Appeals court rules in favor of Zillow, NAR in REX case
The Ninth Circuit denied the brokerage's request for a new trial, agreeing with an earlier ruling that NAR's no-commingling rule was not anticompetitive.
Zillow and the National Association of Realtors scored another court victory against REX, a low-fee brokerage that filed a lawsuit four years ago over what it called deceptive practices to conceal non-MLS listings on Zillow's website.
On Mar. 3, the Ninth Circuit Court of Appeals affirmed a U.S. District Court ruling against Real Estate Exchange, more commonly known as REX. The appeals court heard arguments from REX, Zillow, NAR and the U.S. Department of Justice in Honolulu on Feb. 13.
REX argued that NAR's no-commingling rule — which says MLS listings must be displayed separately from non-MLS listings — was an anticompetitive scheme. REX said it was harmed because its non-MLS listings were relegated to a separate search results tab on Zillow, significantly reducing traffic to those listings.
What the Ninth Circuit said: The appeals court agreed with the district court that the no-commingling rule did not represent a concerted effort by separate decisionmakers to hurt REX. Each MLS chose whether to adopt the rule, the court said, noting that nearly a third did not — evidence that it was optional.
The justices also found that Zillow had independently redesigned its website to comply with the rule, noting that REX did not provide evidence that NAR agreed or was involved in the website redesign. For those reasons, the appeals court ruled that the district court did not err in instructing the jury about Zillow's business practice, something REX alleged was wrong and warranted a new trial.
In a statement following the ruling, NAR said the appeals court emphasized what the association has said from the beginning: The no-commingling rule never constituted an antitrust violation.
"The rule is optional, leaving MLSs the choice whether to adopt it, and, in fact, 29% chose not to. We are pleased to put this meritless lawsuit behind us and maintain our focus on delivering value for our membership," NAR said in a statement.
Zillow offered a similar response: "Zillow was founded on increasing transparency in real estate, and we have a long history of advocating for consumers through our products and services. We're pleased with the Ninth Circuit having affirmed what we've said all along — REX's claims have been without merit since the start of this matter."
Real Estate News has also reached out to REX for comment.
How we got here: REX sued Zillow in 2021, claiming that the search portal used deceptive practices to conceal non-MLS listings in search results. Starting in Jan. 2021, Zillow moved non-MLS listings to a separate search results tab on its website, a change that significantly reduced traffic to those listings, which REX claimed was an unreasonable restraint of trade.
Zillow said it made the change to comply with NAR's comingling policy that prevents real estate sites which use IDX feeds from displaying non-MLS listings alongside MLS listings.
The case went to trial in September 2023, and a Seattle jury disagreed with REX's allegations, prompting the brokerage to request a new trial.
In January 2024, U.S. District Court Judge Thomas Zilly ruled on the motion and denied that request.
NAR was originally a defendant in the case but was dropped after the judge ruled that REX's antitrust claim was without merit.
DOJ involvement: The case captured the interest of the U.S. Department of Justice, which took the position that the REX case should be looked at again. During the Feb. 13 hearing, DOJ attorney Alice Wang argued that "other viable theories" related to potential antitrust violations were not considered when the U.S. District court made its ruling.
The appeals court did not address the DOJ's argument directly, but ruled that REX did not provide direct or circumstantial evidence of concerted action.