Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 1 of 10
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`REX - REAL ESTATE EXCHANGE,
`INC.,
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`Plaintiff,
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`v.
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`ZILLOW, INC.; ZILLOW GROUP,
`INC.; ZILLOW HOMES, INC.;
`ZILLOW LISTING SERVICES,
`INC.; TRULIA, LLC; and THE
`NATIONAL ASSOCIATION OF
`REALTORS,
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`Defendants.
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`C21-312 TSZ
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`ORDER
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`THIS MATTER comes before the Court on a motion to dismiss, docket no. 101,
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`Plaintiff’s amended complaint filed by defendant the National Association of
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`REALTORS® (“NAR”). Having reviewed all papers filed in support of, and in
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`opposition to, the motion, the Court enters the following Order.
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`ORDER - 1
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`

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`Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 2 of 10
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`Background
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`On September 2, 2021, the Court entered an Order,1 docket no. 98, denying in part
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`and granting in part NAR’s motion under Federal Rule of Civil Procedure 12(b)(6) to
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`dismiss Plaintiff’s claims, docket no. 84. The Court denied NAR’s motion as to
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`Plaintiff’s antitrust claims brought under Section 1 of the Sherman Act, 15 U.S.C. § 1,
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`and the Washington Consumer Protection Act (“CPA”), RCW 19.86.030. The Court
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`granted NAR’s motion as to Plaintiff’s claims for false advertising or deceptive acts
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`under the Lanham Act, 15 U.S.C. § 1125, and the CPA, RCW 19.86.020, and dismissed
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`the claims without prejudice and with leave to amend.2
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`On September 30, 2021, Plaintiff filed an amended complaint, docket no. 99. In
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`its amended complaint, Plaintiff maintains its claims against NAR for alleged violations
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`of Section 1 of the Sherman Act and the CPA, RCW 19.86.030 (Counts I & VI), and
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`Section 1125 of the Lanham Act and the CPA, RCW 19.86.020 (Counts III & V).
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`Am. Compl. at ¶¶ 131–41, 153–62, 179–88 & 189–201 (docket no. 99). Plaintiff also
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`brings a new claim against NAR, alleging defamation in violation of Washington law
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`(Count VII). Id. at ¶¶ 202–216. Plaintiff relies on an agency theory to establish NAR’s
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`liability, and alleges that Zillow acted as NAR’s agent when Zillow designed its website
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`1 The relevant background of this action is set forth in the Court’s Order, docket no. 98.
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`2 The Court concluded that Plaintiff failed to state a Lanham Act or CPA claim against NAR for false
`advertising or deceptive acts because Plaintiff’s initial complaint relied on conclusory allegations that did
`not plausibly allege that NAR had any involvement in designing or encouraging Zillow’s allegedly
`misleading website displays.
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`ORDER - 2
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`

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`Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 3 of 10
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`displays. Id. at ¶¶ 156, 184 & 207. NAR requests that the Court dismiss all of Plaintiff’s
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`claims.
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`Discussion
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`1.
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`Article III Standing
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`The Court previously concluded that Plaintiff has standing to bring its claims
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`against NAR. Order at 7–8 (docket no. 98). NAR takes a second bite at the apple, and
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`argues that Plaintiff’s amended complaint confirms that NAR’s actions did not cause
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`Plaintiff’s alleged injuries. NAR argues that it did not cause Plaintiff’s injuries because
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`Plaintiff alleges that some, but not all, NAR-affiliated multiple listing services (“MLSs”)
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`reviewed, approved of, or required Zillow to implement its new displays. See Am.
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`Compl. at ¶¶ 83–85. Because Plaintiff’s amended complaint suggests that some NAR-
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`affiliated MLSs did not require Zillow to change its websites, NAR contends that its rules
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`cannot have caused Plaintiff’s injuries. As before, NAR ignores Plaintiff’s allegations
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`that NAR is a direct participant in the challenged conduct. Plaintiff challenges the “rules
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`written by NAR and enforced by its member MLSs.” Id. at ¶ 7. Plaintiff’s amended
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`complaint continues to allege that Zillow changed its websites as “a result of [Zillow]
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`joining the MLS.” Id. at ¶ 105. Plaintiff also alleges that a Zillow representative stated
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`that, “[i]n general these changes are for us to comply with MLS rules.” Id. The Court
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`concludes that Plaintiff’s alleged injuries are fairly traceable to NAR’s conduct. The
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`amended complaint plausibly alleges that Zillow changed its websites because of NAR’s
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`rules.
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`ORDER - 3
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`Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 4 of 10
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`2.
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`Rule 12(b)(6) Standard
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`Although a complaint challenged by a Rule 12(b)(6) motion to dismiss need not
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`provide detailed factual allegations, it must offer “more than labels and conclusions” and
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`contain more than a “formulaic recitation of the elements of a cause of action.” Bell Atl.
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`Corp. v. Twombly, 550 U.S. 544, 555 (2007). The complaint must indicate more than
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`mere speculation of a right to relief. Id. When a complaint fails to adequately state a
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`claim, such deficiency should be “exposed at the point of minimum expenditure of time
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`and money by the parties and the court.” Id. at 558. A complaint may be lacking for one
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`of two reasons: (i) absence of a cognizable legal theory, or (ii) insufficient facts under a
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`cognizable legal claim. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th
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`Cir. 1984). In ruling on a motion to dismiss, the Court must assume the truth of the
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`plaintiff’s allegations and draw all reasonable inferences in the plaintiff’s favor. Usher v.
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`City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). The question for the Court is
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`whether the facts in the complaint sufficiently state a “plausible” ground for relief.
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`Twombly, 550 U.S. at 570. If the Court considers matters outside the complaint, it must
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`convert the motion into one for summary judgment. Fed. R. Civ. P. 12(d). If the Court
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`dismisses the complaint or portions thereof, it must consider whether to grant leave to
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`amend. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000).
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`3.
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`Antitrust Violations
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`NAR moves to dismiss Plaintiff’s antirust claims. The Court previously denied
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`NAR’s motion to dismiss Plaintiff’s antitrust claims under Section 1 of the Sherman Act
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`and the CPA, RCW 19.86.030. In its amended complaint, Plaintiff does not substantively
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`ORDER - 4
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`

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`Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 5 of 10
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`amend its antitrust claims against NAR. Compare Compl. (docket no. 1) with Am.
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`Compl. (docket no. 99). NAR argues that Plaintiff’s “new factual allegations,”
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`concerning the conduct of “some” NAR-affiliated MLSs defeats Plaintiff’s antitrust
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`standing. However, Plaintiff’s allegation that only some NAR-affiliated MLSs engaged
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`in the anticompetitive application of NAR’s rules is not new. See Compl. at ¶ 161; Am.
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`Compl. at ¶ 198. Despite NAR’s contention, the amended complaint does not contain
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`new allegations that support dismissing Plaintiff’s antitrust claims.
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`Accordingly, the Court DENIES NAR’s motion to dismiss, docket no. 101, the
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`antitrust claims brought under Section 1 of the Sherman Act and the CPA,
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`RCW 19.86.030 (Counts I & VI).
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`4.
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`False Advertising or Other Deceptive Acts
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`The Court previously dismissed Plaintiff’s claims for false advertising or
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`deceptive acts brought under the Lanham Act and the CPA, RCW 19.86.020. The Court
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`concluded that Plaintiff’s initial complaint, docket no. 1, did not contain allegations
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`explaining what NAR did to design or encourage the labeling system on Zillow’s
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`websites, let alone when, where, and how NAR did it. These allegations remain absent
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`from Plaintiff’s amended complaint. To cure the identified deficiencies, Plaintiff now
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`embraces an agency theory, claiming that Zillow acted as NAR’s agent when changing its
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`websites. Am. Compl. at ¶¶ 156 & 184.
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`“In Washington, ‘[t]he two elements of an agency are mutual consent, and control
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`by the principal of the agent.’” Env’t Transp. of Nev., LLC v. Mod. Mach. Co., No. C18-
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`5445, 2020 WL 1847747, at *4 (W.D. Wash. Apr. 13, 2020) (citing Uni-Com Nw., Ltd. v.
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`ORDER - 5
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`

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`Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 6 of 10
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`Argus Publ’g Co., 47 Wn. App. 787, 796, 737 P.2d 304 (1987)). “Washington will not
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`impose liability for conduct that a defendant does not directly or actually control.” Id.
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`(citing McLean v. St. Regis Paper Co., 6 Wn. App. 727, 732, 496 P.2d 571 (1972)); see
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`also Bastida v. Nat’l Holdings Corp., C16-388, 2016 WL 4250135, at *2 (W.D. Wash.
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`Aug. 4, 2016) (dismissing plaintiff’s complaint because plaintiff failed to plead sufficient
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`facts to establish that the defendant had an agency relationship with a subsidiary
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`corporation).
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`A.
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`Pleading Standard
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`Federal Rule of Civil Procedure 9(b) provides that “in alleging fraud or mistake, a
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`party must state with particularity the circumstances constituting fraud or mistake.” Fed.
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`R. Civ. P. 9(b). Plaintiff asserts that Rule 9(b)’s heightened pleading standard does not
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`apply to its allegations that Zillow acted as NAR’s agent. However, “[t]he fact that
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`Plaintiff is proceeding under an agency theory does not absolve Plaintiff of Rule 9(b)’s
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`requirement to explain [the defendant’s] role in the false statements.” RPost Holdings,
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`Inc. v. Trustifi Corp., No. CV11-2118, 2011 WL 4802372, at *4 (C.D. Cal. Oct. 11,
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`2011); see also Morici v. Hashfast Techs. LLC, No. 14-cv-00087, 2015 WL 906005, at *4
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`(N.D. Cal. Feb. 27, 2015); Jackson v. Fischer, No. C11-2753, 2013 WL 6732872, at *17
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`(N.D. Cal. Dec. 20, 2013) (“[W]here a plaintiff alleges that a defendant is liable for fraud
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`under an agency theory, Rule 9(b) requires that the existence of the agency relationship
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`be pled with particularity.”).
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`ORDER - 6
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`Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 7 of 10
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`B.
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`NAR’s Allegations
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`Plaintiff has not pleaded an agency relationship with particularity under Rule 9(b).
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`Plaintiff alleges that, “Zillow acted as NAR’s agent in moving REX listings to ‘Other
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`Listings’ to enforce NAR’s rules, including its co-mingling and segregation rules” and
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`that, “Zillow acted as a NAR member and NAR agent to implement NAR’s co-mingling
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`and segregation rules in changing the description of REX-listed homes.” Am. Compl. at
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`¶¶ 156 & 184. The amended complaint contains no factual allegations to support the
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`existence of an agency relationship between Zillow and NAR, and Plaintiff has not
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`pleaded the elements of agency. Plaintiff fails to plead any facts alleging that NAR
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`exercised control over the design of Zillow’s labeling system. Plaintiff’s allegation that
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`Zillow joined NAR and abided by NAR’s rules is too conclusory to plausibly allege that
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`Zillow acted as NAR’s agent when designing its website displays.
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`Even under Federal Rule of Civil Procedure 8(a)(2)’s less demanding pleading
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`standard, Plaintiff’s allegations do not plausibly allege that Zillow acted as NAR’s agent.
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`Plaintiff’s allegations are nothing more than legal conclusions unsupported by any factual
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`assertions. Although the Court recognizes that Plaintiff need not provide detailed factual
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`allegations under Rule 8(a)(2), it must offer “more than labels and conclusions.” See
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`Twombly, 550 U.S. at 555. Plaintiff has failed to plead any facts alleging that NAR
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`manifested consent for Zillow to act on its behalf, and subject to its control, with respect
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`to the labeling system for Zillow’s websites.
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`The Court therefore GRANTS NAR’s motion to dismiss, docket no. 101, as to the
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`claims for false advertising or deceptive acts brought under the Lanham Act and the
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`ORDER - 7
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`Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 8 of 10
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`CPA, RCW 19.86.020 (Counts III & V), and these claims are DISMISSED with
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`prejudice.3
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`5.
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`Defamation
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`In its amended complaint, Plaintiff brings a defamation claim against NAR and
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`Zillow. Am. Compl. at ¶¶ 202–216. To state a defamation claim in Washington, a
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`plaintiff must plead four elements: (1) a false statement, (2) publication, (3) fault, and
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`(4) damages. Duc Tan v. Le, 177 Wn.2d 649, 662, 300 P.3d 356 (2013) (citing Herron v.
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`KING Broad. Co., 112 Wn.2d 762, 768, 776 P.2d 98 (1989)). The Court applies the
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`pleading standards of Rule 8(a)(2) when evaluating Plaintiff’s defamation claim. See
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`Cascade Yarns, Inc. v. Knitting Fever, Inc., No. C10-861, 2011 WL 13100746, at *2
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`(W.D. Wash. May 19, 2011) (explaining that the tort claim of defamation is not subject to
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`the heightened pleading standards of Rule 9(b)). The doctrine of vicarious liability can
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`apply to defamation claims. Restatement (Second) of Agency § 254 (Am. L. Inst. 1958).
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`Plaintiff does not allege that NAR made any false statements. Instead, Plaintiff
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`alleges that Zillow’s statements are false. See Am. Compl. at ¶¶ 203–04. Like Plaintiff’s
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`claims for false advertising or deceptive acts, Plaintiff alleges that, “Zillow acted as
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`NAR’s agent when it stated that REX homes are not listed by an agent and that REX
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`homes are ‘Other Listings.’” Id. at ¶ 207. As discussed above, Plaintiff has failed to
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`3 Leave to amend should be freely given, see Fed. R. Civ. P. 15(a)(2), and the Court previously provided
`Plaintiff leave to amend these claims. Order (docket no. 98 at 25). Like Plaintiff’s initial complaint,
`Plaintiff’s amended complaint does not contain any allegations explaining what NAR did to design or
`encourage the labeling system on Zillow’s websites. Therefore, the Court concludes that granting leave
`to further amend these claims is futile. See Lopez, 203 F.3d at 1130.
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`ORDER - 8
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`Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 9 of 10
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`plead any factual allegations and relies on legal conclusions to support its claim that
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`Zillow acted as NAR’s agent when making allegedly false statements on its websites.
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`Plaintiff’s allegation is too conclusory to plausibly allege that NAR exercised control
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`over Zillow with respect to the statements on Zillow’s websites.
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`Plaintiff also alleges that NAR, operating through its member MLSs, “directed and
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`approved” of Zillow’s false statements. Resp. (docket no. 102 at 17); see Am. Compl. at
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`¶¶ 205–06. These allegations are solely conclusions without any underlying facts to
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`support Plaintiff’s assertions. This type of pleading, without more, cannot support a
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`claim of defamation. Plaintiff’s response, docket no. 102, to NAR’s motion to dismiss
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`devotes only one page in opposition to the motion as it relates to the defamation claim.
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`Any attempt to replead this defamation claim will be subject to close scrutiny by the
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`Court as to whether the amended complaint complies with the requirements of Federal
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`Rule of Civil Procedure 11(b).4
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`The Court GRANTS NAR’s motion to dismiss, docket no. 101, the defamation
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`claim, and hereby DISMISSES, without prejudice, the defamation claim asserted against
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`NAR (Count VII).
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`4 Plaintiff’s reliance on In the Matter of National Housewares, is misplaced. See In the Matter of Nat’l
`Housewares, Inc. v. Emdeko Int’l, Inc., 90 F.T.C. 512 (1977). In that case, the Federal Trade
`Commission was making specific “findings of fact” that respondent had engaged in misleading or
`deceptive acts. Id. at *10. Similarly, Plaintiff’s reliance on Facebook, Inc. v. Power Ventures, Inc., 844
`F.3d 1058, 1069 (9th Cir. 2016), does not provide support for Plaintiff’s defamation claim. Although a
`corporate officer or director might be personally liable for torts which he or she authorizes or directs, see
`id., Plaintiff has not plausibly alleged that NAR authorized or directed Zillow to make false statements on
`its websites.
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`ORDER - 9
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`Case 2:21-cv-00312-TSZ Document 108 Filed 12/20/21 Page 10 of 10
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`Conclusion
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`For the foregoing reasons, the Court ORDERS:
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`(1)
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`NAR’s motion to dismiss, docket no. 101, is DENIED in part and
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`GRANTED in part, as follows. The motion is DENIED as to the antitrust claims brought
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`under Section 1 of the Sherman Act and the CPA, RCW 19.86.030 (Counts I & VI). The
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`motion is GRANTED as to the claims for false advertising or deceptive acts brought
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`under the Lanham Act and the CPA, RCW 19.86.020 (Counts III & V), and these claims
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`are DISMISSED with prejudice. The motion is GRANTED as to the defamation claim
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`(Count VII), and this claim is DISMISSED without prejudice and with leave to amend;
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`(2)
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`Plaintiff may file any amended complaint relating solely to the dismissed
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`defamation claim on or before January 13, 2022. Any answer or response is due on or
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`before January 27, 2021. See Fed. R. Civ. P. 15(a)(3); and
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`(3)
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`The Clerk is directed to send a copy of this Order to all counsel of record.
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`IT IS SO ORDERED.
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`Dated this 20th day of December, 2021.
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`A
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`Thomas S. Zilly
`United States District Judge
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`ORDER - 10
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