Real Estate

NAR, MLSs seek to avoid disclosing competition documents in suit

The National Association of Realtors and three of the nation’s largest multiple listing services are asking a federal court to prevent a former pocket listing service from compelling them to produce documents related to competition between MLSs and private listing networks, broker data management platform Upstream and antitrust inquiries from federal agencies.

In May 2020, The PLS, formerly a private listing network for real estate agents, filed a federal antitrust lawsuit against NAR and the California Regional MLS (CRMLS), Bright MLS and Midwest Real Estate Data (MRED) over a policy designed to curb pocket listings.

The suit alleged the defendants had violated the federal Sherman Antitrust Act and California’s Cartwright Act for adopting the Clear Cooperation Policy, also known as MLS Policy Statement 8.0, which requires listing brokers to submit a listing to their MLS within one business day of marketing a property to the public.

The controversial rule is meant to effectively end the growing practice of publicizing listings for days or weeks without making them universally available to other agents, in part to address fair housing concerns. The Clear Cooperation Policy went into effect on January 1, 2020, and its implementation deadline was May 1. Some MLSs have instituted hefty fines to enforce it.

In August, NAR and the MLSs struck back with motions to dismiss The PLS’s lawsuit, arguing that antitrust laws do not exist to protect competitors, but rather consumers and competition, and PLS had not shown that the Clear Cooperation Policy harmed either.

Those motions to dismiss are still pending, but in the meantime, NAR and the MLSs are resisting The PLS’s demands to turn over documents. On Jan. 4, they filed a motion to stay discovery (compulsory disclosures) until the court decides whether or not to toss the suit. They argue that a stay is appropriate because The PLS “has not alleged facts to plausibly suggest it sustained an antitrust injury” and therefore the court can dismiss the case for that reason alone, without the need for discovery.

Moreover, NAR and the MLSs allege that the discovery The PLS has asked for would impose “substantial burdens” on them.

“PLS’s complaint, among other things, includes allegations concerning several wide-ranging conspiracies, involving millions of purported co-conspirators … (alleging conspiracies involving all ‘members of NAR’ and ‘each NAR-affiliated MLS and their members’), and events that occurred as early as 2013,” the motion said.

“And PLS has already sought expansive discovery concerning virtually all matters relating to MLS operations.”

As part of discovery, The PLS has asked NAR for documents dating back to Jan. 1, 2013 regarding 25 categories of documents, including all documents relating to the plaintiff, to pocket listings, to Upstream, to competition between MLSs and private listing networks, to any benefit for licensed real estate professionals from membership in an MLS, and to the ability of such pros to provide brokerage services without membership in a MLS.

The PLS also asked for all documents relating to any communications with, between or among MLSs regarding the plaintiff, private listing networks, pocket listings, or the Clear Cooperation Policy as well as all documents relating to any complaint or concern about the price or quality of services provided by MLSs, to consolidation of MLSs on a regional or national scale, and to the actual or potential formation of a nationwide database of real estate listings.

In addition, The PLS wants all documents related to sections of the DANGER Report, a report released in May 2015 detailing 50 threats, risks and challenges the real estate industry was facing at the time and would face in the near future. NAR commissioned the report from Stefan Swanepoel, chairman and CEO of T3 Sixty, for the trade group’s Strategic Thinking Advisory Committee.

This is not the first time the DANGER Report has been at issue in a lawsuit against NAR — a bombshell commission suit in Missouri subpoenaed T3 Sixty for information about the report in October.

The sections The PLS is interested in concern the loss of the MLS as a primary revenue source for Realtor associations and potential dangers impacting MLSs, including entry by a new non-industry player, control of a national MLS, escalation of off-MLS listings, increased hostility in the real estate community between large and small brokers and different brokerage models, and growing friction over MLS- and association-owned consumer-facing websites.

The PLS is also asking for:

  • All documents relating to the competitive position of any MLS, including but not limited to (i) the market share of any MLS, however measured; (ii) barriers to entry into any area served by a MLS; (iii) actual or potential competition between MLSs; (iv) the future viability of any MLS; (v) any competitive threats confronting any MLS; and (vi) any alternatives to any MLS.
  • All documents relating to the formulation, negotiation, adoption, implementation or enforcement of the Clear Cooperation Policy, including but not limited to (i) any actual or potential alternatives to the Clear Cooperation Policy; (ii) any criticisms of the Clear Cooperation Policy or any variant thereof; (iii) the actual and intended purpose and effect of the Clear Cooperation Policy; (iv) the exclusion of so-called office exclusive listings from the Clear Cooperation Policy; and (v) all minutes of any meeting of any NAR Committee, Board or Advisory Board relating to pocket listings, private listing networks, or the Clear Cooperation Policy.
  • Documents sufficient to show the number of non-NAR members that are members of NAR-affiliated MLSs and the number of listings submitted by those non-NAR members.
  • All documents relating to NAR’s compliance with United States federal or state antitrust law in connection with any policies or procedures relating to any MLS, including all documents relating to any complaint or concern that NAR’s MLS policies are or may be in violation of any such antitrust law.
  • All documents submitted to the Federal Trade Commission (FTC), Department of Justice (DOJ), or a state attorney general in response to an antitrust inquiry, including any white papers, presentations, or other advocacy materials.

Moreover, The PLS seeks all documents relating to Policy Statement 7.62 in NAR’s 2020 Handbook on Multiple Listing Policy, which prohibits open listings in Realtor-affiliated MLSs. Open listings are those in which multiple brokers have a contract with a seller to market a property.

Part of the company’s request asked for all documents “relating to any costs, problems, difficulties, or inefficiencies associated with accepting Open Listings in an MLS, including all documents relating to any changes to MLS rules, policies or procedures that could minimize or eliminate any such costs, problems, difficulties, or inefficiencies.”

In a separate filing on Jan. 4, NAR and MLSs informed the court about statements made by The PLS co-founder Chris Dyson in an Inman interview in which he said, “It’s not the MLS we’re competing against. It’s the big public platforms that get the information from the MLS and it’s what they do with the information. It’s not the MLS that we have issue with or that we’re trying to give our agents any advantage against.”

The filing said, “Because PLS’s statements in the Inman article are directly relevant to the questions posed by the Court and contradict representations PLS previously made to the Court, Defendants now feel compelled to bring them to the Court’s attention.”

But in a filing on Jan. 5, The PLS objected to the defendants’ filing, saying that Dyson’s statements related to The PLS’s new business venture as a public-facing site with new agent services, rather than the business that competed with MLSs and was shut down after the Clear Cooperation Policy went into effect.

NAR, The PLS and Bright MLS did not respond to requests for comment for this story. MRED declined to comment for this story. CRMLS CEO Art Carter told Inman, “I believe the filings speak for themselves.”

Read the motion to stay discovery:

Email Andrea V. Brambila.

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