MRED scores ‘important victory’ in legal battle with Zillow
A judge has denied the portal’s request for a preliminary injunction, but “the case continues,” Zillow said. “Today’s ruling is not the final word.”
Midwest Real Estate Data (MRED) and Compass notched a win in their legal battle with Zillow on Tuesday when the judge overseeing the case denied the home search giant's request for a preliminary injunction and dissolved a temporary restraining order granted earlier in the case.
The Sept. 15 ruling "marks an important victory" for the Chicago-area MLS and "for MLSs, brokers, and the cooperative marketplace nationwide," MRED said in a blog post.
The case has been stayed pending private arbitration.
The latest: Activity in the case, which Zillow filed four months ago, had been quiet since the three parties involved made their final arguments for and against a preliminary injunction in early July.
But on Tuesday, U.S. District Judge John J. Tharp said the portal "has not made the required strong showing that it is likely to succeed" on its claims that MRED and Compass are engaging in activities that violate the Sherman Antitrust Act.
Tharp thus denied the preliminary injunction request filed by the portal just days after it sued the MLS in May. The temporary restraining order granted later that month was also dissolved.
What the ruling said: While the court "does not discount MRED's substantial practical importance in the Chicagoland real-estate ecosystem," Zillow "has not made a sufficiently strong showing that MRED possesses monopoly power in a cognizable relevant market," Tharp wrote. Addressing Zillow's claim of Sherman Act violations, the judge added that the portal had also "not made the strong showing necessary to establish antitrust injury."
Moreover, the ruling stated, the monopolization claim "independently fails" because although Zillow's "anticipated losses of listing, traffic, users and competitive positions may be substantial," the portal "has not sufficiently connected those injuries to a reduction in competition" in Chicagoland.
To meet the standard for a preliminary injunction, at least one claim must have a likely chance of success.
Tharp went on to note that Zillow hasn't ever enforced its Listing Access Standards in the Chicago region and thus "has presented no evidence of any 'downward spiral'" in its business as a result of MRED's actions.
"Zillow has shown both the inadequacy of legal remedies and a likelihood of irreparable harm," Tharp's ruling concluded.
'The case continues': "Today's ruling is not the final word," Zillow said in a statement. "And it hasn't changed our belief that MRED and Compass coordinated to undermine consumers, or our commitment to proving their misconduct. Every home for sale should be visible to every buyer, with access to homeownership not dependent on knowing the right people. The case continues."
In an update on its Front Porch blog, the company added that it is "disappointed" with Tuesday's ruling, which it characterized as a temporary "step back for Chicago home buyers and sellers."
"Buyers, sellers and their agents depend on a fair, transparent housing market to find their dream home and sell for the best price. MRED and Compass are jeopardizing that to line their own pockets," the post said.
'A victory for fairness': MRED, meanwhile, said it "stood its ground to protect a fundamental MLS principle: brokerages receiving other brokerages' listing data may use it for their consumer sites, provided they follow the relevant licensing requirements and display all listings approved for distribution."
Tuesday's ruling "reinforces the ability of MLSs to consistently enforce their rules and data licensing agreements," the MLS's blog post added. "This is a victory for fairness, transparency and broker cooperation — principles MRED will continue defending every day."
A Compass International Holdings spokesperson also described the ruling as "a clear victory not just for Compass International Holdings and MRED, but for consumers, real estate professionals, brokerages, and everyone in the real estate industry that wants to compete freely on behalf of their clients."
"This decision affirms that choice belongs to the homeowner, and any effort to punish consumers for exercising that choice is anti‑competitive and harmful to consumers," the Compass spokesperson added. "Real estate professionals have a fiduciary duty to serve their clients; Zillow does not."
How we got here: Zillow filed its lawsuit against MRED and Compass on May 12, just weeks after the MLS opened its services to brokerages across the U.S. with Compass as its first partner. The portal's lawsuit accused the brokerage giant and MLS of conspiring to hide listings from consumers and "to punish Zillow for not going along with it."
After MRED temporarily cut Zillow's listing feeds, the portal requested a temporary restraining order to reinstate access, which a judge granted in part on May 22. The TRO was extended in early June. A month later, Zillow presented its arguments for why it believed a preliminary injunction should be granted, with MRED and Compass arguing against the request.
This story has been updated with additional information, background and a statement from a Compass International Holdings spokesperson.