Judge locks in DOJ v. NAR settlement

Case draws to a close after 3-year battle

Settlement of an antitrust lawsuit that the federal government filed three years ago against the nation’s largest real estate trade organization is now final.

U.S. District Court Judge Matthew Kennelly this week issued a final judgment to settle the U.S. v. National Association of Realtors case — the lawsuit was originally filed in September 2005 and amended in October 2005.

The federal government had charged that the Realtor group approved policies governing the online sharing and display of property listings information that were illegally restrictive, while the Realtor group countered that the policies did not violate federal antitrust law.

A proposed settlement was reached in May 2008, just weeks before a trial was set to begin. The Justice Department had initiated an investigation of NAR policies in 2003.

The proposed settlement was amended slightly (see Inman News) to address public comments received, and Judge Kennelly signed off on these amendments in issuing a final judgment.

In a statement today, NAR President Charles McMillan said, "This is a great day for real estate and for consumers. This compromise is terrific news for the industry. We are pleased with the settlement so that we can all focus now on what matters most — stabilizing the housing market and helping the U.S. economy recover."

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The final settlement provides that the Realtor group does not admit any liability or wrongdoing, NAR also noted in its statement.

Gina Talamona, a Justice Department spokeswoman, said in a statement, "We are pleased that the judge entered the settlement. The department believes that the NAR settlement enhances competition in the real estate brokerage industry giving consumers more choices, better quality service and lower commissions."

Under the settlement agreement, NAR must adopt a "Modified Virtual Office Web site (VOW) Policy" that allows member brokers who participate in multiple listing services to operate Web sites that carry property information from other brokers and does not allow other brokers to "opt out" from sharing property listings information with those VOW sites.

The settlement could potentially lead MLS participants to display a broader range of property information on MLS participants’ public-facing Web sites, though consumers will be required to register at VOW sites before gaining access to this more extensive set of information.

"The impact of the amended VOW policy is expected to be minimal, since most consumers do not use VOWs because these sites require online registration," NAR officials said in a statement.

The settlement does not affect NAR’s policies for Internet Data Exchange (IDX) sites, which are powered by data-sharing agreements among brokers. Brokers participating in IDX sharing agreements can choose to withhold property information from other MLS participants.

NAR officials are required in the settlement to direct local Realtor boards to repeal the former VOW policy and a separate hybrid policy dubbed the Internet Listing Display (ILD) if they had adopted those policies, and to direct those boards to adopt the Modified VOW policy within 90 days of the final judgment, which was issued on Tuesday, Nov. 18.

NAR is directed in the final settlement to deny insurance coverage under any NAR insurance policy to boards that do not comply with the settlement and to report to the Justice Department "the identity of that member board and the rule or practice it refused to rescind and cease to enforce."

NAR must designate an "Antitrust Compliance Officer" by mid-December who has responsibility for "educating member boards about the antitrust laws and for achieving full compliance with this final judgment."

And on a quarterly basis NAR must hand over to the Justice Department copies of any communications "with any person containing allegations of any member’s board’s noncompliance with any provision of the Modified VOW policy or with this final judgment or failure to enforce any rules implementing the Modified VOW policy."

NAR is also required to publish a prominent link on its Realtor.org Web site to a Web site that has published copies of the final judgment, a notice to repeal ILD and VOW policies, and a copy of the Modified VOW policy. And NAR must publish all of these items in an upcoming issue of its Realtor Magazine publication.

Laurie Janik, during an NAR annual conference earlier this month, detailed other provisions of the then-pending settlement before an audience of MLS officials (see Inman News), such as requirements that participants in NAR-affiliated MLSs actively engage in the business of real estate brokerage or risk losing participation as of May 27, 2009.

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