Zillow scored a victory in a years-long legal battle with former discount brokerage REX Real Estate on Monday when the U.S. Supreme Court declined to take up the case, leaving in place a lower court’s ruling.
Real Estate Exchange Inc. (REX) previously lost its 2021 challenge of NAR’s no-commingling rule, a decision that was upheld by the Ninth Circuit Court of Appeals in March. The lawsuit had named both NAR and Zillow as defendants.
Attorneys for the defunct brokerage then petitioned the Supreme Court on Sept. 15 to review those previous rulings. But in an order list released on Monday, the high court denied REX’s request.
Zillow applauded the decision, which effectively ends the defunct brokerage’s case.
“We’re pleased this matter has reached the conclusion we expected and that the court at every level has affirmed Zillow’s position,” a spokesperson for the company said in a statement to Inman. “Zillow was founded on increasing transparency in real estate and we have a long history of advocating for practices and launching products that do just that. This decision reinforces our long-standing commitment to transparency, innovation and prioritizing consumers.”
The case zeroed in on Zillow’s decision in 2019 to become an MLS participant to obtain Internet Data Exchange (IDX) listings, which meant complying with rules created by NAR and adopted by MLSs that Zillow joined.
At the time, that included a rule prohibiting non-MLS listings from appearing alongside MLS listings — a policy known as the no-commingling rule.
After joining hundreds of MLSs to obtain IDX feeds, Zillow complied with the rule starting in January 2021 by creating a two-tab system on its website. Listings that complied with the no-comingling rule were what users saw by default. If they wanted to see non-MLS listings, users would have to click a tab labeled “Other Listings.”
The change led views of non-MLS listings on Zillow to plummet; REX wound down its residential brokerage business about 18 months later.
NAR repealed the optional no-commingling rule in June.
In front of a panel of appeal court judges earlier this year, REX’s attorney attempted to get the panel to focus on the no-comingling rule itself and Zillow’s decision to begin complying with it.
“Our position consistently was that the agreement in restraint of trade was the agreement to segregate,” attorney Ursula Ungaro argued. “Yes, the website is the implementation of the rule. But under this court’s decision in [a separate case], the starting point is the restraint; what happens beyond that is implementation and should be of no consequence.”
“Zillow, had it not combined with the NAR, could have taken any position that it wanted to as to REX,” Ungaro later added. “The problem is that Zillow combined with NAR in an anti-competitive scheme.
In petitioning the Supreme Court, attorneys for REX argued that the high court needed to weigh in on conflicting appeals court decisions on whether an association’s optional rule can violate the Sherman Antitrust Act.
While the Ninth and Tenth Circuit Courts of Appeal have held that optional rules are immune from the Sherman Act, the First, Third, and Fifth circuits have held association rules can be a conspiracy, even if optional.
Two groups that shared concerns about the Ninth Circuit Court’s ruling in the case — Consumer Advocates in American Real Estate (CAARE) and the Antitrust Education Project — filed friend of the court briefs.
Monday’s legal victory for Zillow comes as the company contends with pressure from various other sources, including several unrelated lawsuits.
