An order issued by Judge Thomas S. Zelle Last Friday, for now, Real Estate Exchange Inc. (REX) of a Lanham Law False Advertising counter-suit brought against her by the National Association of Realtors (NAR). The view was that the NAR did not show that the damage to its alleged reputation was significant and specific as required to establish constitutional standing.
REX filed an antitrust lawsuit against NAR, a trade association, and Zillow Inc. The defendant, which operates an online real estate marketplace also known as an “aggregator site,” last March. REX is a licensed real estate broker whose “innovative model uses technology to enhance efficiency and significantly reduce brokerage commissions, while offering a full range of personalized services to clients,” according to the amended complaint.
The plaintiff’s progressive model allegedly drove broker commissions down and saved millions of consumers, giving NAR and members of traditional real estate agents reason to consider it a threat, even though the two do not directly compete. As for anti-competitive behaviour, the complaint accuses Zillow, who has been the source of information on all homes for sale, of joining the NAR “cartel” and thus agreeing to “separation, concealment and reduction of non-competitive behavior.”[Multiple Listing Service] Lists’ like REX.
Judge Zilly has allowed most of the lawsuits, including the REX federal antitrust lawsuits against Zillow and NAR, to proceed in a series of disapproval opinions, with the most recent, on NAR, issued last December.
NAR filed a counterclaim against REX alleging that it had made false statements about REX’s own services and products on its website, and asserted that “NAR has enacted anticompetitive policies that artificially inflate fees in real estate transactions.” REX moved to reject, arguing that NAR had failed to meet the requirements of Article III of the associative level and that NAR had not demonstrated harm.
In last week’s opinion, Judge Zilly largely agreed. Regarding the constitutional position, the court wrote: “The allegations in the counterclaim to NAR are insufficient to establish that the damage to reputation it is alleged to have suffered is concrete and limited.” The resolution said NAR’s allegations were categorical and devoid of facts explaining how REX’s alleged false advertisements frustrated its mission, diverted resources, or damaged NAR’s reputation and goodwill among its members.
The court also addressed REX’s alternative arguments, including that under Rule 12(b)(6), NAR failed to state a false declaration claim under Lanham because it lacked legal standing. Once again, Judge Zilly found the NAR allegations unsatisfactory because the trade association had failed to claim the injury, and specifically that “any consumers or intermediaries had withheld trade from NAR itself.”
NAR has received permission to amend the counterclaim with a deadline of June 6. REX is represented by Foster Garvey PC, McCarty Law PLLC, and Lehotsky Keller LLP. Zillow is represented by Orrick, Herrington & Sutcliffe LLP, and NAR by Quinn Emanuel Urquhart & Sullivan LLP.
