It’s been a busy two weeks in the courtroom. At least that has been the case in the ongoing legal battle between the National Association of REALTORS® (NAR), Zillow and REX.
As the Texas-based discount brokerage’s trial continues, a series of recent volleys have come to a head in the case, with U.S. District Court Judge Thomas Zilly handing out a mix of rulings that could have untold implications as both sides are preparing for the next trial in June.
The latest in the saga came after Zilly awarded REX a partial victory late last month, granting the brokerage’s motion to compel NAR to comply with the court order on ‘electronically stored information’. (ESI). Zilly also denied the discount brokerage’s request for documents related to the Moerhl and Sitzer antitrust lawsuits.
The decision came weeks after Zilly partially granted Zillow’s motion to compel REX to provide a list of all employees who left the brokerage and retained a REX-issued laptop.
REX urged the court in August to compel NAR to add seven new data custodians that the brokerage said would likely have information relevant to the case.
The motion called for the following executives to be added to the list:
- Bob Goldberg, CEO of NAR
- Katie Johnson, NAR General Counsel and Director of Member Experience
- Kate Lawton, Vice President of Member Experience at NAR
- Kevin Milligan, former Vice President of Policy and Programs of the NAR Board of Directors
- Diane Mosley, Director of Training and Policy Resources at NAR
- Clifford Niersbach, former Associate General Counsel of NAR and Vice President of Board Policy and Programs
- Lawrence Yun, Chief Economist of NAR
REX secured four of the seven proposed additions as Judge Zilly granted the brokerage’s requests for Goldberg, Johnson, Milligan and Niersbach to be added to the list of custodians. He wrote in the order that “the appointment of these additional guardians will not impose a material burden on NAR” over the course of the case.
REX argued that each person had a “significant responsibility in NAR’s response to competition from internet providers” and helped develop and enforce NAR’s rules and policies, which would have limited how homes are listed in online and negotiating commissions.
“As it relates to this matter, many of these high-level employees are responsible for NAR’s efforts to exclude low-cost, technology-based competitors from the residential real estate brokerage market,” reads an excerpt from the filing.
NAR had previously identified Rodney Gansho, director of engagement, and Rene Galicia, its former director of MLS engagement, as its two ESI guardians.
However, while criticizing NAR, REX’s lawyers argued that it was inadequate. The court’s ESI order required each party to identify up to five custodians most likely to have discoverable information relevant to the case.
“NAR’s position flouts the express terms of the ESI order insofar as it asserts that only two employees in the entire association are likely to have detectable ESI. NAR’s position is all the more remarkable given that in other cases alleging related anticompetitive misconduct, NAR has appointed nearly twenty trustees,” the filing reads.
In particular, REX argued – among other things – that Goldberg should be on the list for his involvement in Zillow’s decision to join NAR. The case also cited its history as a “strong focus on NAR’s efforts to maintain its technological competitive edge” in real estate.
Since the lawsuit was filed last year, the Texas-based discount brokerage firm has stood by — and fervently publicized — its claims that NAR and Zillow colluded to direct home hunters to NAR-related listings. .
REX’s lawsuit primarily targets NAR’s commingling policy — REX calls it the Segregation Rule — which allows local associations to choose whether non-MLS content can appear with their own or whether it must be published separately.
The legal dispute between REX, Zillow and the National Association of REALTORS® has had its share of ups and downs over the past year and a half.
Although it granted its additional custodian designations, Zilly denied REX’s other request that the court compel NAR to turn over documents relating to or produced by NAR in the Moehrl or Sitzer antitrust lawsuits.
Both lawsuits target NAR and several prominent franchisors, accusing them of conspiring to inflate commissions through NAR’s Buyer’s Broker Commission Rule, also known as the Equity Rule.
REX attempted to draw parity between his case and the two antitrust lawsuits, saying his suit also challenges the NAR policy, which requires listing brokers to offer buying brokers a commission for listing a property in a REALTOR®-affiliated MLS. .
“REX argues that the buyer-broker commission rule is deeply implicated in this case because the segregation rule serves to protect and reinforce the buyer-agent commission rule,” the filing reads.
He said “the presence of these proposed depositories on the Working Group’s lists is sufficient to establish that their inclusion in ESI searches is reasonably calculated to lead to relevant evidence.”
Zilly found in its order that REX’s claim “is too broad, and the court is not satisfied that all of the documents produced by NAR in these actions are relevant to this case.”
NAR does not see Zilly’s recent decision as a problem.
NAR spokesperson Mantill Williams said in a statement emailed to RISMedia that “we remain confident that we will ultimately prevail.”
“These rulings deal with common issues in this phase of litigation and have nothing to do with the underlying merits of the case,” Williams said. “NAR remains committed to championing local brokerage markets that create highly competitive markets, empower small businesses, and ensure fair homeownership opportunities, superior customer service, and higher cost options for all buyers and sellers.
REX did not immediately respond to RISMedia’s requests for comment on this story.