REX petitions Supreme Court to hear its antitrust suit

REX Real Estate is petitioning the U.S. Supreme Court to review a lower court’s summary judgment ruling that the National Association of Realtors’ (NAR) and Zillow did not break antitrust laws when NAR promulgated its no-commingling rule and Zillow redesigned its website in order to follow the rule. REX filed its writ of certiorari with the Supreme Court last Monday. The District Court’s ruling was affirmed by the Ninth Circuit Court of Appeals in a ruling in early March. In April, the Ninth Circuit  denied REX’s request for a rehearing en banc, however one judge did believe a review was warranted. REX highlights this in its petition. According to the petition, while the Ninth and Tenth Circuits have deemed optional rules, which the no-commingling rule was, as non-conspiracies due to their optional nature, other circuits, including the First, Third, and Fifth, as well as guidance form the Department of Justice (DOJ) have ruled that optional rules can constitute a conspiracy. In addition to this, REX claims that NAR, in its rule-making capacity, is itself a conspiracy because competitors are coming together to promulgate rules, which counts as concerted action, violating antitrust laws. REX also maintains that, despite Zillow’s pushback against the no-commingling rule, by changing its website design to comply it was actively participating in the alleged conspiracy. In the petition, REX maintains that the no-commingling rule promulgated by the alleged conspiracy harmed competition and caused REX to go out of business, and that it also led to inflated agent commissions. Additionally, REX argues that allowing optional rules to escape scrutiny sets a dangerous precedent. “If uncorrected, the district court’s incomplete approach creates a risk that associations like NAR could evade antitrust scrutiny for many anticompetitive schemes by using optional rules,” the writ states. “Vacatur and remand are appropriate for the district court to fully consider whether there is adequate evidence of concerted action under the correct legal framework.” REX first indicated a desire to petition the Supreme Court to hear its appeal this summer, when it was granted an extension of time to file its petition. REX’s legal saga began in March 2021, two months after Zillow began moving homes not listed on the MLS out of initial user search results and onto a second tab, in adherence with NAR’s optional no-commingling rule. Zillow has maintained that it does not support the rule, but that it was forced to adopt it to obtain IDX feeds from MLSs that had. This precipitated the two-tab design for MLS listings and “other listings.” In May 2022, REX ceased its brokerage operations. A little over a year later, each of the three parties involved in the case filed motions for summary judgment on either the entirety of the lawsuit or portions of it. Judge Thomas Zilly, who oversaw the case, dismissed REX’s antitrust claims against NAR and Zillow. But he allowed the discount brokerage’s false advertising claim under the Lanham Act — along with a claim for unfair or deceptive trade practices under the state of Washington’s Consumer Protection Act — to stand. At a trial in September 2023, the court ruled in favor of Zillow on the remaining charges. Roughly six weeks later, REX filed its motion for a new trial. In the request, REX argued that it was unfairly prevented from presenting testimony about agent commissions to the jury. A Seattle jury ultimately found that REX did not prove Zillow used false advertising in its decision to put non-MLS listings on a different section of its website. It also found that Zillow proved its defense on REX’s second claim that Zillow acted deceptively and unfairly. REX filed its appeal in February 2024 after Zilly denied its motion for a new trial. In June, NAR repealed its optional no-commingling rule. At the time, NAR said the decision was based on MLS community feedback about the rule’s declining usage and relevance in local marketplaces. In an emailed statement, a NAR spokesperson wrote that “local MLSs play a key role in fostering transparent, competitive, and fair housing markets by delivering consumers the most accurate and up-to-date information on home listings.” “As the district court and the Ninth Circuit Court of Appeals both affirmed, NAR’s optional no-commingling rule was not an antitrust violation,” the spokesperson wrote. “While the optional rule is no longer in effect, NAR remains committed to protecting the benefits MLSs provide agents, consumers, and the industry.” Zillow has not yet returned HousingWire’s request for comment.