Real Estate

Judge To REX: Stop Calling NAR, Zillow A ‘Cartel’

A judge also denied REX’s request for a preliminary injunction against NAR and Zillow. REX asked for the injunction after arguing that it was the victim of anticompetitive practices.

Zillow and the National Association of Realtors (NAR) scored a victory in their legal fight with discount brokerage REX Wednesday when a judge said REX hadn’t proven it’s being irreparably harmed by what it has referred to as a real estate “cartel.”

The judge also told REX to stop referring to Zillow, NAR and others as a “cartel.”

The case first erupted in March. At the time, REX — which has said it wants to “drastically reduce commissions” and which aims to operate outside the traditional multiple listing service (MLS) system — said in a court filing that “legacy members of a cartel” had “banded together to boycott a fledgling competitor.”

There are a number of claims in the case, including some related to agent commissions. But the gist is that REX accused members of the real estate establishment of anticompetitive practices that segregated and marginalized REX’s listings.

Zillow was dragged into the case thanks to a backend change in the way it gets its data, and to a move to place greater emphasis on agent listings. REX took issue with these changes, saying that they resulted in the discount brokerage’s listings “losing significant traffic” and being relegated to a lesser space on the website, according to its lawsuit.

Zillow responded to the suit in April, arguing REX’s claims were “without merit.”

REX’s goal when it filed the suit was to get a preliminary injunction. That basically means it wanted court-ordered rules that would limit what NAR and Zillow could do with listings. Among other things, REX wanted the court to prohibit NAR, Zillow and their partners from engaging in “any anticompetitive conduct,” and from segregating or excluding REX listings.

But in Wednesday’s ruling, the judge sided with Zillow and NAR.

Among other things, the judge concluded that REX hadn’t shown “a likelihood of irreparable harm,” nor had it proven that the practices of Zillow, NAR and their partners threaten REX’s existence.

“Plaintiff asserts that it is a market ‘disruptor’ within the real estate industry, but it has made no showing, for example, that it has engaged in extensive marketing efforts to carefully control its brand image as unaffiliated with NAR or an MLS,” Wednesday’s ruling states.

The judge also argues in the ruling that REX hasn’t show it’s likely to prevail in its arguments that Zillow, NAR and others violated antitrust and consumer protection regulations.

In addition to exploring the main arguments in the case, Wednesday’s ruling is also peppered with footnotes, many of which add context and commentary. The seventh footnote directly addresses the use of the word “cartel,” and directs REX to steer away from that language.

“The Court discourages any future use of the term ‘cartel’ to describe Defendants’ conduct,” the footnote states, “which is neither persuasive nor remotely accurate.”

Jack Ryan

After reaching out to REX Wednesday afternoon for comment, the company directed Inman to a statement in which CEO Jack Ryan said, “We are disappointed that consumers will continue to face the NAR segregation rule every time they visit Zillow.” Ryan also said REX “won’t stop” pursuing the case, which “is far from done.”

“REX is going to continue to innovate for consumers as it builds its case against old industry rules that stifle consumer choice and competition,” Ryan continued in the statement. “At a time when home prices are skyrocketing and the supply of homes for sale is at record lows, consumers deserve to see every home on the market.”

On the other hand, Zillow expressed satisfaction, with a spokesperson saying in a statement to Inman Wednesday, “We’ve consistently maintained REX’s allegations are without merit.”

“We are pleased with the court’s decision denying REX’s motion for a preliminary injunction,” the statement added, “and its acknowledgment of our commitment to empowering consumers with the most complete, up-to-date housing and listing information possible.”

Read Wednesday’s ruling here: 

Correction: Zillow filed a response to REX’s suit in April. This post initially and incorrectly referred to that filing as a countersuit.

Email Jim Dalrymple II

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