NAR Defeats Antitrust Claim Based on Key Zillow Website Change

Our firm obtained a complete and resounding summary judgment victory on an $850 million antitrust claim against our client National Association of Realtors and co-defendant Zillow in a dispute with upstart tech real estate brokerage REX – Real Estate Exchange, Inc. represented by lead counsel David Boies.  

Our client, the National Association of Realtors (NAR) is the biggest trade association in the country, representing 1.5 million real estate agents and brokers.  NAR is comprised further of hundreds of local associations of Realtors and many of these local associations own and operate multiple listing services (“MLS”), which is the means by which most agents collaboratively exchange and share each other’s listings information.  To provide best practices and help guide these Realtor association owned MLS’s, NAR publishes MLS model rules that, if adopted by MLS’s, govern how each participants listing information can be used.  In 2001, NAR promulgated an optional rule just as internet listings were becoming popular that made clear MLS’s at their discretion could require participants to separate MLS listings from non-MLS listings on their websites.  This case was about the day twenty years later that Zillow decided to join MLS’s and started complying with the 70% of MLS’s that had adopted that optional rule.

REX was a residential real estate brokerage start-up, which accused the real estate industry is a “cartel” of conspiring agents whose main purpose is to prop up their own commissions. REX alleged NAR and Zillow conspired to exclude REX as a competitor based on this optional rule in order to control real estate listings information and maintain supracompetitive commissions. 

Shortly after Zillow joined MLS’s, it changed its website, moving REX listings to a second, non-default tab. REX filed suit within a matter of weeks, seeking an injunction against Zillow to revert to the old website design. REX brought antitrust claims as well as false advertisement, unfair practices, and defamation claims, claiming that the conspiracy had caused the failure of REX’s entire business, which it claimed was valued at over $1 billion.

Quinn Emanuel was brought on immediately for the defense and went to work demonstrating that the reality was that REX built its business on a loophole, that REX’s business was already failing well before the Zillow website design change, and most critically, that there was never any conspiracy or agreement between Zillow and NAR to “segregate, conceal, and demote” REX listings. NAR and Zillow beat back the preliminary injunction threat, but through misleading pleading, REX was able to defeat our motion to dismiss by alleging that the “so called voluntary” No-Commingling Rule was actually mandatory in practice (although we were successful in getting REX’s Lanham Act claims against NAR kicked).

Our team pushed in discovery to demonstrate this was not the case.  REX, NAR, and Zillow all filed cross motions for summary judgment. We hammered our main refrain: that there was no evidence of a contract, combination or conspiracy, a threshold element of Section 1 antitrust claims. After a two-day marathon oral argument, Judge Zilly of the Western District of Washington issued a 31-page opinion granting NAR summary judgment on the issue of agreement, dismissing all claims against NAR with prejudice.