Real Estate Exchange (Rex), a tech-focused real estate broker headquartered in Austin, Texas, scored a partial victory in its lawsuit against the National Association of Realtors (NAR) and Seattle-based Zillow Group Inc.
U.S. District Judge Thomas Zilly on Monday denied NAR's motion to dismiss antitrust claims from Rex. Rex's claims of false advertising and defamation, however, were dismissed.
"REX is the only real estate industry player willing to fight for consumers in the court of law and public opinion," Rex CEO Jack Ryan said in a news release. "The ruling is another important step towards reining in the anti-competitive policies that have come to define big real estate."
Rex's lawsuit arose from its listings moving from the Zillow website's "agent listings" tab to the harder-to-find "other listings" tab. The suit, filed in the Western District of Washington court, lists Zillow (Nasdaq: ZG) and NAR as defendants.
Rex takes issue with two NAR rules. The first rule, which is technically optional, says listings obtained from a multiple listings services' (MLS) internet data exchange should be separate from other listings. When Zillow redesigned its website in January, it began complying with this NAR rule, and Rex said its listings moved to the "other listings" tab, despite using licensed real estate agents, simply because the company isn't a member of NAR or any MLS.
The other rule, the buyer's agent commission rule, is mandatory and requires a seller's agent to include a fixed commission for the buyer's agent in any MLS listing. According to Rex, Zillow adopting this rule has led to high real estate commissions in the U.S.
In September, Zilly denied Zillow's motion to dismiss Rex's claims against Zillow. Zilly also denied NAR's motion to dismiss antitrust claims but did dismiss the false advertising claims. On Sep. 30, however, Rex filed an amended complaint against NAR that still included the antitrust and false advertising claims while adding a defamation claim. For the false advertising and defamation claims, Rex said Zillow acted as NAR's agent, but the court remained unconvinced.
"(Rex) has failed to plead any factual allegations and relies on legal conclusions to support its claim that Zillow acted as NAR's agent when making allegedly false statements on its websites," the court order read.
In a news release, Rex, which was founded in 2016, said its legal battle against NAR and Zillow will continue into fact discovery, or the legal process where the sides exchange information and evidence ahead of a trial.
