The
now
defunct
discount
brokerage
filed
its
appeal
in
early
February
2024,
asking
the
appeals
court
to
reverse
the
lower
court’s
ruling
on
REX’s
motion
of
a
new
trial.

REX
filed
its
motion
for
a
new
trial
in
November,
roughly
six
weeks
after its
September
trial concluded.
In
its
request,
REX
argued
that
it
was
unfairly
prevented
from
presenting
testimony
about
agent
commissions
to
the
jury.
The
Seattle
jury
ultimately
found
that
REX
did
not
prove

Zillow
used
false
advertising
it
its
decision
to
put
non-MLS
listings
on
a
different
section
of
the
website
and
that
Zillow
proved
its
defense
on
REX’s
second
claim
that
Zillow
acted
deceptively
and
unfairly.

Originally
filed
by
REX in
March
2021,
the
lawsuit
alleges
that
changes
made
to
Zillow’s
website
“unfairly
hides
certain
listings,
shrinking
their
exposure
and
diminishing
competition
among
real
estate
brokers.”

Two
months
prior, in
January
2021,
Zillow
began
moving
homes
not
listed
on
the
MLS
out
of
users’
initial
search
result
and
on
a
second
tab,
adhering
to
an
optional
NAR
rule,
which
prevents
those
who
choose
to
adopt
it
from
commingling
MLS
listings
with
non-MLS
listings.
Despite
claiming
that
it
did
not
support
this
rule,
Zillow
chose
to
adopt
it
and
created
a
two-tab
design
for
MLS
listings
and
“other
listings.”

In
January
2022,
NAR
filed
a countersuit claiming
that
REX
uses
false
advertising
and
misleading
claims
to
deceive
consumers
in
violation
of
the
Lanham
Act,
but
the countersuit
was
dismissed in
late
April
2022.

In
mid-May
2022,
REX ceased
its
brokerage
operations. 

A
little
over
a
year
later,
in
mid-June
2023,
the
three
parties
involved
in
the
suit,
all
filed motions
for
summary
judgment on
at
least
some
issues,
if
not
the
entire
lawsuit.

While
Judge
Thomas
Zilly,
who
oversaw
the
case, dismissed
REX’s
antitrust
claims against
NAR
and
Zillow,
he
allowed
the
discount
brokerage’s false
advertising
claim under
the Lanham
Act,
and
a
claim
for
unfair
or
deceptive
trade
practices
under
Washington’s
Consumer
Protection
Act
(WCPA)
to
stand.

In
its
brief,
the
DOJ
claims
that
despite
being
optional,
NAR’s
“no
commingling”
may
still
support
anticompetitive
behavior,
something
it
claims
the
district
court
did
not
fully
examine
in
its
ruling.

“The
district
court
applied
an
incomplete
legal
framework
in
evaluating
whether
REX
had
presented
a
genuine
dispute
of
material
fact
on
concerted
action
in
this
case,”
the
filing
states.

The
department
also
argues
that
the
court’s
ruling
did
not
look
into
the
risks
of
trade
groups
like
NAR
avoiding
antitrust
oversight
through
optional
regulations.

“The
judge’s
decision
created
a
loophole
that
could
allow
associations
to
sidestep
antitrust
scrutiny
by
cloaking
restrictive
rules
as
optional,”
the
DOJ
stated
in
its
filing. 

In
the
brief,
the
DOJ
outlines
three
ways
it
believes
optional
rules
can
involve
concerted
action
by
the
parties
involved
in
its
creation
or
implementation.

“1)
a
purportedly
optional
rule
could
be
mandatory
in
practice,
(2)
an
association’s
adoption
of
an
optional
rule
can
itself
be
concerted
action,
and
(3)
an
optional
rule
can
invite
others
to
participate
in
a
common
plan,”
the
filing
states.

“The
district
court
considered
and
rejected
the
first
theory
that
NAR’s
“optional”
no-commingling
rule
was
mandatory
in
practice,”
the
filing
continued.
“But
even
if
the
no-commingling
rule
is
optional,
that
is
not
determinative
on
concerted
action
in
this
case.
In
particular,
REX’s
arguments
appear
to
have
the
most
support
under
the
third
theory:
REX
has
alleged
a
common
plan
among
NAR,
MLSs,
and
their
members,
under
which
(i)
NAR
promulgated
the
optional
no-commingling
rule
and
invited
MLSs
to
adopt
it,
(ii)
knowing
that
MLSs
that
adopt
the
rule
will
enforce
it-unmodified-on
their
members,
and
(iii)
in
which
Zillow
later
acquiesced
by
complying
with
the
no-commingling
rule
(despite
disfavoring
it).”

The
DOJ
argues
that
the
district
court
relied
on
the
optional
nature
of
the
rule
and
the
lack
of
an
enforcement
mechanism
by
NAR
on
MLSs
to
adopt
the
rule
to
reach
its
conclusion
that
there
was
no
concerted
action
by
Zillow,
NAR
and
the
MLSs.

“But
the
court
failed
to
consider
other
factors-such
as
NAR’s
role
in
promulgating
the
rule
to
segregate
listings
and
prohibiting
modifications
by
MLSs
adopting
the
rule,
the
effect
of
an
MLS
adopting
the
rule
of
making
it
mandatory
on
its
members,
and
MLSs’
role
in
enforcing
the
rule
on
their
members-that
suggest
that
NAR
proposed
a
common
plan
to
MLSs
and
their
members
to
segregate
and
demote
non-MLS
listings,”
the
filing
states.
“If
uncorrected,
the
district
court’s
incomplete
approach
creates
a
risk
that
associations
like
NAR
could
evade
antitrust
scrutiny
for
many
anticompetitive
schemes
by
using
optional
rules.”

Despite
its
beliefs
that
concerted
action
may
have
occurred,
the
DOJ
states
that
Zillow
was
not
a
part
of
the
rule
at
its
formation.
However,
the
DOJ
states
that
Zillow
“allegedly
joined
this
common
scheme
when
becoming
a
member
of
NAR
and
affiliated
MLSs
and
complying
with
the
no-commingling
rule
despite
being
opposed
to
it.”

Due
to
its
views,
the
DOJ
recommends
in
its
brief
that
the
Ninth
Circuit
overturn
Judge
Zilly’s
ruling
and
reopen
the
case
for
further
review
at
the
district
court
level.

 “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
Zillow
spokesperson
wrote
in
an
email.
“We
were
required
to
comply
with
the
no
co-mingling
rule
to
obtain
our
IDX
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.”

NAR
was
none
too
pleased
by
the
DOJ’s
brief.

“NAR
continues
to
believe
this
lawsuit
is
without
merit
and
that
the
district
court’s
determination
on
summary
judgment that
there
was
no
antitrust
violation
should
be
affirmed.
As
we
have
long
said,
local
MLSs
benefit
competition
and
fair
housing,
and
provide
consumers
with
the
most
accurate,
transparent
and
up-to-date
information
on
home
listings,”
a
NAR
spokesperson
wrote
in
an
email.

REX
is
understandably
pleased
by
the
DOJ’s
support
of
its
appeal.

“We
are
pleased
that
the
DOJ
has
agreed
with
our
position
that
summary
judgment
was
improperly
granted,
and
we
think
the
case
should
be
remanded
for
further
proceedings
so
that
it
can
be
resolved
on
the
merits,”
attorneys
for
REX,
which
include
Stephen
Zack,
Ursula
Ungaro
and
Carl
Goldfarb
of

Boies
Schiller,
wrote
in
an
email.

NAR
did
not
return
a
request
for
comment.