Seattle-based real estate tech company Zillow Group Inc. (Nasdaq: ZG) scored a partial victory Wednesday in a lawsuit filed against the company in 2021.
U.S. District Judge Thomas Zilly dismissed antitrust claims filed by Austin, Texas-based real estate broker Real Estate Exchange (Rex) against Zillow and the National Association of Realtors (NAR). Rex first filed the suit in March 2021 in the Western District of Washington court after Zillow redesigned its website and moved Rex's listings in the "agent listings" tab to the more-obscure "other listings" tab, which Rex alleges hurt the company's business. Rex ceased operations in May 2022.
At issue is an optional NAR rule that says listings obtained through the multiple listing services' (MLS) internet data exchange should be separate from other listings. Rex alleges its listings were moved to "other listings" despite the company using licensed real estate agents and claims Zillow and NAR conspired to enforce this optional rule, which in turn damaged Rex's business. Rex was not a member of NAR or any MLS.
Zilly wrote in the Wednesday ruling, however: "Zillow ultimately chose, without input from NAR or any MLS, to implement the two-tab display on its platforms. ... Rex has presented no evidence to support that Zillow redesigned its website in an allegedly misleading manner at NAR’s or any MLS’s direction."
The ruling also noted Zillow experimented with different ways to display non-MLS listings before settling on the "agent listings" and "other listings" displays. The National Association of Realtors is no longer a defendant in the case. Rex didn't immediately respond to a request for comment on the ruling.
Zillow is still facing certain legal challenges from Rex. Earlier this month, Zilly denied Zillow's motions for summary judgment on Rex's claims of false advertising, unfair or deceptive trade practices, and defamation. The pretrial conference is scheduled for Sept. 8.
In a Friday filing from the judge further detailing the claims of false advertising, Zilly wrote Rex has established "falsity" as a matter of law. The filing noted labeling tabs as "agent listings" and "other listings" is misleading.
"What Zillow has not done is identify evidence in the record, or describe evidence that could be adduced at trial, based on which a jury could reasonably find that the tab labels mean something other than agent listings and non-agent listings," the filing said.
Despite still facing legal challenges from Rex, a Zillow spokesperson called the dismissal of the antitrust claims a "significant victory for Zillow."
"This ruling affirms Zillow’s business decisions were squarely focused on improving the data on our website for consumers," the spokesperson said in an emailed statement to the Business Journal. "With Rex’s central argument tossed from this case, we believe the public now sees this case for what it is: Rex seized upon another company’s website design change to hide its own business failings.”
In a separate statement regarding the ongoing lawsuits, the spokesperson said Zillow looks forward to presenting its case in court and that "customers understand the two-tab system and are confident that the evidence will show that Rex’s business failed for reasons unrelated to Zillow.”
Zillow was founded in 2004. The company offers a home and rentals search tool. It also provides mortgages and a platform for partner agents called Premier Agent. Zillow generated $506 million in revenue during the second quarter, up slightly from $504 million during the second quarter of last year. Its share price fell nearly 3.2% Monday, closing at $47.87.
