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The U.S. Department of Justice’s multi-front fight against certain National Association of Realtors rules is likely heading to an appeals court in February.
The antitrust enforcer is asking to speak at oral arguments in an appeal filed by now-defunct discount brokerage REX, also known as Real Estate Exchange, in litigation against NAR and real estate giant Zillow.
Oral arguments in the case are scheduled for Feb. 13 and the court has allotted 20 minutes to each side. On Jan. 8, attorneys for the DOJ’s Antitrust Division submitted a motion requesting 5 minutes on top of that allotment from the U.S. Court of Appeals for the Ninth Circuit.
The DOJ noted that it previously submitted an amicus brief in the case in June in support of neither party, without taking a position on the case’s ultimate outcome.
“Instead, the United States explained that, although the district court appeared to have a limited view of when optional association rules can represent concerted action under Section 1 of the Sherman Act, there are additional ways that optional rules constitute concerted action that the court did not appear to consider,” the DOJ’s attorneys wrote in the motion.
“The United States thus urged this Court to vacate and remand the case for the district court to apply the proper legal framework to the evidence in this case.”
The federal agency added that it believes its participation “would be helpful to the Court” and that the DOJ “has a significant interest in the proper application of [federal antitrust] laws,” including how they apply to the real estate industry.
The motion noted that none of the parties oppose the DOJ’s request for five minutes, but they do disagree about where the five minutes should be taken from.
According to the filing, Zillow and NAR say the five minutes should come out of REX’s time to speak, while REX says the DOJ’s time should be added on without affecting each side’s time. However, the filing notes that REX would agree to two potential alternatives: granting REX 20 minutes, the DOJ five minutes, and Zillow and NAR collectively 25 minutes; or, that REX would cede 5 of its 20 minutes in order to have the DOJ participate, though the latter is “not REX’s preference.”
The DOJ’s June amicus brief took aim at NAR’s optional “no-commingling” rule, which, when adopted by an MLS, requires brokerage websites to separate displays of MLS listings from non-MLS listings. Because REX did not use MLSs for most of its existence, REX’s suit alleges that this led to limited visibility of REX’s listings on Zillow and the rule is therefore anticompetitive.
REX’s antitrust claims against NAR and Zillow were thrown out before trial, REX lost on its remaining claims at trial, and then the brokerage was subsequently denied a request for a retrial. REX is appealing that latter ruling.
According to the DOJ’s amicus brief, the “no-commingling” rule’s “optional nature” does not prevent it from potentially being anticompetitive and that the court decision denying a retrial did not fully take into consideration that associations like NAR may have circumvented antitrust oversight by enacting such optional rules.
The DOJ further argued that Supreme Court precedent has shown optional rules may involve “concerted action” that can make those rules “mandatory in practice” and that the court should vacate the district court’s denial of a retrial so that the lower court fully considers REX’s argument that the optional rule nonetheless invited NAR, MLSs and Zillow “to participate in a common plan.”
Read the motion (re-load page if document is not visible):
