U.S. Supreme Court
WASHINGTON, D.C. - The U.S. Supreme Court has declined to take up an appeal from the owners of a defunct home sale site, who were attempting to potentially secure billions of dollars in damages from the National Association of Realtors and online real estate giant Zillow for allegedly using allegedly illegal "optional" industry rules to sidestep federal antitrust law and drive their growing competitor out of business.
The Supreme Court rejected the appeal of the owners of the Real Estate Exchange company in orders issued Oct. 20. The order denying the appeal was not accompanied by any dissents.
A spokesperson for the National Association of Realtors said the group was "pleased" by the high court's decision in the matter, allowing the rulings of lower courts in their favor to stand.
“As we have said from day one, NAR’s optional no-commingling rule was not an antitrust violation," the NAR spokesperson said in a prepared statement.
An attorney representing the REX group said they do not believe the Supreme Court's decision not to take up the case represents a repudiation of their position.
"REX understands the Supreme Court lacks the time to hear all worthy appeals, and that the denial of REX’s petition is not an endorsement of the flawed decision below," said attorney Bennett Rawicki, of the firm of Hilgers Graben PLLC, of Dallas, Texas.
"REX continues to believe that its appeal, and the issue presented, are critical for the Supreme Court to correct."
The Austin, Texas-based REX filed suit in 2021, about six years after businessman and former investment banker Jack Ryan and his business partners launched the online company. Ryan is also a former candidate for U.S. Senate in Illinois.
According to published reports, Ryan decided to start up REX after experiencing a home purchase process in which he reportedly did almost all of the work while his agent was out of the country, yet his agent still received the usual commission.
At that point, REX was launched with the goal of "resetting the traditional real estate broker model and upending how Americans interact with real estate," and specifically to slash the fees paid by American home sellers and buyers from the traditional 6% fees paid in the U.S. to more closely align with the 2-3% paid in other countries.
On the sale of a $450,000 home, such a reduction could save home sellers and buyers tens of thousands of dollars in commissions paid to real estate agents.
According to court filings and public statements, REX attempted to do so, in large part, by bypassing the so-called Multiple Listing Services (MLS) run by NAR members, instead bringing listings direct to consumers through online listing sites, like Zillow, and social media platforms, like Facebook and Instagram.
At the same time, the NAR and large U.S. brokerages were targeted by a storm of lawsuits, taking aim at the commission and fee structure as monopolistic and collusive violations of federal antitrust laws.
The NAR and others targeted by the suits settled in 2024, paying hundreds of millions of dollars and, more consequentially, agreeing to reform its fee and commission practices to allow greater fee flexibility, particularly for sellers.
However, in their legal action, REX argued the alleged antitrust behaviors of the NAR and its partners haven't ended.
Specifically, the lawsuit asserts NAR sought to protect its members through rules designed to control which real estate listings are seen online by people searching for their next home, allegedly with the goal of ultimately leading home buyers to pay more in commissions and fees.
The lawsuit asserts this allegedly illegal anti-competitive behavior is evidenced in an alleged agreement between NAR and Zillow to abide by a so-called "Segregation Rule," also known as a "no-commingling rule."
Under that rule, Zillow allegedly created a two-tier listing system, which allegedly buried listings posted by non-NAR member realty services, like REX.
According to REX, after Zillow agreed to segregate listings from REX and other non-NAR members, pageviews of REX's listings declined by at least 80%.
REX and Ryan have asserted in court and public statements that this alleged collusion drove them out of business within 18 months, allegedly costing them billions of dollars in lost business.
REX's legal arguments, however, came up short in both federal district court and on appeal at the U.S. Ninth Circuit Court of Appeals.
n those rulings, the judges determined REX had fallen short of proving an illegal conspiracy, in part, because the NAR's "Segregation Rule" was "optional."
Despite the wins in court, the NAR still repealed the "optional" rule concerning real estate listings earlier this year, appearing to come into line with the demands laid out in the REX lawsuit.
REX, however, continued the legal fight, appealing to the Supreme Court in the hope the high court would use the case to clear up thorny legal questions surrounding whether business associations, like NAR, can use such "optional rules" to allegedly conspire and stifle competitors and industry innovation.
"This case is an opportunity to close the antitrust loophole of 'optional' rules, thus protecting the economic health of the country from thinly veiled conspiracies to restrain competition. The competition restrained here - which the lower courts did not consider or remedy after mistakenly ruling there was no conspiracy - affects transactions totaling $2 trillion each year," REX wrote in its Supreme Court petition.
Other groups joined with REX before the high court, urging the Supreme Court to take up the matter to end "the evisceration of competition" under such "optional rules."
The National Association of Realtors said the Supreme Court's refusal of REX's appeal indicates the NAR had acted within the law, despite its repeal of the "no-commingling" rule.
"Both the district court and the 9th Circuit Court of Appeals affirmed this, and we are pleased their rulings will stand," the NAR spokesperson said. "Local MLSs play a key role in fostering transparent, competitive, and fair housing markets by delivering consumers the most accurate and up-to-date information on home listings. While the optional rule is no longer in effect, NAR remains committed to protecting the benefits MLSs provide agents, consumers, and the industry.”
