DOJ debates ‘commingling’ with Zillow and NAR in REX case
The Justice Department is concerned the case, which Zillow won in 2023, could set a bad precedent and allow other organizations to circumvent antitrust laws.
Key points:
- After losing its lawsuit involving NAR’s commingling rule and alleged deceptive practices, low-fee brokerage REX took its case to the Ninth Circuit court.
- On Feb. 13, a panel of judges heard arguments from the DOJ, which suggested that the “optional” commingling rule was, in practice, effectively mandatory for Zillow.
- Attorneys for NAR and Zillow defended the U.S. District Court decision, saying REX provided no evidence of an agreement or conspiracy to harm REX.
Citing concerns that future trade associations could circumvent antitrust rules, the Department of Justice asked a U.S. Court of Appeals to set aside a lower court ruling related to NAR's "no-commingling" policy — a rule prohibiting real estate sites that use IDX feeds from displaying MLS listings alongside non-MLS listings.
Speaking to a panel of Ninth Circuit judges in Honolulu on Feb. 13, DOJ attorney Alice Wang argued in favor of vacating a 2023 jury decision involving Zillow, the defendant in the case, and the low-fee brokerage Real Estate Exchange (REX). NAR was originally a defendant as well but was dropped in 2023.
Why the DOJ continues to weigh in on the REX case
Wang said the DOJ was attending the hearing to protect the "legal framework for concerted action" — meaning the set of rules that ensure coordinated actions between individuals or organizations don't violate antitrust or other laws. She suggested that the 2023 decision — which was based on the premise that NAR's commingling rule is optional — didn't consider alternate interpretations of the rule.
Those "other viable theories," Wang said, propose that the adoption of an optional rule is, in itself, a concerted action, and it can be an invitation for others to join in a common plan — potentially veering into antitrust territory.
This isn't the first time the DOJ has weighed in on the case. In June 2024, the agency filed an amicus brief with the Ninth Circuit court arguing that the judge took an "incomplete approach that creates risk that associations like NAR could evade antitrust scrutiny with optional rules."
Evidence of a 'scheme' to harm REX?
Attorneys for REX, NAR and Zillow also spoke at the panel this week, reiterating previous positions about the case and answering several clarifying questions.
The judges zeroed in on the optional aspect of the commingling rule, noting that only 71% of MLSs abide by it. Representing REX, Ursula Ungaro argued that while the rule was optional for MLSs, it was essentially mandatory for Zillow because the portal would otherwise lose access to the IDX feed that provides it with MLS listings.
Ungaro also said there was direct evidence that NAR and Zillow had an agreement in place to separate the listings: "The problem is that Zillow combined with NAR in an anti-competitive scheme."
NAR and Zillow had 'no agreement'
Christopher Michel, representing NAR, countered that the commingling rule is indeed optional and "not an agreement with anyone to do anything." It was individual MLS policies, not NAR, that required Zillow to separate out non-MLS listings, he argued.
If there was harm to REX, "it was Zillow's independent choice on how to design its browser that resulted in that harm, not any agreement between Zillow and NAR," Michel said.
Steven Engel, representing Zillow, noted that the search portal chose to display REX's listings for free, adding that REX hasn't established any evidence of an agreement with NAR to demote or cancel the brokerage's listings.
"There was no contractual obligation to carry REX's listing," Engel said. "The district court found that there was simply no agreement because Zillow bent over backwards. Frankly, its principal goal was to help consumers, but it also wanted to keep all the listings on its website. So there was no conspiracy to boycott REX, no effort to harm REX."
How we got here
REX sued Zillow in 2021, claiming that the search portal used deceptive practices to conceal non-MLS listings by relegating them to a separate search results tab, significantly reducing traffic to those listings and creating an unreasonable restraint of trade.
Zillow said it made the change to comply with NAR's "no-commingling" policy, and in response to the DOJ's amicus brief last year, reiterated that the company has "publicly advocated against this rule for several years because we believe all listing data should be displayed in one place."
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. U.S. District Court Judge Thomas Zilly denied that request in January 2024.