ARMLS, 5 other MLSs sue Compass over pressure campaign 

About two weeks after California Regional Multiple Listing Service (CRMLS) sued Compass over the brokerage's demand that CRMLS change its listing policies, six additional MLSs have filed a joint lawsuit against the megabrokerage with the same goal: to receive a declaration from the court that their cooperation rules are lawful and an injunction barring Compass from suing over those policies.

Banding together

Arizona Regional Multiple Listing Service, BridgeMLS, Canopy MLS, Doorify MLS, Hive MLS and REcolorado, which represent more than 120,000 real estate professionals, filed a lawsuit against Compass on Oct. 21 that asks the court in the Southern District of New York to declare that their cooperation rules comply with federal and state antitrust laws.

The lawsuit also seeks an injunction to permanently prevent Compass from suing any of the six MLSs over claims that their cooperation rules violate such laws.

A press release sent by the plaintiffs' attorneys on Thursday states that the lawsuit was initiated in response to demand letters Compass sent to MLSs in September threatening to sue any MLS that fines real estate agents who do not adhere to MLS pre-marketing and listing submission rules.

"Faced with this imminent threat, the MLS Parties file this action seeking a declaratory judgment that their respective Cooperation Rules do not violate Section 1 of the Sherman Act, 15 U.S.C. § 1, or the state antitrust laws of Arizona, California, Colorado, and North Carolina, because the Cooperation Rules are not anticompetitive and have significant procompetitive benefits," the complaint states. 

'Free riding' diminishes competition, MLS value

The complaint describes the nature of the MLS as "a cooperative collective of real estate brokers" and notes that brokerages who join the MLS agree to its rules.

Compass, however, wants to use the cooperative database for the benefit of its buyer clients while withholding its own listings, an example of "free riding" that compromises the core function of the MLS, the lawsuit alleges.

"Compass wants to have its cake and eat it too," the complaint states. The brokerage "wants to unilaterally decide what information it puts into the MLS and when it puts that information into the MLS, thereby limiting the information available to brokers and the consumers they represent."

Such a move may further Compass' business strategy to "wield its substantial inventory of for-sale properties as a weapon to drive smaller brokerages out of business," the complaint adds, "But it would diminish competition among brokerages and reduce options for the buyers and sellers of residential real estate."

A fight for transparency

Greg Skidmore, who is representing the six MLSs and co-chairs Robinson Bradshaw's Antitrust and Competition Practice Group, said the MLSs involved are "standing up for the thousands of brokers and agents who follow the rules and depend on a fair marketplace."

"Our clients believe transparency and broad access to timely and accurate listing information are fundamental to a competitive real estate industry," Skidmore continued. "These rules serve an important purpose for the consumers who buy and sell homes."

The six MLSs involved in the complaint have not immediately responded to Real Estate News' request for further comment.

Compass: MLSs aren't the law

A spokesperson for the brokerage reiterated its argument that homesellers should have the right to choose how their property is marketed without their agent facing steep fines. Compass also noted that several other MLSs across 12 states currently allow sellers to publicly market their listings without entering them into the MLS, "and we believe all MLSs should follow their lead."

"Only the law and the homeowner should tell agents how to publicly market a home, and these MLSs are neither the law nor the homeowner," the spokesperson said.

Prior to the current barrage of litigation, Rocket Companies — which partnered with Compass earlier this year — joined the brokerage's cause, co-signing an open letter in March that accused certain MLSs, including ARMLS, of "actively working against the interests" of their member agents. Both companies pledged to fight to change rules that "punish" the notion of "seller choice."

Threats, defiance and litigation

The latest legal action comes less than a week after Compass sued CRMLS over the MLS's listing rules. CRMLS was the first MLS to openly defy Compass after receiving a demand letter from the brokerage, and the California organization opted to preempt Compass' legal threats with a lawsuit of its own on Oct. 5. 

Compass' suit alleged that CRMLS enforces "competition-blocking" rules and took issue with the MLS's practice of issuing fines, and sometimes suspensions or expulsions, against real estate professionals who violate its policies. While CRMLS allows certain types of pre-marketing, it does not permit members to withhold a listing from the MLS while otherwise marketing it publicly when the seller has an exclusive listing agreement with the agent.

CRMLS has argued that its rules are "designed to support fair competition, preserve seller choice, and ensure that no brokerage gains an unfair advantage by benefiting from the cooperative while withholding its own publicly marketed listings."

A wave of MLS backlash

Other large MLSs have issued their own public responses to Compass' threats, including Austin-based Unlock MLS and New York's OneKey MLS. 

Unlock MLS CEO Emily Girard noted that Compass contradictorily had praised the MLS for its new listing statuses in the spring, only to threaten it with an antitrust lawsuit over the same policies about six months later. 

Earlier this week, OneKey argued that Compass' message of "seller choice" only "obscures" the true impact of selective marketing on the industry and consumers and allows a single brokerage to "act as a gatekeeper."