The past several days have not been good for the National Association of REALTORS® (NAR) from a legal perspective at least.
First, last Friday, April 22, 2022, Stephen R. Bough, a Federal Judge for in the Western District of Missouri, certified a lawsuit against NAR as a class action suit.The suit, known as the “Sitzer” suit as the original plaintiffs were Joshua Sitzer and Amy Winger, alleges that the defendant, the National Association of REALTORS® “created and implemented anticompetitive rules which require home sellers to pay commission to the broker representing the home buyer“. The plaintiffs in the suit also allege that the other defendants, which include Realogy Holdings Corp, Homeservices of America, Inc., Re/MAX LLC and Keller Williams Realty, Inc., “enforce those rules through anticompetitive practices.” I believe this action by the court was expected and likely did not come as a surprise to anyone but it was not good news for NAR or the other defendants. In the coming days I’ll be doing an in-depth article on this one.
Then, yesterday, the United States Court of Appeals for the 9th Circuit delivered another and this time, a likely unexpected, blow to the National Association of REALTORS® in the form of a reversal of a suit against NAR that had been dismissed previously by a lower court. The suit, PLS.com v. the National Association of REALTORS®, is another suit alleging anti-trust violations by NAR and the other defendants which are all MLS’s. The suit was brought originally by PLS.com as a result of NAR enacting its “Clear Cooperation Policy” which for all intents and purposes, dictates to agents and brokers how and when they can market their listings. I’ve written several articles specifically on this policy in the past which can be found using the following links:
- New Rule Will Require REALTORS Put All Listings In The MLS Or Not Market Them
- REALTORS® Adopt New MLS Rule Aimed To Eliminate Off-MLS Listings
- REALTORS® Association Considers New Rule Requiring All Listings Be In MLS
In the suit, PLS.com alleged “that its competitors in the real estate network services market violated antitrust laws because they conspired to take anticompetitive measures to prevent PLS from gaining a foothold in the market”. The lower court dismissed the suit stating “PLS fails to allege a plausible antitrust injury.”
Yesterday, the appellant court reversed the lower courts decision and remanded the case back to the lower court to be heard. If you read the opinion of the appellant court to me it makes it pretty clear they sided with PLS.com on most of it’s claims making the following statements within the opinion (when you see “the panel” it refers to the judges on the panel for the appellant court):
- “The panel held that PLS adequately alleged a violation of Sherman Act § 1, which prohibits a contract, combination, or conspiracy that unreasonably restrains trade.”
- “The panel held that PLS adequately alleged that the Clear Cooperation Policy was an unreasonable restraint of trade because it was a per se group boycott…”
- “The panel concluded that PLS adequately alleged antitrust injury by alleging a group boycott in which the Clear Cooperation Policy prevented PLS from gaining a foothold in the market and made it virtually impossible for new competitors to enter the market, leaving agents with fewer choices, supra-competitive prices, and lower quality products.”
- “The Clear Cooperation Policy, as PLS characterizes it, shares all the hallmarks of a group boycott:”
So now it the case goes back to the lower courts and we’ll see what decision they make on it when the time comes. Between now and then I plan to do an article where I’ll share some of my thoughts on how the likely decision on this case (which for PLS.com to win) will affect the real estate industry and consumer.
