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Mark your calendars: The U.S. Department of Justice will be weighing in on three real estate industry-related lawsuits on June 20 and 21.
The legal filings may offer some clarity to those in the industry who are trying to prepare for upcoming commission changes resulting from the National Association of Realtors’ proposed settlement of multiple antitrust cases and wondering if their efforts will be upended by the DOJ.
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The deal eliminates offers of compensation from listing brokers to buyer brokers in Realtor-affiliated multiple listing services and explicitly does not prohibit them elsewhere. But the DOJ said last month it does not want to see such offers “anywhere” and its unclear at this point what steps the federal agency might take to make that happen, if any.
Here are the three suits in which the DOJ will be opining next week:
NAR v USA
NAR’s most recent legal drama with the DOJ began five years ago. In 2019, the DOJ sent NAR a civil investigative demand (CID) — a type of administrative subpoena — over several of its rules and later sent another CID in 2020. The parties came to a settlement in November 2020 while the DOJ was under the Trump administration. After the Biden administration took over, the agency abruptly withdrew from that proposed settlement agreement on July 1, 2021.
Days later, the agency sent NAR another CID seeking new information on the trade group’s rules, including:
- The Participation Rule, which requires listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing into a Realtor-affiliated multiple listing service.
- The Clear Cooperation Policy, which requires listing brokers to submit a listing to their Realtor-affiliated MLS within one business day of marketing a property to the public.
In September 2021, NAR filed a lawsuit attempting to quash the DOJ’s demand, contending NAR only agreed to the settlement (also called a “consent decree”) because of a letter from the DOJ affirming the federal agency had closed its investigations into the Participation Rule and Clear Cooperation Policy.
In January 2023, Judge Timothy J. Kelly of Washington, D.C.’s district court, a Trump appointee, granted NAR’s petition, but the DOJ appealed. In April 2024, the U.S. Court of Appeals for the District of Columbia ruled that the DOJ can reopen its investigation of NAR’s rules.
On May 20, NAR petitioned for a rehearing “en banc,” meaning before all judges of the appeals court, not just the three who initially heard the appeal. At the end of May, attorneys for the DOJ asked the court to extend the deadline to respond to NAR’s rehearing petition to June 20, which the court granted.
In that request the DOJ said its filing “will make clear that NAR has not come close to satisfying the high burden for en banc review,” but did not offer other clues about its potential arguments.
If the appeals court denies NAR’s petition for en banc review, the case returns to the district court. NAR’s petition specifically asked the district court to either set aside the CID or modify it. Because the district court originally ruled on the former request and not the latter, the appeals court did not opine on the latter request. Therefore, NAR may attempt to have the district court modify the demand before the trade group is required to respond to it.
REX v Zillow
In March 2022, REX Real Estate filed suit against Zillow and NAR, saying Zillow’s decision to split listings between “agent listings” and “other listings” tabs in order to comply with a NAR rule dramatically decreased the number of views for REX’s listings on Zillow and lowered sales.
NAR was later dismissed from the suit after the court dismissed the antitrust claims in the case.
In a September 2023 trial, the jury ruled against REX and REX subsequently requested a new trial in November, arguing, in part, that it was unfairly barred from presenting testimony about real estate commissions to jurors.
In January, the court denied that request and in February, REX appealed that decision to the U.S. Court of Appeals for the Ninth Circuit.
On May 30, the DOJ asked the appeals court for an extension to June 20 to file an amicus brief in the case, which the court granted. The federal agency said the brief would be “in support of neither party” and would focus on the lower court’s application of antitrust law.
“The district court in this case granted summary judgment to defendants under Section 1 of the Sherman Act, finding the plaintiff failed to satisfy the concerted-action element,” the filing reads.
“The United States has a particular interest in ensuring that courts properly apply the concerted-action requirement under Section 1 of the Sherman Act and has filed numerous briefs on that subject in the Supreme Court and in the court of appeals.”
Nosalek v MLS PIN
It is in a lawsuit known as Nosalek that the DOJ has made its opinions on commissions most salient. The antitrust enforcer dipped its oar into the case last year after the homeseller plaintiffs came to a settlement with MLS Property Information Network (MLS PIN), which had a rule similar to NAR’s Participation Rule.
Attorneys for the DOJ made clear they were not happy with the deal in a February statement of interest in which they rejected rule changes that would keep offers of compensation in the MLS and instead called for “an injunction that would prohibit sellers from making commission offers to buyer brokers at all.”
The agency argued such a ban on pre-emptive offers would promote competition and innovation between buyer-brokers because buyers would be empowered to negotiate directly with their own brokers.
On June 10, MLS PIN fired back, urging the court to reject the DOJ’s arguments against the settlement and approve the deal, saying that the federal agency’s proposal itself violates antitrust law and the First Amendment’s free speech provision.
A joint statement from the plaintiffs, MLS PIN and the DOJ is due on June 21. The statements will address questions raised by the court about the settlement at a status conference last month, according to a filing from the plaintiffs.
