Day 1 of Zillow-MRED hearing: Collusion or contradiction?
Execs from Zillow, Compass and MRED testified in Chicago on Wednesday in a hearing that could have implications for how listing rules can be enforced.
Leaders from Zillow, Midwest Real Estate Data (MRED) and Compass took to the courtroom on Wednesday for the first day of a two-day preliminary injunction hearing to determine whether Zillow can retain access to MRED's listing data feed.
Who took the stand: Individuals from both sides of the legal debate were called to the stand on July 1 and cross-examined by the opposing party's lawyers.
Testifying for Zillow were Chief Industry Development Officer Errol Samuelson and Chief Financial Officer Jeremy Hofmann.
On the Compass/MRED front, MRED Managing Director and CTO Chris Haran and Compass Regional Vice President Fran Broude — also an MRED board member — testified.
Ron McColly, a broker with the Indiana- and Illinois-based McColly Real Estate, was initially slated to serve as an expert witness for MRED at the hearing, but the MLS declined to call him. Zillow, however, opted to use portions of McColly's deposition when presenting its arguments since they did not serve Compass, a Zillow spokesperson told Real Estate News.
In his pre-recorded deposition, McColly said that brokers who had to move from Zillow to another platform when MRED temporarily cut the portal's data feed likely incurred additional costs as a result, although he did not have any research to support that claim. He also disputed the notion that maximum exposure was the best option for sellers, in part because in the small town where he operates, word of mouth is the primary marketing vehicle.
Zillow's takeaways: During Wednesday's testimony, Zillow reiterated its argument that Compass colluded with MRED to coerce the portal to abandon its listing access standards in order to maintain access to the MLS's data feed.
In a blog post published after the day in court wrapped, Zillow argued that internal documents that surfaced in court proved telling.
The portal pointed to Compass emails following the announcement about its partnership with MRED that allegedly revealed executives "scrambling" over logistics to subsidize MRED membership for up to 100,000 Compass agents, as the firm pledged.
Zillow also claimed discovery documents showed that the MLS and brokerage attempted to get previously banned listings from Florida, Georgia and California back onto Zillow by putting them into MRED's system, and asking MRED "to follow up directly with Zillow when they didn't."
Zillow further alleged that Compass was preparing an ad campaign to promote listings "not found on Zillow" even before MRED had threatened to cut Zillow's data feed.
Compass's takeaways: Compass, meanwhile, said Samuelson's testimony undercut the portal's message of fighting for consumer transparency, arguing that Zillow is simply trying to protect its business interests.
"Zillow says that consumers deserve to see the full market," a Compass spokesperson said. "But it is both banning active, publicly available MLS listings from its platform and deceiving consumers by labeling those listings as not for sale."
The brokerage argued that Zillow's own partnership with Opendoor, which allows homes to be sold directly to Opendoor through Zillow before being exposed to the market at large, contradicts its claims of transparency.
Compass likewise asserted that Zillow Preview listings would have violated Zillow's original listing access standards — but the portal changed its rules so the product would comply.
MRED's stance: MRED said the lawsuit was mischaracterized as an "antitrust conspiracy" when it's really about Zillow's breach of contract with MRED.
The MLS said its rules are intended to preserve "data integrity" and "the viability" of MLSs as the industry shifts.
"Zillow's purported harm is entirely self-inflicted and can be remedied immediately by simply complying with the same clear and longstanding license agreement terms that Zillow has complied with for years," an MRED spokesperson said in an email.
Who's testifying today: Set to appear in court on July 2 are Compass International Holdings CEO Robert Reffkin, MRED CEO Rebecca Jensen, antitrust expert witness Lawrence Wu and expert witness Debra Aron.
A ruling by Judge John Tharp, Jr. on the preliminary injunction is not expected until after the parties' post-hearing briefs and responses are filed later this month.