Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 1 of 24
`
`The Honorable Thomas S. Zilly
`
`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
`
`REX – REAL ESTATE EXCHANGE, INC., a
`Delaware corporation,
`
`v.
`
`Plaintiff,
`
`No. 2:21-cv-00312-TSZ
`
`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM
`
`ZILLOW, INC., a Washington corporation;
`ZILLOW GROUP, INC., a Washington
`corporation; ZILLOW HOMES, INC., a
`Delaware corporation; ZILLOW LISTING
`SERVICES, INC., a Washington corporation;
`TRULIA, LLC, a Delaware limited liability
`company; and THE NATIONAL
`ASSOCIATION OF REALTORS, an Illinois
`trade association,
`
`Defendants.
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`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM
`Case No.: 2:21-cv-00312-TSZ
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`

`

`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 2 of 24
`
`TABLE OF CONTENTS
`
`Page
`
`I.
`
`II.
`
`INTRODUCTION ............................................................................................................ 1
`
`FACTUAL BACKGROUND ........................................................................................... 2
`
`III.
`
`ARGUMENT AND AUTHORITY .................................................................................. 5
`
`A.
`
`NAR LACKS ARTICLE III STANDING TO BRING THIS
`CLAIM. ................................................................................................................ 6
`
`1.
`
`2.
`
`NAR Does Not Allege “Injury in Fact” to Itself as an
`Organization. ............................................................................................ 6
`
`NAR’s Alleged Reputational Harm Is Not “Injury in
`Fact.” ......................................................................................................... 7
`
`B.
`
`C.
`
`NAR LACKS STATUTORY STANDING TO BRING THIS
`CLAIM UNDER THE LANHAM ACT. ............................................................. 8
`
`NAR CANNOT USE THE LANHAM ACT TO CHILL REX’S
`CONSTITUTIONAL RIGHT TO CHALLENGE CONDUCT IT
`BELIEVES HARMS CONSUMERS. ................................................................ 11
`
`1.
`
`2.
`
`3.
`
`REX’s Opinions Are Not Statements of Fact. ........................................ 11
`
`REX’s Statements in and to the Media Are Not
`Commercial Speech and Are Protected by the First
`Amendment. ............................................................................................ 14
`
`The Noerr-Pennington Doctrine Protects REX’s First
`Amendment Right to Petition the Government for Relief
`from NAR’s Anticompetitive Conduct. .................................................. 16
`
`IV.
`
`CONCLUSION............................................................................................................... 18
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`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - i
`Case No.: 2:21-cv-00312-TSZ
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`

`

`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 3 of 24
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`TABLE OF AUTHORITIES
`
`CASES
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`Page(s)
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`Aircapital Cablevision, Inc. v. Starlink Commc’ns Grp., Inc.,
`634 F. Supp. 316, 326 (D. Kan. 1986) .................................................................................... 17
`
`AirHawk Int’l, LLC v. TheRealCraigJ, LLC,
`No. SACV1600624JVSKESX, 2017 WL 3891214 (C.D. Cal. Jan. 19, 2017) ................ 16, 17
`
`Alexander v. Falk,
`828 Fed. App’x 350 (9th Cir. 2020) ....................................................................................... 10
`
`Am. Diabetes Ass’n v. United States Dep’t of the Army,
`938 F.3d 1147 (9th Cir. 2019) .............................................................................................. 6, 7
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) .................................................................................................................. 8
`
`Ass’n of Wash. Pub. Hosp. Dists. v. Phillip Morris, Inc.,
`241 F.3d 696 (9th Cir. 2001) .................................................................................................. 10
`
`BBK Tobacco & Foods LLP v. Cent. Coast Agric. Inc.,
`No. CV-19-05216-PHX-MTL, 2021 WL 1751134 (D. Ariz. May 4, 2021) ............................ 9
`
`Blaylock v. First Am. Title Ins. Co.,
`No. C06-1667RAJ, 2008 WL 8741396 (W.D. Wash. Nov. 7, 2008) ..................................... 10
`
`Bobbleheads.com, LLC v. Wright Bros., Inc.,
`259 F. Supp. 3d 1087 (S.D. Cal. 2017) ..................................................................................... 8
`
`Boule v. Hutton,
`328 F.3d 84 (2d Cir. 2003) ..................................................................................................... 15
`
`Coastal Abstract Service, Inc. v. First Am. Title Ins. Co.,
`173 F.3d 725 (9th Cir. 1999) ................................................................................ 11, 12, 13, 14
`
`Columbia Pictures Indus., Inc. v. Prof’l Real Estate Inv’rs, Inc.,
`944 F.2d 1525 (9th Cir. 1991), aff’d, 508 U.S. 49 (1993) ...................................................... 17
`
`Comite de Jornaleros de Redondo Beach v. City of Redondo Beach,
`657 F.3d 936 (9th Cir. 2011) .................................................................................................... 7
`
`Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc.,
`911 F.2d 242 (9th Cir. 1990) ............................................................................................ 12, 13
`
`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - ii
`Case No.: 2:21-cv-00312-TSZ
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`

`

`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 4 of 24
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`Coral Ridge Ministries Media, Inc. v. Amazon.com, Inc.,
`406 F. Supp. 3d 1258 (M.D. Ala. 2019), aff’d, 6 F.4th 1247 (11th Cir. 2021) ...................... 12
`
`Crabtree v. Experian Info. Sols., Inc.,
`948 F.3d 872 (7th Cir. 2020) .................................................................................................... 8
`
`Dial A Car, Inc. v. Transp., Inc.,
`82 F.3d 484 (D.C. Cir. 1996) .................................................................................................. 13
`
`E. R. R. Presidents Conf. v. Noerr Motor Freight, Inc.,
`365 U.S. 127 (1961) ................................................................................................................ 17
`
`Edward Lewis Tobinick, MD v. Novella,
`848 F.3d 935 (11th Cir. 2017), cert. denied, 138 S. Ct. 449, 199 L. Ed. 2d 348 (2017) ........ 15
`
`Envtl. Def. Ctr., Inc. v. EPA,
`344 F.3d 832 (9th Cir. 2003) .................................................................................................... 7
`
`Fair Hous. Council of Suburban Philadelphia v. Montgomery Newspapers,
`141 F.3d 71 (3d Cir. 1998) ....................................................................................................... 7
`
`Glen Holly Ent., Inc. v. Tektronix, Inc.,
`352 F.3d 367 (9th Cir. 2003) .................................................................................................. 12
`
`Greenbelt Coop. Publ’g Ass’n v. Bresler,
`398 U.S. 6 (1970) .................................................................................................................... 13
`
`Hoffman v. Capital Cities/ABC, Inc.,
`255 F.3d 1180 (9th Cir. 2001) ................................................................................................ 15
`
`In re Cray Inc.,
`431 F. Supp. 2d 1114 (W.D. Wash. 2006) ............................................................................... 8
`
`L.A. Taxi Coop., Inc. v. Uber Techs., Inc.,
`114 F. Supp. 3d 852 (N.D. Cal. 2015) .................................................................................... 15
`
`La Asociacion de Trabajadores de Lake Forest v. City of Lake Forest,
`624 F.3d 1083 (9th Cir. 2010) .............................................................................................. 6, 7
`
`Lexmark Int’l, Inc. v. Static Control Components, Inc.,
`572 U.S. 118 (2014) ............................................................................................................ 9, 10
`
`Lujan v. Defs. of Wildlife,
`504 U.S. 555 (1992) .................................................................................................................. 6
`
`Manistee Town Ctr. v. City of Glendale,
`227 F.3d 1090 (9th Cir. 2000) ................................................................................................ 17
`
`Mattel, Inc. v. MCA Records, Inc.,
`296 F.3d 894 (9th Cir. 2002), cert. denied, 123 S. Ct. 993, 154 L. Ed. 2d 912 (2003) .......... 13
`
`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - iii
`Case No.: 2:21-cv-00312-TSZ
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`

`

`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 5 of 24
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`Mitcheson v. El Antro LLC,
`No. CV-19-01598-PHX-GMS, 2020 WL 7075239, (D. Ariz. Dec. 3, 2020),
`reconsideration denied, 2021 WL 2539700 (D. Ariz. Jan. 28, 2021) ........................................ 10
`
`Moehrl v. Nat’l Ass’n of Realtors,
`492 F. Supp. 3d 768 (N.D. Ill. 2020) ........................................................................................ 3
`
`NAACP v. City of Kyle,
`626 F.3d 233 (5th Cir. 2010) .................................................................................................... 7
`
`Nat’l Coal. of Latino Clergy & Christian Leaders v. Arizona,
`No. CV 10-943-PHX-SRB, 2010 WL 11586703 (D. Ariz. Dec. 10, 2010) ............................. 7
`
`Nat’l Treasury Emps. Union v. United States,
`101 F.3d 1423 (D.C. Cir. 1996) ................................................................................................ 6
`
`New York Times Co. v. Sullivan,
`376 U.S. 254 (1964) ................................................................................................................ 14
`
`Newcal Indus., Inc. v. IKON Off. Sol.,
`513 F.3d 1038 (9th Cir. 2008) ................................................................................................ 11
`
`Nissan Motor Co. v. Nissan Comput. Corp.,
`378 F.3d 1002 (9th Cir. 2004) .......................................................................................... 14, 15
`
`Or. Nat. Res. Council v. Mohla,
`944 F.2d 531 (9th Cir. 1991) .................................................................................................. 16
`
`Rice v. Fox Broad. Co.,
`330 F.3d 1170 (9th Cir. 2003) ................................................................................................ 14
`
`Rodriguez v. City of San Jose,
`930 F.3d 1123 (9th Cir. 2019) .................................................................................................. 6
`
`Sliding Door Co. v. KLS Doors, LLC,
`No. EDCV 13–00196 JGB, 2013 WL 2090298 (C.D. Cal. May 1, 2013) ....................... 16, 17
`
`Sosa v. DIRECTV, Inc.,
`437 F.3d 923 (9th Cir. 2006) ...................................................................................... 16, 17, 18
`
`Theme Promotions, Inc. v. News Am. Mktg. FSI,
`546 F.3d 991 (9th Cir. 2008) .................................................................................................. 16
`
`ThermoLife Int’l LLC v. Am. Fitness Wholesalers LLC,
`No. CV-18-04189-PHX-JAT, 2020 WL 122874, (D. Ariz. Jan. 10, 2020),
`aff’d, 831 Fed. App’x 325 (9th Cir. 2020) ........................................................................ 10, 11
`
`ThermoLife Int’l, LLC v. Am. Fitness Wholesalers, LLC,
`831 Fed. App’x 325 (9th Cir. 2020) ....................................................................................... 10
`
`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - iv
`Case No.: 2:21-cv-00312-TSZ
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`

`

`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 6 of 24
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`Walker v. City of Lakewood,
`272 F.3d 1114 (9th Cir. 2001) .................................................................................................. 7
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`Wojnarowicz v. Am. Fam. Ass’n,
`745 F. Supp. 130 (S.D.N.Y. 1990) ......................................................................................... 15
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`Women’s Student Union v. Dep’t of Educ.,
`No. 21-CV-01626-EMC, 2021 WL 3932000 (N.D. Cal. Sept. 2, 2021) .................................. 6
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`STATUTES
`
`15 U.S.C. § 1125(a) .................................................................................................................... 11
`
`CONSTITUTIONAL PROVISIONS
`
`U.S. CONST. amend. I ................................................................................................................. 14
`
`TREATISES
`
`5 McCarthy on Trademarks and Unfair Competition § 27:96 (5th ed.) ..................................... 12
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`5 McCarthy on Trademarks and Unfair Competition § 27:97 (5th ed.) ..................................... 16
`
`5 McCarthy on Trademarks and Unfair Competition § 27:109.50 (5th ed.) .............................. 13
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`6 McCarthy on Trademarks and Unfair Competition § 31:104 (5th ed.) ................................... 16
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`OTHER AUTHORITIES
`
`National Association of Realtors, Code of Ethics and Standards of Practice (Jan. 1, 2022),
`https://cdn.nar.realtor/sites/default/files/documents/2022-COE-Standards-of-Practice-2021-
`12-15.pdf (last accessed Feb. 17, 2022) ................................................................................... 3
`
`Patrick Woodall & Stephen Brobeck, Consumer Federation of America, How the Real Estate
`Cartel Harms Consumers and How Consumers Can Protect Themselves (June 2006),
`http://www.consumerfed.org/pdfs/Real_Estate_Cartel_Study061906.pdf ............................ 13
`
`William C. Erxleben, In Search of Price and Service Competition in Residential Real Estate
`Brokerage: Breaking the Cartel, 56 WASH. L. REV. 179 (1981) ............................................ 13
`
`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - v
`Case No.: 2:21-cv-00312-TSZ
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`

`

`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 7 of 24
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`I.
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`INTRODUCTION
`
`The National Association of Realtors (“NAR”) alleges that REX is engaging in deceptive
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`practices by bringing this lawsuit and by expressing its view on NAR’s conduct to the United
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`States Department of Justice and in the court of public opinion. While NAR has and continues
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`to robustly argue its own case in this lawsuit and in many other public forums, NAR now seeks
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`to enjoin REX from itself speaking out against and challenging practices that it believes violate
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`antitrust laws and harm competition. NAR’s Lanham Act claim should be dismissed because it
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`infringes on REX’s First Amendment right to express opinions on legal and policy matters and
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`for the other reasons discussed below.
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`NAR’s counterclaim takes aim at two assertions: (1) that REX said it is an innovator
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`seeking to lower real estate commissions; and (2) that REX said it believes commissions are
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`artificially maintained at high levels because of the anticompetitive rules and practices of NAR
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`and its affiliated Multiple Listing Services (“MLSs”).
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`NAR admits it does not bring this claim on behalf of its members, and it admits it doesn’t
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`compete with REX. As a trade association, NAR’s bare allegations of reputational injury to itself
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`are too conclusory, indirect, and remote to confer Article III and statutory standing.
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`NAR also fails to allege necessary elements of its Lanham Act claim because REX’s
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`statements are not commercial speech and are not provable or disprovable assertions of fact.
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`REX’s legal and policy positions on NAR’s conduct are expressions of opinion protected by the
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`First Amendment.
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`This protected speech includes materials cited by NAR and attached to its counterclaim:
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`REX’s op-ed in The Wall Street Journal; interviews with journalists for Forbes and Inman, a
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`leading real estate publication; reflections on the state of the real estate industry in blog posts;
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`and press releases commenting on DOJ antitrust enforcement.
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`NAR itself robustly engages in the public debate about its practices. NAR also has taken
`
`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - 1
`Case No.: 2:21-cv-00312-TSZ
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`

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`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 8 of 24
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`
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`and continues to take shots at REX and its business practices in the court of public opinion. But
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`while NAR has every opportunity to defend its practices in this lawsuit, it should not be allowed
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`to use the Lanham Act to suppress REX’s protected speech just because NAR disagrees with the
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`message. The Lanham Act claim should be dismissed.
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`II.
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`FACTUAL BACKGROUND
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`The Amended Complaint alleges that Zillow and NAR conspired to exclude REX’s
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`residential real estate listings from the primary results page that most consumers use to find their
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`new home. This group boycott by REX’s competitors violates antitrust law. It reduces
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`competition in the residential real estate brokerage market. It enforces NAR’s rules that prohibit
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`negotiation of commissions, which is unlawful price-fixing. And it restricts consumer choice and
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`innovation by boxing out alternatives to the traditional way of buying and selling homes,
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`resulting in higher costs for all.
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`REX is an innovator in the residential real estate business that seeks to lower
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`commissions paid by consumers, most of whom buy homes from brokers affiliated with NAR
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`and its MLSs. Dkt. No. 99, ¶ 6. “REX uses digital technology to market the home directly to
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`consumers” including with “proprietary technology.” Id., ¶ 40. REX relied on Zillow and other
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`search platforms not subject to MLS rules to reach customers. Id., ¶ 46.
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`REX alleges that Zillow and NAR conspired to eliminate REX as a competitive threat
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`through application and enforcement of rules adopted by NAR members, real estate firms who
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`compete with REX. Id., ¶¶ 7–8. “The NAR controls a large portion of MLSs through local
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`associations of realtors, which are members of and governed by the NAR.” Id., ¶ 24. REX asserts
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`that “industry practices, including mandated NAR-endorsed MLS member rules, preserve sky-
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`high real estate fees across the United States.” Id., ¶ 33.
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`In its counterclaim, NAR denies that its “rules and multiple listing service
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`policies . . . prohibit negotiations between the listing broker and cooperating broker at any time
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`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - 2
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`

`

`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 9 of 24
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`during the transaction,” citing to its Code of Ethics Standard of Practice 3-3. Dkt. No. 114, ¶¶ 43–
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`44 (PDF p. 27 of 33). But NAR’s Code of Ethics expressly prohibits a buyer’s agent from attempt
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`to “modify” the offer of compensation from a seller, stating, “REALTORS® . . . shall not use
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`the terms of an offer to purchase/lease to attempt to modify the listing broker’s offer of
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`compensation. . . .” Standard of Practice 16-16.1 And NAR’s Handbook on Multiple Listing
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`Policy, which contains model MLS rules and procedures, requires that the listing broker make a
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`“blanket unilateral offer[ ] of compensation” to the buyer’s agent. Dkt. 85-2 at 131 of 184. As
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`one district court found, NAR rules permit only the “hypothetical possibility” of negotiating
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`commissions that routinely cost consumers tens of thousands of dollars every time they buy and
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`sell a home. Moehrl v. Nat’l Ass’n of Realtors, 492 F. Supp. 3d 768, 785 (N.D. Ill. 2020).
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`REX alleges that in January 2021, Zillow, as part of its entry into the real estate brokerage
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`business, changed its residential property search display to comply with NAR internet display
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`rules adopted by MLSs. Zillow admits in its answer that it made these changes to comply with
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`MLS rules. Dkt. No. 100, ¶ 84 (Zillow “was required to undergo audit checks of its display to
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`ensure compliance with the individual MLS’s rules”); id., ¶ 85 (“[s]ome NAR-affiliated MLSs
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`reviewed Zillow’s proposed new display before Zillow implemented the change”); id., ¶ 88
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`(Zillow is “required to comply with the local MLSs’ rules, some of which relate to the display
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`of listings on Zillow’s online platforms”).
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`Even though REX employs licensed real estate agents as Zillow and NAR members do,
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`see Dkt. No. 99, ¶ 39, Zillow’s changes placed REX listings behind a hidden tab labeled “Other
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`listings” while the main search tab was labeled “Agent listings.” Id., ¶ 64. “Accordingly, REX
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`has lost clients, has been forced to co-list clients with MLS members, and has been repeatedly
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`questioned about the lack of visibility of REX listings on Zillow’s websites.” Id., ¶ 140.
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`1 See National Association of Realtors, Code of Ethics and Standards of Practice (Jan. 1, 2022),
`https://cdn.nar.realtor/sites/default/files/documents/2022-COE-Standards-of-Practice-2021-12-15.pdf at PDF p. 7
`(last accessed Feb. 17, 2022).
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`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - 3
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`

`

`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 10 of 24
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`In its answer to the amended complaint, NAR admits it “is a trade association,” Dkt. No.
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`114, ¶ 23, 71, and that “REALTORS® are members of the NAR.” Id., ¶ 22. NAR admits that it
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`“creates rules through the participation of its members,” see id., ¶ 76; Dkt. No. 99, ¶ 76, and that
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`“it intends for REALTOR® association-owned multiple listing services to comply with
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`mandatory policies.” Dkt. No. 114, ¶ 79. These policies include authorizing “MLS participants
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`to display on their websites the listings of other participants and that this policy is known as
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`NAR’s IDX [internet display] Policy.” Id., ¶ 101. If those rules aren’t followed, NAR admits that
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`members “who belong to an MLS that requires membership in a local REALTOR® association
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`can have their MLS access cut off if REALTOR® membership is suspended.” Dkt. No. 114,
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`¶ 72.
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`The Amended Complaint provides background on other proceedings challenging NAR’s
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`anticompetitive conduct, including enforcement actions by the United States Department of
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`Justice and two consumer class action lawsuits. Dkt. No. 99, ¶¶ 37–38. It states that “[a]ccording
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`to DOJ’s complaint, these [NAR] rules ‘reduce price competition among brokers and lead to
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`higher prices and lower quality services for American home buyers and sellers.” Id., ¶ 37. “[T]he
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`district court judge presiding over [one of the consumer class actions] noted, ‘it is easy to
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`understand how’ [NAR’s commission rules] ‘could plausibly result in inflated commission
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`rates.’” Id., ¶ 38.
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`“NAR admits that there are pending federal lawsuits in which private plaintiffs purport
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`to challenge NAR rules,” and that “Paragraph 37 [of the amended complaint] contains language
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`from a complaint filed by the United States.” Dkt. No. 114, ¶ 37. The DOJ complaint stated
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`certain NAR rules “reduce price competition among brokers and lead to higher prices and lower
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`quality service for American home buyers and sellers.” Dkt. No. 99, ¶ 37.
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`Now, one year after this lawsuit began, NAR asserts a Lanham Act counterclaim against
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`REX based on allegations encompassed by REX’s complaint. In summarizing its Lanham Act
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`
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`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - 4
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`

`

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`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 11 of 24
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`counterclaim, NAR alleges that “[f]rom its inception, REX has sought to draw a distinction
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`between its services and those offered by members of NAR by publicly promoting itself as an
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`‘innovator’ and accusing NAR and its members of engaging in illegal or unfair conduct.” Dkt.
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`No. 114, ¶ 3 (PDF p. 22 of 33). NAR alleges that “REX’s campaign of false claims about its own
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`services, false statements about multiple listing services affiliated with NAR, and false claims
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`about NAR, including those identified above, has deceived consumers.” Id., ¶ 51.
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`But NAR admits in its answer that the following allegations from REX’s Amended
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`Complaint are “legal conclusions,” Dkt. No. 114, ¶ 118:
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`The concealment of non-MLS listings from Zillow and Trulia's sites are a group boycott
`perpetuated by NAR and MLS members against non-member competitors. Zillow's
`agreement to comply with rules that segregate MLS listings on their websites, and in turn
`demote competitive non-MLS listings, violates federal and state antitrust law. The recent
`changes are an illegal, exclusionary act.
`
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`III. ARGUMENT AND AUTHORITY
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`NAR’s Lanham Act counterclaim should be dismissed for at least three separate reasons.
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`First, NAR lacks Article III standing to assert this claim on its own behalf. NAR admits it does
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`not bring this claim on behalf of its members, and it fails to plead the elements of organizational
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`standing or to allege a concrete and particularized injury in fact. Spending money to defend this
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`lawsuit is not sufficient injury to confer standing.
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`Second, NAR lacks statutory standing to bring this claim under the Lanham Act because
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`it does not adequately plead proximate causation. Alleging injury to NAR members—real estate
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`brokers who compete with REX—is not the same as alleging injury to NAR itself.
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`Finally, NAR fails to plead sufficient facts to state a claim for false advertising. REX’s
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`commentary on the state of the real estate industry is not commercial speech, as the Lanham Act
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`requires. It is speech about important legal and policy issues and is protected by the First
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`Amendment. REX’s views on commercial, legal, and social matters are also not statements of
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`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - 5
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`

`

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`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 12 of 24
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`fact, but opinions.
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`A.
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`NAR LACKS ARTICLE III STANDING TO BRING THIS CLAIM.
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`Article III limits federal court jurisdiction to cases or controversies that meet the
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`“irreducible constitutional minimum” necessary for standing: (1) injury in fact; (2) causation;
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`and (3) redressability. La Asociacion de Trabajadores de Lake Forest v. City of Lake Forest, 624
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`F.3d 1083, 1088 (9th Cir. 2010) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)).
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`The party invoking federal jurisdiction bears the burden of establishing these elements. Lujan v.
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`Defs. of Wildlife, 504 U.S. 555, 561 (1992)). NAR does not meet its burden to allege injury in
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`fact.
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`1.
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`NAR Does Not Allege “Injury in Fact” to Itself as an Organization.
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`NAR does not purport to bring this claim on behalf of its members, but instead on its own
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`behalf. See, e.g., Dkt. No. 114, ¶¶ 53, 73–74. An organization may establish injury in fact to
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`itself only “if it can demonstrate: (1) frustration of its organizational mission; and (2) diversion
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`of its resources to combat the particular [conduct] in question.” Am. Diabetes Ass’n v. United
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`States Dep’t of the Army, 938 F.3d 1147, 1154 (9th Cir. 2019) (quoting Smith v. Pac. Props. &
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`Dev. Corp., 358 F.3d 1097, 1105 (9th Cir. 2004)) (alteration in original).
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`NAR does not allege facts showing that REX’s activities frustrate any organizational
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`mission. That omission alone is fatal to NAR’s organizational standing. See Women’s Student
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`Union v. Dep’t of Educ., No. 21-CV-01626-EMC, 2021 WL 3932000, at *4 (N.D. Cal. Sept. 2,
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`2021). Absent a showing of “direct conflict” between a defendant’s conduct and an
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`organization’s expressly stated goals, “it is entirely speculative whether the defendant’s conduct
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`is impeding the organization’s activities.” Nat’l Treasury Emps. Union v. United States, 101 F.3d
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`1423, 1430 (D.C. Cir. 1996); see also Rodriguez v. City of San Jose, 930 F.3d 1123, 1136 (9th
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`Cir. 2019) (finding no standing where organizations “offered no theory explaining their
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`organizational harm”); Nat’l Coal. of Latino Clergy & Christian Leaders v. Arizona, No. CV 10-
`
`PLAINTIFF’S MOTION TO DISMISS
`NAR’S COUNTERCLAIM - 6
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`

`

`Case 2:21-cv-00312-TSZ Document 115 Filed 02/17/22 Page 13 of 24
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`943-PHX-SRB, 2010 WL 11586703, at *7 (D. Ariz. Dec. 10, 2010) (finding injury “too
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`speculative” to confer standing where organization failed to allege its mission was “frustrated in
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`some specific and identifiable way”).
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`NAR also fails to allege facts demonstrating that “it was forced to divert resources . . .
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`because of” REX’s activities. Lake Forest, 624 F.3d at 1088. This, too, is dispositive: a failure
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`to assert factual allegations of resource reallocation requires dismissal. See id. (holding that an
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`organization must “show that it would have suffered some other injury if it had not diverted
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`resources to counteracting the problem”). An organization “merely going about its business as
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`usual” lacks organizational standing under Article III. Am. Diabetes Ass’n, 938 F.3d at 1155.
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`To invoke this Court’s jurisdiction, NAR must allege facts showing standing independent
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`of REX’s lawsuit. Comite de Jornaleros de Redondo Beach v. City of Redondo Beach, 657 F.3d
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`936, 943 (9th Cir. 2011). Resources expended in or related to litigation cannot alone constitute
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`the necessary injury. Walker v. City of Lakewood, 272 F.3d 1114, 1124 n.3 (9th Cir. 2001) (“An
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`organization cannot, of course, manufacture the injury necessary to maintain a suit from its
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`expenditure of resources on that very suit.” (quoting Spann v. Colonial Vill., Inc., 899 F.2d 24,
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`27 (D.C. Cir. 1990))); Fair Hous. Council of Suburban Philadelphia v. Montgomery
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`Newspapers, 141 F.3d 71, 80 (3d Cir. 1998); NAACP v. City of Kyle, 626 F.3d 233, 238–39 (5th
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`Cir. 2010) (finding no injury sufficient for organizational standing where resource expenditures
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`were litigation-related or were no different from the organizations’ ongoing lobbying activities).
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`NAR does not allege that it made any expenditures in response to REX’s allegations other than
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`litigation expenses.
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`2.
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`NAR’s Alleged Reputational Harm Is Not “Injury in Fact.”
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`Article III standing requires an injury that is “concrete and particularized” and “actual or
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`imminent, not conjectural or hypothetical.” Envtl. Def. Ctr., Inc. v. EPA, 344 F.3d 832, 863 (9th
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`Cir. 2003) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)). NAR’s