According to the second amended complaint, NAR had policies at the time that discriminated against sellers who “used secure, password-protected Internet sites that allowed those sellers’ customers to search for and receive real estate listings online.”
The DOJ says the NAR is developing regulations for VOWs, which the task force head recommended the NAR adopt quickly because “browsers using VOWs have ‘gained market share just under the radar.'” Additionally, some brokerage executives expressed concern that VOWs can. drive down agent commissions.
According to the DOJ, these concerns led the NAR to adopt the original VOW Policy, and eventually its Revised VOW Policy, which the trade group announced after the DOJ notified the NAR of its intention to sue.
In the complaint, the DOJ says the policies “significantly change the rules governing many listing services,” and that they would allow sellers to withhold seller listings from VOW operators by giving them the right to opt out of digital advertising.
By doing so — which the DOJ says the brokers did without the sellers’ express consent — the DOJ says the traditional sellers “prevented customers of web-based competitors from using the Internet to review the same set of MLS listings that traditional sellers provide to customers” through a hard-copy book kept at the dealer’s office.
Before the VOW policies went into effect, NAR “did not allow any dealer to withhold a competitor’s customer list.” But a new opt-out feature in VOW policies has made it possible to keep or hide the list of internet-based firms.
“If implemented, this provision prevents a seller from providing online the same MLS information that brick-and-mortar sellers can provide in their offices,” according to the DOJ’s amended complaint.
The department also noted that the policy exempted Realtor.com (which still owns the RIN) from the opt-out provisions.
After nearly three years of litigation, the DOJ and NAR reached a settlement in May 2008. As a result, NAR agreed to implement yet another Modified VOW Policy. The policy went into effect in November of that year after receiving final approval from US District Court Judge Matthew F. Kennelly. In his final decision, Kennelly noted that as part of the settlement, NAR agreed not to change the policy “without obtaining the prior written consent of the United States Department of Justice or a Court order.”
Included in the amended policy is Section 19.23, which reads: “Participant shall cause any listing shown in his VOW obtained from other sources, including from another MLS or from a broker not participating in the MLS, to be separately searched on the MLS.” The policy notes that the rule is voluntary and adoption is “at the discretion of the MLS.”
A similar optional policy, last amended in May 2017, was later added to the NAR Handbook on Multiple Listing Policy. Section 18.3.11 states: “Listing received through Internet Data Exchange feeds [the successor of VOWs] from Realtor Association MLSs in which the MLS participant has participation rights must be shown separately from listings obtained from other sources.”
With these rules, NAR has reinforced a tradition of selecting but has long excluded MLS listings from listings obtained from non-MLS sources, such as for-sale-by-owner or builder listings. Additionally, based on the DOJ’s signing of the Revised VOW Policy in 2008, the department – at least for one time – was right about the law.
However, since then, the DOJ’s position has clearly changed.
Friends in the REX suit
In June 2024, the DOJ filed an amicus curiae brief with Ninth Circuit Court of Appealspresided over REX’s appeal of its antitrust lawsuit against NAR and Zillow. After losing the case in September 2023, REX filed for a new trial in November. In its petition, REX argued that it was improperly prevented from presenting evidence about the agent’s commissions to the jury. Judge Thomas Zilly, who presided over the original trial, denied REX’s request for a new trial.
At the center of the suit was Zillow’s decision to put non-MLS listings, including that of the now-defunct discount brokerage REX, on a separate section of the website. REX alleges that Zillow was engaging in false advertising by doing this.
Zillow created its own two-tab design, with one tab showing MLS listings and one showing non-MLS listings, after the listing giant became a member of NAR to gain access to the Internet Data Exchange (IDX) feed to display listings of the MLS its location. Some of the MLSs that Zillow was a part of had a no-match rule, so the company was forced to comply.
In its amicus brief, the DOJ argued that the district court relied on the discretionary nature of the statute — and the NAR’s lack of enforcement mechanism for MLSs to enforce the statute — to reach the conclusion that there was no concerted action by Zillow, the NAR or the MLSs.
“But the court failed to consider other factors – such as the NAR’s role in promulgating the law to desegregate listings and prohibiting the conversion of MLSs that adopted the law, the effect of the MLS adopting the law to make it binding on its members, and the role of the MLS in enforcing the law on its members – that “suggests that NAR propose a similar plan to MLSs and their members to declassify and demote non-MLS listings,” the document said.
“If left uncorrected, the district court’s imperfect approach creates the danger that organizations like NAR could avoid antitrust scrutiny in many anti-competitive practices by using discretionary rules.”
Despite its belief in the possibility of collective action, the DOJ says Zillow was not a party to the law in its formation. But the DOJ also said Zillow “allegedly joined this common scheme when it became a member of the NAR and its affiliated MLSs and complied with the non-collusion law despite its objections.”
The DOJ concluded its sentence by recommending that the Ninth Circuit reverse Zilly’s decision and reopen the case for review at the district court level. The appeals court has yet to rule on REX’s appeal.
In addition to filing an amicus brief in REX’s motion for a new trial, multiple sources have confirmed that HousingWire that the DOJ has sent Civil Investigative Demands (CIDs) to at least 10 MLSs across the country as it looks at the optional non-joinder rule.
In an email sent to members in mid-August and obtained by HousingWire, NAR said it is “cooperating with the DOJ on data consolidation discussions and other housing industry practices.”
“As the President [Kevin] Sears recently shared, NAR leadership met with leadership at the DOJ Antitrust Division in July, including Assistant Attorney General for Antitrust Jonathan Kanter,” the letter said.
NAR could not elaborate on the contents of the letter, which was written by Katie Johnson, the group’s former chief legal officer, but confirmed the email’s authenticity.
From silence to opposition
The DOJ’s attention to this optional rule has put it in the spotlight and made it a point of contention for some. Klein of the San Diego MLS is one of the few people who will be outspoken about his support for the no-huddle rule.
“There is a long history of how this happened. This wasn’t some sly thing that people did – this made perfect business sense,” Klein said. “If you’re a content provider, these brokerages are MLS, you want to protect the content you provide and you want to use that content to your advantage. Today, in one way or another, online content providers are often compensated in some way, and one way to do that is to protect the content they provide.”
On the other hand, Zillow, as it has stated many times throughout its legal battle with REX, does not support discretionary law. Since 2021, Zillow has submitted four petitions to NAR asking the trade group to remove the rule.
“Basically, it comes down to the fact that we believe in real estate planning,” said Errol Samuelson, Zillow’s chief industry development officer. “We think buyers should have access to all their housing options in one place and that they should be able to see their options side by side.”
In a 2023 consumer survey, Zillow found that 91% of buyers believe they should be able to see all their real estate options free and without barriers in one place. Samuelson said he believes good agents and sellers feel the same way.
“When you’re working with a buyer, you want to make sure you know all of their options,” Samuelson said. “If a buyer comes to you with a suitable listing and asks why you didn’t show it, that can destroy trust and your relationship.”
But Art Carter, CEO of California Regional MLSit doesn’t care about the law you choose. CRMLS is one of the companies that has never used it.
“It’s never been a touch point for our consumer community,” Carter said. “I have never received a call from someone asking me why we don’t have it. It’s just something our board of directors, for whatever reason, when the policy was introduced, decided not to implement it.”
Carter said CRMLS reopened the discussion on the law with membership about five years ago. The board ultimately felt that it was not something the members wanted CRMLS to change.
“I don’t understand why it’s so hot right now,” Carter said.
As controversy over this rule has increased in recent months, some MLSs have decided to drop this optional rule. Bright MLS was one of the companies that made this change.
“It may have been helpful in the early days of the Internet when there were concerns about how data was accessed and displayed,” said Rene Galicia, senior vice president of client advocacy at Bright MLS. “These rules came when IDX was just starting 20 years ago and no one knew how the listing would evolve.”
Although Bright MLS declined to elaborate on the decision to remove the rule, Galicia noted that Bright regularly updates the rules based on subscriber feedback.
In conflictREcolorado – which was the first MLS to repeal the rule – had a lot to say about its decision. In August 2022, when the law was repealed, it said the decision was based on the changing role of the consumer in the real estate transaction due to advanced technology.
“With IDX websites, you can now find more listings – and notice properties that are not currently on the MLS,” wrote REcolorado in a blog post cited by. Inman News. “You can also grow your business by marketing your services to sellers who are not on the MLS.”
Looking ahead, it is unclear what the DOJ’s next steps will be regarding the non-interference rule. The DOJ’s antitrust division declined to comment on the matter and its recent actions regarding it. But regardless of what the future holds, the DOJ has certainly succeeded in sparking a conversation.
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