The National Association of Realtors, in court actions this week, is attempting to toss out portions of a Justice Department antitrust lawsuit that target the trade group’s former online listings policy and so-called “opt-out” provisions that allow brokers to withhold online listings from other brokers.
On Tuesday, lawyers for the association filed a motion to dismiss several claims brought by the Justice Department, and also filed dozens of pages of documentation to support its motion.
Laurie Janik, general counsel for the Realtors group, said that Justice Department lawyers have 60 days to file a response to the motion, and the association’s legal team will have 30 days to reply to that response. Janik said that it “makes no sense” for the Justice Department to pursue claims against the association’s former online listings policy, the Virtual Office Web site policy, “because that policy is already rescinded.”
On the same day Justice Department officials filed the antitrust suit against NAR in September, the trade group publicly announced that it had rescinded the 2003 VOW policy that antitrust officials had been investigating for two years and adopted a new one in its place.
In court documents, association lawyers state that “neither the parties nor the court should waste time and resources” in litigation over a policy that is no longer in effect. About 200 Realtor-affiliated MLSs chose to adopt the association’s initial VOW policy after it was adopted in 2003, the Justice Department alleged in its complaint.
In the motion to dismiss, NAR challenges the Justice Department’s claims relating to opt-out provisions of the old policy and a new Internet Listings Display (ILD) policy, stating, “These provisions do nothing more than permit individual entities to make independent decisions regarding whether to authorize display of their own listings on the Internet sites of other entities. Thus, they do not involve any collectively imposed restraint of trade as required to state a claim under … the Sherman Act.”
In its supporting documents, NAR states that the opt-out provisions of both online listings policies “impose no restraints whatsoever on any of NAR’s members who would be subject to the policies if they were being enforced. They do not encourage NAR members to refuse to allow listings to be displayed on other brokers’ Web sites. Any decision to opt out is made unilaterally by listing brokers exercising their independent judgment.”
The Realtor association in court documents claims that the Justice Department’s allegations about the anticompetitive effects of the new online listings display policy are insufficient to call for any antitrust action against that policy, and lack “factual basis or economic theory.”
Judge Mark Filip of the Eastern Division of the U.S. District Court for the Northern District of Illinois is presiding over the case, Craig W. Conrath is serving as lead counsel for the Justice Department and Jack R. Bierig of Sidley Austin Brown & Wood LLP is serving as lead counsel for the association.
In its memorandum, NAR claims that the court “lacks jurisdiction” to judge whether the association’s 2003 VOW policy is lawful, “because that policy was rescinded prior to the initiation of this lawsuit.”
The Justice Department, which had investigated the association’s VOW policy for more than two years, filed its original lawsuit against the association in September and filed an amended complaint on Oct. 4. The Justice Department claims that the trade group has worked to illegally restrain trade, and in its amended complaint seeks to block the association “from maintaining or enforcing policies that restrain competition from brokers who use the Internet to more efficiently and cost effectively serve home sellers and buyers, and from adopting other related anticompetitive rules.”
The department also asks the court to prevent the association from permitting or requiring its member boards and affiliated MLSs to adopt opt-out, anti-referral, or membership and access restrictions that can be harmful to trade.
In its memorandum, NAR claims that the new listings display policy “abandoned many of the features” that the Justice Department objected to in the preliminary VOW policy. As an example, the association states that under the new policy, an MLS participant “may prevent its listings from being displayed on the Web sites of other MLS participants only by (a) preventing its listings from being displayed on the Web sites of all other MLS participants, and (b) not displaying on its own Web site the listings of any other MLS participants.”
The opt-out clause in the first listings display policy gave brokers more freedoms in withholding listings, according to the memorandum, while the new opt-out policy is “blanket and reciprocal.”
Under the initial 2003 VOW policy, a broker could pick and choose which other MLS participants could display his or her listings on the Web or could choose to prevent all other MLS members from displaying them. Under the newly formed policy, listing brokers can still choose to keep their listings from all other MLS member Web sites, but cannot reserve them from individual sites.
The Justice Department lawsuit contains no alleged instance “of any broker exercising a blanket opt-out under the 2003 VOW policy” and no alleged instance “of any broker exercising any opt-out under the 2005 ILD policy – which has not even been adopted by local MLSs,” association lawyers state in the memorandum.
Legal observers have said that property data ownership, control and access issues are at the root of the court battle.
The association faces a long and costly legal battle even if it ultimately prevails, Janik has told association members. And while NAR has been open to talks about settling the case, its position is inflexible on some of the key issues in the case, she has said.
***
Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.
