Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
This week saw previously decided matters on the legal side of the real estate world revived, with the National Association of REALTORS® (NAR) arguing against the renewal of investigations and suits against itself. And brokerage Parks Pilkerton (more often known simply as Parks) announced it has earned immunity from seller lawsuits as part of a previously agreed upon settlement.
NAR appeals DOJ investigation
In April 2024, a three-judge panel allowed the Department of Justice (DOJ) to reopen an antitrust investigation into NAR. On May 20, 2024, NAR filed an appeal in the D.C. Circuit Court of Appeals, asking for a rehearing by the same three-judge panel or a rehearing from the entire court.
“As part of our commitment to championing the interests of our members and the home buying and selling public, we are petitioning the U.S. Court of Appeals for the D.C. Circuit to review the April 5, 2024 decision, uphold the district court’s determination and hold the Department of Justice to the terms of our 2020 agreement,” an NAR spokesperson told RISMedia, referring to a previous agreement between NAR and the DOJ to close the investigation in exchange for the former changing certain rules.
Two of the three judges ruled that this letter did not promise a permanent end to this investigation, allowing the DOJ to proceed.
NAR notes in its appeal that many of the DOJ’s preferred changes have been made (with implementation due by August 17, 2024) following the association’s pending settlement in the Sitzer v. Burnett class-action case. However, one rule of interest to the DOJ (Clear Cooperation, wherein NAR members must list on NAR-affiliated MLSs) has not been altered.
It remains to be seen if, as part of its investigation, the DOJ will seek to intervene in NAR’s class-action commission settlement.
Parks off the hook due to Compass settlement
In a court filing today, Tennessee-based Parks Pilkerton and plaintiffs in the Gibson lawsuit (a national class-action filed by the same lawyers behind Burnett) announced the company would receive immunity from seller lawsuits based on Compass’s previously announced settlement in the litigation.
Parks had been added to the Gibson suit only recently, as plaintiffs sought to include several large independent brokerages that were excluded from the NAR settlement.
But according to the filing, Parks was already covered because it had previously been acquired by Compass, which agreed to pay $57.5 million and change practices in exchange for immunity back in March—something plaintiffs seemingly had not been aware of.
The agreement is still subject to final court approval, but the judge overseeing the case suspended all legal deadlines facing Parks in the meantime.
NAR files against lawsuit reconsideration
The Clear Cooperation rule is also at the center of an antitrust lawsuit against NAR. The Top Agent Network (TAN)—a San Francisco-based pocket listing startup—sued NAR in 2021, claiming that the rule is an anticompetitive practice.
The case was dismissed by a Federal Judge that year, but the dismissal was seemingly reversed by the Ninth Circuit Court of Appeals in summer 2023, claiming TAN’s case is sufficiently similar to a settled suit filed by PLS.com.
TAN has filed an appeal in California court urging their case to move forward; the next hearing is scheduled for July 18, 2024. On May 23, 2024, NAR defense attorneys filed a brief asking that the court reject TAN’s appeal. NAR’s brief argued that TAN’s dismissal is legally consistent with the PLS.com settlement, as the dismissal was premised on TAN’s own business model (described as “an exclusive listing service for elite real estate agents”) being anti-competitive. PLS.com does not have an equivalent business model and thus, NAR argues, its settlement is irrelevant to the TAN case’s standing.
The judge in the case had not ruled on either motion at press time.
MLS PIN plaintiffs and defendants conferring with DOJ
The DOJ has made noise suggesting it is unsatisfied with the class-action settlement proposed by NAR, specifically citing insufficient rule changes surrounding offers of compensation.
“We believe offers of compensation should not be made anywhere, but certainly not on the MLS,” said Jessica Leal, an attorney representing the DOJ.
The DOJ previously stalled a settlement in a Massachusetts-based commission lawsuit, known as Nosalek v. MLS Property Information Network, Inc. et al. The DOJ, which sent a formal statement of interest in the case, also believes that the defendants’ (MLS PIN) rule changes did not go far enough to produce effective pro-competitive outcomes.
On May 24, 2024, lawyer Seth Klein (representing the plaintiffs in Nosalek v MLS PIN) filed a brief with Judge Patti B. Saris (the District Court Judge overseeing the case). The letter states that, “Plaintiffs will confer with MLS PIN and the Department of Justice to discuss the questions raised by the Court.” The parties will release a joint statement by June 21, 2024.
MLS PIN and plaintiffs in the case had previously aimed to respond to the DOJ on May 24, but that deadline was lifted by Saris after a status conference discussing the case. MLS PIN and the plaintiffs said they still expect to file their separate responses before June 21, and use those to advance ongoing discussions with the DOJ.
Zillow touring agreement—legal or not?
The changes underway to the real estate industry largely pertain to buyer representation. Zillow has gotten out in front of this and released a new “touring agreement” to be used by buyer agents/brokers. (Read the one page document here). The boilerplate document specifies for buyers that a broker offering touring services in-and-of-itself does come with an exclusive client relationship.
The Virginia REALTORS® association sent a message to its members on May 3, 2024, claiming that they believe Zillow’s agreement does not comply with Virginia state law.
“Please discuss your business practices AND any agreements that you are going to use with your broker and ensure that any forms you use are in compliance with Virginia law,” the news alert said.
