Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 1 of 25
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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 the motion to dismiss filed by
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`Defendants Zillow Inc., Zillow Group Inc., Zillow Homes Inc., Zillow Listing Services
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`Inc., and Trulia LLC (“Zillow”), docket no. 83, and the motion to dismiss filed by the
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`National Association of REALTORS® (“NAR”), docket no. 84. Having reviewed all
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`papers filed in support of, and in opposition to, the motions, the Court enters the
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`following Order.
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`Background
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`NAR is the nation’s largest trade association for real estate professionals,
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`consisting of multiple listings services (“MLSs”), more than a thousand local
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 2 of 25
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`associations, and around 1.45 million real estate agents. Compl. at ¶ 24 (docket no. 1).
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`NAR promulgates rules governing how its members operate their businesses, which have
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`allegedly become ubiquitous within the marketplace. Id. at ¶ 29. For example, NAR has
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`adopted an optional rule, known as the Segregation Rule,1 which requires members’
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`listings that are obtained through MLSs’ internet data exchange (“IDX”) feeds to be
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`“displayed separately from listings obtained from other sources.” Id. at ¶¶ 83 & 85.
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`NAR has also adopted a mandatory rule, known as the Buyer Agent Commission Rule,
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`which requires a seller’s agent to include in any MLS listing a predetermined offer of
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`commission to a buyer’s agent, thereby prohibiting any party from later modifying that
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`commission. Id. at ¶¶ 31 & 33. NAR’s members allegedly encourage their customers to
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`offer high commissions for buyers’ agents, resulting in historically high, static
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`commissions throughout the United States, with total commissions averaging about 5.5
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`percent of a home’s sale price. See id. at ¶¶ 34 & 42.
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`Established in 2015, Plaintiff REX – Real Estate Exchange Inc. is a licensed
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`broker that employs licensed real estate agents across the nation, including in
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`Washington. Compl. at ¶¶ 40, 44, & 47. Plaintiff is not a member of NAR or any MLS
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`and thus has not agreed to comply with any of NAR’s rules. Id. at ¶ 35. Home sellers
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`who choose Plaintiff’s services are able to avoid paying a predetermined buyer agent
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`commission and can instead negotiate that fee—as a result, Plaintiff’s clients pay a total
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`average commission of 3.3 percent of a home’s sale price. Id. at ¶ 42.
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`1 The complaint refers to the “segregation rule” or “IDX segregation rule,” e.g., Compl. at ¶¶ 85 & 93, but
`the parties, and the Court’s prior order (docket no. 80), have also referred to this rule as the No-
`Commingling Rule. This order will refer to the rule as the Segregation Rule.
`ORDER - 2
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 3 of 25
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`Plaintiff has developed proprietary digital technology to market its customers’
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`homes, allegedly saving customers more than $29 million in commissions over the past
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`five years. Compl. at ¶¶ 40–43. Plaintiff lists its customers’ homes on various real estate
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`aggregator websites, including two of Zillow’s websites, Zillow.com and Trulia.com,
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`which are the first and fourth most visited real estate aggregator sites in the United States.
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`Id. at ¶ 54. Zillow’s websites are alleged to be a “dominant doorway into the residential
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`real estate market.” Id. Plaintiff’s listings were historically displayed on Zillow’s
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`primary search page alongside the listings of MLS participants. Id. at ¶ 63.
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`In 2018, Zillow launched its “Zillow Offers” business, allowing Zillow to
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`“transact[] thousands of homes annually” as an “ibuyer” of homes. Compl. at ¶ 58.
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`Based on Plaintiff’s information and belief, “the growth and substantial inventory of
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`Zillow-owned homes placed Zillow in a new position: Instead of focusing on being an
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`open access point for consumers to display and access residential real estate listings,
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`Zillow’s interests turned to its own substantial home inventory.” Id. In late 2020, Zillow
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`announced that it would join forces with NAR and several MLSs, publicly committing
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`that “all Zillow-owned homes will be listed on the MLSs with commissions paid to
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`agents representing buyers.” Id. at ¶ 59. Plaintiff alleges that NAR’s Buyer Agent
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`Commission Rule, which is “now adopted by Zillow, is the paramount reason that real
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`estate commissions are two to three times higher in the United States than in comparable
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`international markets.” Id. Zillow also announced that it would begin to use MLS data
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`feeds to populate its websites. Id. at ¶ 60.
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`In January 2021, Zillow unveiled its newly designed website display to be
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`implemented nationwide on its websites to comply with the NAR and MLS “guidelines”
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`ORDER - 3
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 4 of 25
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`or “rules.” Compl. at ¶¶ 64 & 70–71. The new display created a separate page or tab,
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`called “Other listings,” that is concealed behind the primary results page or tab, called
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`“Agent listings,” as depicted below:
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`Id. at ¶ 64. As a result of this new display, consumers see only a portion of the homes at
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`one time, based on whether they are viewing the primary “Agents listings” tab or the
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`secondary “Other listings” tab; and they must now move back and forth between these
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`two tabs. Id. at ¶ 66. Although Plaintiff’s customers’ homes are all listed by licensed
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`real estate agents, its listings are now being displayed in the “Other listings” category to
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`comply with NAR and MLS rules, rather than in the “Agent listings” category. Id. at
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`¶¶ 67–68 & 71. Zillow allegedly knows that Plaintiff is a licensed broker with licensed
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`agents, as Plaintiff pays Zillow to be a part of Zillow’s Premier Agent Program. Id. at
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`¶ 69. Plaintiff alleges that this new display and labeling system “is not only inaccurate
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`and nonsensical, it is misleading and deceptive,” as it “degrades non-MLS listings” by
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`placing them on the “Other listings” tab. Id. at ¶¶ 67 & 71.
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`ORDER - 4
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 5 of 25
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`After Zillow redesigned its websites, views of Plaintiff’s listings “plummeted” on
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`Zillow’s websites, causing “a corresponding drop in sales and . . . lost brokerage service
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`revenues to” Plaintiff. Compl. at ¶¶ 73–74 & 88. For example, views of one of
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`Plaintiff’s listings on Zillow.com dropped dramatically after January 2021, when Zillow
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`added the “Other listings” tab to the website, as depicted below:
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`Id. at ¶ 74. Zillow’s and NAR’s actions are also allegedly harming other non-MLS
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`agents, see id. at ¶ 71, as well as the sellers of the homes that are listed on Zillow’s
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`“Other listings” tab, “causing them to list the home for more days on market and accept
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`lower sales prices.” Id. at ¶ 73.
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`In March 2021, Plaintiff brought this action against Zillow and NAR, asserting
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`four claims: (1) an unreasonable restraint of trade in violation of Section 1 of the
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`Sherman Act, 15 U.S.C. § 1; (2) false advertising in violation of the Lanham Act, 15
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`ORDER - 5
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 6 of 25
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`U.S.C. § 1125; (3) an unfair or deceptive act or practice in violation of the Washington
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`Consumer Protection Act (“CPA”), RCW 19.86.020; and (4) conspiracy to restrain trade
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`in violation of the CPA, RCW 19.86.030. Compl. at ¶¶ 114–64. Plaintiff simultaneously
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`filed a motion for a preliminary injunction, docket no. 5, seeking to enjoin Defendants
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`from implementing any rule requiring the segregation of Plaintiff’s listings from MLS
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`listings, excluding Plaintiff’s listings from the “Agent listings” tab, and categorizing
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`Plaintiff’s listings as “Other listings” on Zillow’s websites. The Court denied that
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`motion, concluding that Plaintiff failed to satisfy its burden to show a likelihood of
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`prevailing on its federal and state law claims, or a likelihood of suffering irreparable
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`harm in the absence of an injunction. Order (docket no. 80 at 23).
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`Defendants now move to dismiss the claims asserted against them, see docket nos.
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`83 & 84. NAR also requests that the Court take judicial notice of certain documents,
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`docket no. 85. Plaintiff partially opposes the request, docket no. 91, with respect to two
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`of the documents, a complaint filed in a civil case, see Ex. C to request (docket no. 85-3),
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`and the final judgment entered in that case, including a 2008 consent decree between
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`NAR and the United States, see Ex. D to request (docket no. 85-4). The United States
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`also filed a statement of interest, docket no. 95, asking this Court to decline to draw any
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`inference in NAR’s favor from the 2008 consent decree, which is now expired. See id. at
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`2. The Court previously noted the existence of that consent decree in ruling on the
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`motion for a preliminary injunction, see docket no. 80 at 13. Because no one disputes the
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`authenticity of these court records, the Court GRANTS NAR’s request to take judicial
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`notice of them (docket nos. 85-3 & 85-4), as well as the unopposed documents (docket
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`nos. 85-1 & 85-2), in ruling on the instant motions.
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`ORDER - 6
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 7 of 25
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`Discussion
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`1.
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`Article III Standing
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`NAR argues that Plaintiff fails to plausibly allege that its injury is traceable to
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`NAR or that such injury is redressable. “[L]ack of Article III standing requires dismissal
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`for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1).”
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`Maya v. Centrex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011). “[T]hose who seek to
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`invoke the jurisdiction of the federal courts must satisfy the threshold requirement
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`imposed by Article III of the Constitution by alleging an actual case or controversy.” Id.
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`(quoting City of Los Angeles v. Lyons, 461 U.S. 95, 101 (1983)). “[T]o satisfy Article
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`III’s standing requirements, a plaintiff must show (1) it has suffered an ‘injury in
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`fact’ . . . ; (2) the injury is fairly traceable to the challenged action of the defendant; and
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`(3) it is likely, as opposed to merely speculative, that the injury will be redressed by a
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`favorable decision.” Id. (quoting Friends of the Earth, Inc. v. Laidlaw Env’t Servs., Inc.,
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`528 U.S. 167, 180–81 (2000)). “For purposes of ruling on a motion to dismiss for want
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`of standing, . . . courts must accept as true all material allegations of the complaint and
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`must construe the complaint in favor of the complaining party.” Id. (quoting Warth v.
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`Seldin, 422 U.S. 490, 501 (1975)). On a motion to dismiss, courts “presum[e] that
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`general allegations embrace those specific facts that are necessary to support the claim.”
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`Id. (citation omitted).
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`The Court first considers whether Plaintiff’s allegations are sufficient to show that
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`its alleged injuries are traceable to NAR. In arguing that Plaintiff has failed to plead
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`causation, NAR points to the complaint’s allegations that the Segregation Rule applies
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`only to MLSs (and not Zillow, who is merely an “MLS participant”), it is “optional” and
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`ORDER - 7
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 8 of 25
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`has not been adopted by all MLSs, and it was implemented by Zillow alone. See NAR
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`Mot. (docket no. 84 at 9–11). NAR also relies on allegations purportedly showing that
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`Zillow’s selection of a new website design was done independently of NAR. See id. at
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`10. According to NAR, such allegations are “breaks in the chain of causation,”
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`demonstrating that “the specific website changes made by Zillow that allegedly harmed
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`REX were the product of Zillow’s independent actions,” and not NAR’s actions. Id.
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`NAR’s argument fails for the simple reason that it ignores the other allegations
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`that NAR is a direct participant in the challenged conduct. The complaint challenges not
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`only the Segregation Rule but also the Buyer Agent Commission Rule, both of which
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`were “written by NAR and enforced by its member MLSs”; moreover, the Buyer Agent
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`Commission Rule allegedly “mandate[s] offers of commissions to buyer agents.” See
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`Compl. at ¶¶ 7 & 59. The complaint also alleges that NAR “coopt[ed] Zillow” and that
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`Zillow’s “[t]op sites . . . now all have restrictions based on NAR and MLS guidelines.”
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`Id. at ¶¶ 61 & 71. In addition, one Zillow representative allegedly stated that they
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`changed the websites as “a result of [Zillow] joining the MLS” and “to comply with MLS
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`rules.” Id. at ¶ 88. The complaint plausibly alleges that, absent NAR’s actions in
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`drafting the rules and effectively forcing Zillow and other MLS participants to comply
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`with them, Zillow would not have changed its websites. Plaintiff’s alleged injuries are
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`thus fairly traceable to NAR’s actions.
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`As to whether Plaintiff’s alleged injuries are redressable, Plaintiff seeks not just
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`injunctive relief, it also seeks statutory damages under 15 U.S.C. §§ 15 and 1117, other
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`“damages and statutory damages to be proven at trial,” and “attorneys’ fees and costs.”
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`See Compl. at ¶¶ D–G. Plaintiff has standing to bring these claims against NAR.
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`ORDER - 8
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 9 of 25
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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). In ruling on a motion to dismiss, the Court
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`must assume the truth of the plaintiff’s allegations and draw all reasonable inferences in
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`the plaintiff’s favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987).
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`The question for the Court is whether the facts in the complaint sufficiently state a
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`“plausible” ground for relief. Twombly, 550 U.S. at 570. If the Court dismisses the
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`complaint or portions thereof, it must consider whether to grant leave to amend. See
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`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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`Defendants argue that Plaintiff’s complaint fails to state an antitrust claim, both
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`under Section 1 of the Sherman Act and under Washington law,2 regardless of whether
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`the Court applies the per se analysis or the “rule of reason” analysis. Plaintiff responds
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`that “[t]he Court is not required to decide which rule applies in [ruling on] a motion to
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`dismiss.” Resp. (docket no. 90 at 14). The Court has already ruled that Plaintiff’s
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`challenge to a less-than-obvious restraint,3 as well as the complicated nature of the
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`2 The parties do not separately brief Plaintiff’s state law claim for conspiracy to restrain trade under the
`CPA, RCW 19.86.030, and Zillow argues that this claim should be dismissed on the same basis that the
`Section 1 claim should be dismissed. See Zillow Mot. (docket no. 83 at 20–21). The Court recognizes
`that the state and federal standards are essentially the same and thus analyzes both claims under the
`federal standards. See State v. LG Elecs., Inc., 186 Wn.2d 169, 186 n.3, 375 P.3d 1035 (2016)
`(concurring, McCloud, J.).
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`3 Although the complaint alleges a “group boycott,” it is clear from the face of the complaint that
`Defendants are not alleged to be competitors who refuse to do business with Plaintiff—but rather, they
`are alleged to have “segregate[d]” Plaintiff’s listings, “denying them effective” or “equal” access to
`ORDER - 9
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 10 of 25
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`parties’ business relationships, do not lend themselves to per se analysis. See Order
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`(docket no. 80 at 13). The Court therefore analyzes the complaint under the rule of
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`reason to determine whether Plaintiff has sufficiently pleaded antitrust claims.
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`To state a Section 1 claim under the rule of reason, Plaintiff “must plead facts
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`which, if true, will prove: (1) a contract, combination or conspiracy among [Defendants];
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`(2) by which the [Defendants] intended to harm or restrain trade or commerce among
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`several States . . . ; (3) which actually injures competition”; and “(4) [Plaintiff is] the
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`proper part[y] to bring the antitrust action because [it was] harmed by [Defendants’]
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`contract, combination, or conspiracy, and the harm [it] suffered was caused by the anti-
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`competitive aspect of [Defendants’] conduct.”4 In Re Nat’l Football League’s Sunday
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`Ticket Antitrust Litig., 933 F.3d 1136, 1150 (9th Cir. 2019) (quoting Brantly v. NBC
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`Universal, Inc., 675 F.3d 1192, 1197 (9th Cir. 2012)).
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`A.
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`Anticompetitive Agreement
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`Defendants contend that Plaintiff has failed to plead the first two elements of a
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`Section 1 violation, namely that they entered an anticompetitive agreement or conspiracy.
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`According to Zillow, the complaint fails to allege a “conscious commitment to a common
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`Zillow’s websites. Compl. at ¶¶ 101, 109, 118 & 122. See Boycott, BLACK’S LAW DICTIONARY (11th ed.
`2019) (defining “group boycott” as “[a] type of secondary boycott by two or more competitors who refuse
`to do business with one firm unless it refrains from doing business with an actual or potential competitor
`of the boycotters,” and noting that such claims are “analyzed under either the per se rule or the rule of
`reason, depending on the nature of the boycott”).
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`4 Neither Defendant appears to challenge Plaintiff’s alleged harm or so-called antitrust standing to bring
`this action. Although NAR argues (unsuccessfully) that Plaintiff lacks constitutional standing, see supra,
`Section 1 of this Order, and suggests that Plaintiff also lacks standing to bring an antitrust action, NAR
`confines its argument to the complaint’s purported failure to plead harm to competition—rather than any
`failure to plead harm to Plaintiff as a result of Defendants’ anticompetitive conduct. See NAR Mot.
`(docket no. 84 at 13–15). The Court concludes that Plaintiff has adequately pleaded that it has suffered
`harm as a result of the anticompetitive aspects of Defendants’ actions. See Compl. at ¶¶ 73 & 111.
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`ORDER - 10
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`scheme designed to achieve an unlawful objective.” Zillow Mot. (docket no. 83 at 14)
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`(quoting Toscano v. Prof. Golfers Assoc., 258 F.3d 978, 984 (9th Cir. 2001)). Although
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`the complaint alleges that Zillow implemented the new website display as “a result of
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`joining the MLS and changing over to IDX feeds” and to “comply with MLS rules,”
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`Compl. at ¶ 88, the complaint also alleges that it was “Zillow’s decision to conceal non-
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`MLS listings under the misleading and inferior ‘other’ category,” causing “listings from
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`non-MLS brokers such as [Plaintiff] [to] be far less competitive.” Id. at ¶ 90; see id. at
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`¶ 108 (alleging that Zillow is “using” the MLS rules “to implement a change in” its
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`website designs). The complaint further alleges that “Zillow signaled its dedication to . .
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`. inflated commissions—by committing that ‘all Zillow-owned homes will be listed on
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`the MLSs with commissions paid to agents representing buyers.’” Id. at ¶ 59. As the
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`Supreme Court has held, “[c]oncerted efforts to enforce (rather than just agree upon)
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`private product standards face more rigorous antitrust scrutiny.” Allied Tube & Conduit
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`Corp. v. Indian Head, Inc., 486 U.S. 492, 501 n.6 (1988) (emphasis in original). At
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`times, the complaint appears to allege that Zillow’s mere act of entering agreements with
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`MLSs constitutes “horizontal agreements between competitors.” Compl. at ¶¶ 93 & 97;
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`see also Resp. (docket no. 90 at 20). Such acts, standing alone, would be insufficient to
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`plead an anticompetitive agreement or conspiracy. See Toscano, 258 F.3d at 984 (finding
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`no evidence of concerted action to restrain trade where a third party “independently set
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`the terms of the contracts, and [defendants] merely accepted them”). Because the
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`complaint also alleges that Zillow went a step further—e.g., by affirmatively redesigning
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`its websites to enforce an allegedly misleading labeling system—Plaintiff has plausibly
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`alleged that Zillow agreed to use the MLS rules to restrain trade. See id.
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`ORDER - 11
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 12 of 25
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`For its part, NAR argues that Plaintiff cannot plausibly allege the existence of an
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`unlawful agreement because NAR’s challenged rules are “optional.” See NAR Reply
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`(docket no. 93 at 7–8). This argument is unavailing for two reasons. First, Plaintiff
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`challenges not just the optional Segregation Rule, but also the mandatory Buyer Agent
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`Commission Rule. See Compl. at ¶¶ 29, 34, & 59. Second, the Supreme Court has
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`concluded that the interpretation and promotion of a trade association’s “so-called
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`voluntary standards” by the association’s agents and members could be deemed to be
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`“repugnant to the antitrust laws,” and the association “should be encouraged to eliminate
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`the anticompetitive practices of all its agents acting with apparent authority.” Am. Soc’y
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`of Mech. Eng’rs, Inc. v. Hydrolevel Corp., 456 U.S. 556, 561–62, 570 & 574 (1982). The
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`complaint alleges that the challenged rules were “written” by NAR and are being
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`“promulgated” or “enforced” by its members, namely the MLSs and their members
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`(including Zillow), and that these “combined” actions constitute illegal restraints on
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`trade. See Compl. at ¶¶ 7, 86, & 120–21. The complaint further alleges that “NAR is the
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`rare trade association that sets the rules of competition among its members,”
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`promulgating “mandates governing [IDX feeds] and the structure of compensation
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`offers.” Id. at ¶ 29. Allegedly, “[b]ecause of the size and scope of NAR and MLSs, these
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`rules have become ubiquitous within the marketplace—essentially making consumers
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`subject to them.” Id. In other words, brokerages, agents, and even customers allegedly
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`have no choice but to comply with NAR’s so-called optional rules. See Hydrolevel, 456
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`U.S. at 570 (emphasizing that the trade association was “in reality an extra-governmental
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`agency, which prescribes rules for the regulation and restraint of interstate commerce”);
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`see also Top Agent Network, Inc. v. Nat’l Assoc. of Realtors, No. 20-cv-3198, 2021 WL
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`ORDER - 12
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 13 of 25
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`3616480, at *6 (N.D. Cal. Aug. 16, 2021) (“That NAR exercises control over the
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`operating rules of the market for home sales in most major markets across the country is
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`not, in and of itself, good for competition.”). The complaint plausibly alleges NAR’s
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`involvement in an anticompetitive agreement or conspiracy.
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`B.
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`Harm to Competition
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`“The rule of reason requires courts to conduct a fact-specific assessment of the
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`‘market power and market structure . . . to assess the [restraint’s] actual effect’ on
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`competition.” FTC v. Qualcomm Inc., 969 F.3d 974, 989 (9th Cir. 2020) (citation
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`omitted) (emphasis in original). “[T]he plaintiff has the initial burden to prove that the
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`challenged restraint has a substantial anticompetitive effect that harms consumers in the
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`relevant market.”5 Id. (citation omitted). “A threshold step in any antitrust case is to
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`accurately define the relevant market, which refers to ‘the area of effective competition.’”
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`Id. (quoting Ohio v. Am. Express Co., 138 S. Ct. 2274, 2285 (2018)).
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`i.
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`Relevant Market
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`Plaintiff alleges that the relevant market is the “market for the provision of real
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`estate brokerage services to sellers and buyers of residential real estate in local markets
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`throughout the country where REX operates.” Compl. at ¶ 102; see id. at ¶ 44 & n.9.
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`5 This circuit has adopted a three-part, burden-shifting test, under which a plaintiff must meet this initial
`burden and only “then the burden shifts to the defendant to show a procompetitive rationale for the
`restraint.” Qualcomm, 969 F.3d at 991. “If the defendant makes this showing, then the burden shifts
`back to the plaintiff to demonstrate the procompetitive efficiencies could reasonably be achieved through
`less anticompetitive means.” Id. In ruling on a 12(b)(6) motion, the Court exclusively focuses on
`whether Plaintiff has sufficiently pleaded the first element. See Sitzer v. Nat’l Assoc. of Realtors, 420 F.
`Supp. 3d 903, 915 (W.D. Mo. 2019) (concluding that at the motion to dismiss stage, “the [c]ourt’s job is
`not to balance the anticompetitive effects of [the challenged restraints] against procompetitive
`justifications,” but instead to “evaluate whether [the complaint] presents facts, which . . . show the
`challenged conduct plausibly exerts an unreasonable restraint on trade”).
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`ORDER - 13
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 14 of 25
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`Zillow contends that the only harm to competition that is alleged in the complaint has
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`been suffered by consumers outside of the relevant market. See Qualcomm, 969 F.3d at
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`993 (holding that regardless of whether a defendant’s “practices are interrelated, actual or
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`alleged harms to customers and consumers outside the relevant markets are beyond the
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`scope of antitrust law”). Zillow, like Qualcomm, “is no one-trick pony.” Id. at 983.
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`According to the complaint, Zillow has traditionally operated aggregator websites that
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`display and market homes for sale, as well as its related “Premier Agent” program,
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`through which Zillow charges a fee to promote brokers and agents on its websites.
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`Compl. at ¶¶ 47–48 & 69. In 2018, Zillow also started “transacting thousands of homes
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`annually” as an “ibuyer” through its Zillow Offers business. Id. at ¶ 58. Zillow then
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`joined NAR as an “MLS participant.” Id. at ¶ 59.
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`Zillow argues that because the Segregation Rule was implemented in Zillow’s
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`capacity as a data aggregator (and not in connection with providing real estate
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`brokerage services), Plaintiff cannot plausibly allege that the restraint occurred within the
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`relevant market. Zillow Mot. (docket no. 83 at 20). Even assuming that Zillow’s
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`implementation of a new website design, which displays real estate listings nationwide,
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`can be deemed as occurring “outside” the market for real estate brokerage services,
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`Zillow does not address the other restraint at issue: the Buyer Agent Commission Rule,
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`which was allegedly implemented in Zillow’s capacity as a real estate broker and MLS
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`participant. See Compl. at ¶¶ 34 & 59 (alleging that “all Zillow-owned homes will be
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`listed on the MLSs with commissions paid to agents representing buyers,” thereby
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`“preserv[ing] sky-high real estate fees across the United States”). As other courts have
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`concluded, NAR’s Buyer Agent Commission Rule, which mandates a “blanket offer of
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`ORDER - 14
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 15 of 25
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`some compensation to the buyer-broker, . . . by itself, raises antitrust concerns given that
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`the offer is the same regardless of the buyer-broker’s experience or the value of services
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`provided by the buyer-broker.” Moehrl v. Nat’l Assoc. of Realtors, 492 F. Supp. 3d 768,
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`784 (N.D. Ill. 2020) (emphasis added); see also Sitzer v. Nat’l Assoc. of Realtors, 420 F.
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`Supp. 3d 903, 915 (W.D. Mo. 2019). The court in Moehrl also noted that the
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`anticompetitive aspects of this NAR rule are exacerbated by the fact that “many
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`prospective homebuyers [now] use online websites like Zillow to find homes,” and that
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`Zillow and other websites “have agreed not to compete with the MLSs by becoming
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`licensed brokerages or offering compensation or cooperation.” 492 F. Supp. 3d at 784.
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`The Court rejects Zillow’s argument that Qualcomm precludes relief in this case.
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`NAR likewise contends that the complaint fails to allege sufficiently specific
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`geographic markets, or that NAR has market power within those markets. The complaint
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`identifies twenty states in which Plaintiff employs or will employ licensed real estate
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`agents, see Compl. at ¶ 44 & n.9, and alleges that at least 70 percent of licensed agents
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`are NAR members, id. at ¶ 26 & n.3. Although NAR members might make up more or
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`less than 70 percent of the active licenses in a given state or local market, the complaint
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`sufficiently alleges that NAR enjoys substantial market power within the market for real
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`estate brokerage services in the states that Plaintiff operates. See Moehrl, 492 F. Supp.
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`3d at 782 (noting that NAR and the other defendants did not “deny that they have market
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`power” in the relevant market and that “the Seventh Circuit and several other courts have
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`recognized that MLSs have market power”); see also Sitzer, 420 F. Supp. 3d at 915
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`ORDER - 15
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`Case 2:21-cv-00312-TSZ Document 98 Filed 09/02/21 Page 16 of 25
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`(concluding “[g]iven the sheer market power possessed by the . . . MLS,” NAR and the
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`other defendants have “significant influence” in the relevant market).6
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`ii.
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`Substantial Anticompetitive Effect
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`Defendants also argue that the complaint lacks sufficient allegations to plead harm
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`to competition, principally arguing that Plaintiff merely assumes that harm to itself is
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`harm to competition. See Zillow Reply (docket no. 92 at 10); NAR Mot. (docket no. 84
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`at 13–14). The Court disagrees, as the complaint is replete with allegations of harm to
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`competition. Specifically, the complaint alleges that “Zillow and NAR are . . . harming
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`the sellers of the[] homes” that are listed on the “Other listings” tab, “causing them to
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`maintain the home for more days on the market and accept lower sales prices” because
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`“[i]interested buyers are likely to continue avoiding or missing ‘Other listings’
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`altogether.” Compl. at ¶¶ 73 & 77. Home listings on the “Other listings” tab include, in
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`addition to Plaintiff’s listings, “For Sale by Owner (FSBO)” and “foreclosure” listings.
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`Id. at ¶ 77. Plaintiff plausibly alleges that Defendants’ actions have a substantial
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`anticompetitive effect that harms consumers in the relevant market. See id. at ¶¶ 8, 59,
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`61, 65, 71, 80 & 106 (collectively, alleging that the enforcement of NAR’s rules have
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`harmed non-MLS agents and sellers, as well as buyers); see Moehrl, 492 F. Supp. 3d at
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`785 (concluding the “Buyer-Broker Commission Rules have caused an artificial inflation
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`of commission rate”); Sitzer, 420 F. Supp. 3d at 915 (same).
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`6 NAR also argues that the relevant market alleged in the complaint is “implausible” because it fails to
`include individuals who “provide real estate brokerage services to themselves,” or other reasonable
`substitutes. See NAR Mot. (docket no. 84 at 17). The complaint alleges that “Zillow and NAR are . . .
`harming the sellers of the[] homes” that are listed on the “Other listings” tab, including “For Sale by
`Owner” listings. Id. at ¶¶ 73 & 77. The complaint clearly alleges harm to individuals who sell their
`homes themselves, as well as those who use non-MLS brokers like Plaintiff.
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`ORDER - 16
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