While the National Association of REALTORS® (NAR) may be celebrating its latest win against the U.S. Department of Justice (DOJ), it is still unclear whether the latter will stop meddling in a mix of lawsuits that NAR is caught in the middle of.
The agency had requested a two-week extension with the U.S. Court of Appeals for the Ninth Circuit with plans to file an amicus brief in a federal lawsuit that takes issue with NAR’s Clear Cooperation Policy (CCP)—one of the policies it has been investigating.
The request came just days before a U.S. District Court judge called for the DOJ to “set aside” its reopened investigation into NAR and its MLS policy.
The DOJ is looking to intervene in a case against Top Agent Network (TAN) filed in 2020 against NAR. The lawsuit alleges that NAR and its affiliates conspired to stymie competition when it established the CCP, which requires REALTORS® to put properties on REALTOR®-controlled MLSs.
The Justice Department claimed in its January 20 filing that the extension, which would push its deadline to file its brief to February 10, would allow for sufficient time to “consider the potentially complex and important questions of federal antitrust law presented in this case.”
While TAN’s lawsuit was dismissed in 2021, the company is appealing the court’s decision, seeking a revival of its case much like the now-reborn case filed by pocket listing startup NLS.com—formerly PLS.com.
“We are confident the Ninth Circuit Court of Appeals will reverse the lower court’s order so our lawsuit can proceed on the merits,” says TAN CEO David Faudman.
TAN had initially filed its lawsuit against NAR, the California Association of REALTORS®, Inc. (CAR) and the San Francisco Association of REALTORS® (SFAR) in 2020, alleging that the association violated antitrust and unfair competition laws by adopting and implementing the CCP.
The policy requires REALTORS® to put properties on REALTOR®-controlled MLSs within one day of marketing the property to the public.
TAN touts itself as an online network built exclusively for verified top agents—admittedly, the top 10% of agents in the industry. The company provides a platform that lets its membership exchange market data and information on a more selective basis and claims that it allows a home seller to “avoid the exposure, and associated risks and hassles, that come along with listing on the MLS.”
In most cases, TAN members are REALTORS® and must abide by the CCP, a point that the company took issue with in its complaint. TAN claimed that the CCP causes “irreparable harm” to its business and reputation as members have already canceled subscriptions and expressed “fear of reprisal” for using its services.
TAN wanted its members to be able to list properties on its service without being required to list them on NAR’s service, according to a brief filed by Judge Vince Chhabria, who presided over and dismissed the case two years ago.
“TAN seems unwilling to recognize the reality of how its ‘elite’ members earned their status as ‘top agents’ in the first place,” Chhabria wrote. “If, as alleged, every single one of them has been and still is an NAR subscriber, then each has climbed their way to the top by dint of their access to an MLS.
“Now, these agents want to pull the ladder up behind them,” his brief continued. “TAN’s platform would (absent the Policy) allow these agents to use the elite status they gained as a result of NAR’s open-access rules to diminish the opportunity of others who seek to achieve similar status through use of the MLS going forward.”
Chhabria explained that if TAN’s business model succeeded, it would also have anticompetitive effects on the real estate market—given its exclusivity.
“Thus, although the policy presumably causes real estate agents to be less interested in using TAN’s service and becoming TAN members, this is not the type of harm that the antitrust laws are designed to prevent,” he wrote.
The DOJ is planning on weighing in on the case either neutrally or on TAN’s side, which TAN officials would welcome based on statements made by company officials following the DOJ’s request.
“We are not surprised that the Clear Cooperation Policy has attracted the attention of the DOJ. The policy is both anticompetitive and simply not working, yet, NAR is stubbornly refusing to acknowledge that,” said Faudman in an emailed statement sent to RISMedia.
This isn’t the first time the DOJ has intervened in a lawsuit like this. The agency recently filed an amicus brief in the NLS.com case, also filed in 2020. That lawsuit also challenged the CCP before it was dismissed by the U.S. District Court of California’s Western Division in February 2021 but was revived by a U.S. 9th Circuit Court of Appeals panel in April 2022.
NAR tried quelling the NLS’ lawsuit by petitioning the Supreme Court to intervene, but to no avail, leaving the case open and likely to head to trial.
The Justice Department has also intervened in high-profile federal lawsuits like the Burnett/Sitzer class action lawsuit and an ongoing courtroom battle between REX, Zillow and NAR. Each of those cases challenges different MLS policies that NAR has in place.
It’s unclear how the Justice Department’s plans to file an amicus brief in TAN’s lawsuit will be impacted—if at all—by a recent ruling pushing the agency to honor its settlement agreement with NAR.
The ruling, which can be appealed, sets aside the DOJ’s request for information from NAR on rules regarding buyer broker commissions and pocket listings, among others.
NAR VP of Communications Mantill Williams told RISMedia in an email that the association “cannot speculate regarding DOJ’s actions.”
However, NAR believes the district court correctly dismissed TAN’s case in August 2021.
Williams also stated that the Clear Cooperation Policy ensures brokers and agents serve the best interest of their consumers and promote equal opportunity for all and that it “advances equal access and opportunity in housing by providing listings that are widely available and accessible to all consumers.
“Without the protections from the CCP, consumers would be disadvantaged because agents could refuse to give agents or customers access to those listings,” Williams said.
The Justice Department did not immediately reply to a request for comments on this story.
