretion, the no co-mingling rule was an agreed starting point to segregate and demote non-MLS listings.

As a result, the verdicts in this case should be vacated and remanded back to the trial court "to fully consider the evidence of concerted action" between NAR and Zillow, the Justice Department is asking the Ninth Circuit to rule.

In a separate case, Zillow as a plaintiff has entered into a preliminary settlement involving its ShowingTime business, which sued three related businesses — Arizona Regional Multiple Listing Service, Metro Multiple Listing Service and MLS Aligned — over antitrust allegations.

ShowingTime is used by buyers' agents to schedule visits to houses with those brokers who represent sellers using the MLS.

But Zillow alleged the defendants made it more difficult to use ShowingTime, trying to push business to their own system, Aligned Showings.

Details about the settlement, first reported in Real Estate News and republished by GeekWire on June 14, have not been made public.