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The National Association of Realtors is looking to the highest court in the land to overturn an appeals court ruling allowing an antitrust case over the trade group’s pocket listing policy to continue.
On Sept. 23, NAR and three of the largest multiple listing services in the nation — California Regional MLS, Bright MLS and Midwest Real Estate Data (MRED) — filed a petition to the U.S. Supreme Court for a “writ of certiorari,” asking the court to review a ruling by the Ninth U.S. Circuit Court of Appeals made in April.
That ruling allowed a case filed by former pocket listing service The PLS to proceed, overturning a lower court decision that had thrown it out. (The PLS now calls itself The NLS, though it remains The PLS in legal filings.)
The suit alleged the defendants had violated the federal Sherman Antitrust Act and California’s Cartwright Act for adopting the Clear Cooperation Policy, which requires listing brokers to submit a listing to their MLS within one business day of marketing a property to the public. The policy has attracted the attention of the U.S. Department of Justice, which is currently investigating NAR over the CCP and other rules. A DOJ attorney also spoke at oral arguments in The PLS’s appeal in January.
According to the federal government, four of the nine justices on the Supreme Court must vote to accept a case and the court only accepts a tiny percentage of the cases it’s asked to review each year: 100-150 of more than 7,000 cases. The court usually only agrees to hear a case if it “could have national significance, might harmonize conflicting decisions in the federal Circuit courts, and/or could have precedential value.”
NAR recognized that the petition “has a small chance of being granted and yet we think it stands a chance because it presents important issues of antitrust law that have nationwide impact in their application,” NAR spokesperson Mantill Williams told Inman in an emailed statement.
Mantill Williams
NAR adopted the CCP “as a crucial protection for consumers,” according to Williams.
“This petition seeks to preserve the ability to provide the most information and the best possible market for buyers and sellers of home real estate,” he said.
“After originally dismissing this case, a federal [j]udge noted in his opinion that the Clear Cooperation Policy (CCP) provides consumers with ‘access to more information regarding market conditions, enabling them to make better informed choices about the bundle of real estate brokerage services that will best serve their needs.'”
According to NAR’s petition, the Ninth Circuit’s ruling overturning the dismissal of The PLS’s case was “contrary and erroneous” and failed to follow previous case law, “sowing confusion and inviting future courts to ignore or misapply fundamental principles of antitrust law.”
The petition asks the court to consider two questions: One regarding two-sided markets and the other regarding harm to alleged members of the conspiracy. Both questions hinge on whether the relevant consumers in the case are brokers or buyers and sellers.
The first question asks whether a court can decide not to analyze both sides of a market, contrary to NAR’s interpretation of previous case law. NAR considers the relevant market in the case to be MLSs as “a home-listing platform for buyers and sellers” and therefore argues that the plaintiffs must allege a plausible injury to participants on both sides of the real estate market — not just to sellers, but also to buyers.
But the DOJ and The PLS contended — and the appeals court agreed — that The PLS should not have to argue that the CCP harms consumers or buyers in order for its antitrust case against NAR to go forward. Moreover, the appeals court found that the definition of “consumer” can also include businesses who use products to create another product or service, and therefore The PLS was not required to allege harm to buyers and sellers; alleging that the policy hurt agents who consume listing services was sufficient.
In regards to the second question, NAR’s petition asks whether a competitor can establish standing (the legal right to sue) based on harm to alleged members of the conspiracy, given that The PLS’s amended complaint asserts that brokers, as members of NAR, conspired to adopt the Clear Cooperation Policy.
“Brokers are not the relevant consumers to assess whether the Clear Cooperation Policy reduces competition because, according to the Amended Complaint, brokers are co-conspirators,” the petition reads.
“Any reduction of competition to them is legally irrelevant. Instead, buyers and sellers, as the first consumers outside the conspiracy, are the relevant consumers.”
The appeals court disagreed, concluding that The PLS “adequately alleged” antitrust injury by alleging that the CCP was part of a group boycott to prevent The PLS from competing with MLSs, leaving agents with fewer choices, inflated prices and lower-quality products.
“If left to stand, the Ninth Circuit’s ruling will subvert antitrust law and benefit alleged conspirators to the detriment of consumers and lawful competition,” NAR’s petition reads.
Whether the Supreme Court agrees to “grant cert” and review the case remains to be seen. The PLS’s response to NAR’s petition is due Oct. 27. Inman has reached out to The PLS for comment and will update this story if and when we hear back.
Read NAR’s petition to the U.S. Supreme Court:
