- A Washington state judge has dismissed three breach and interference claims against NAR in a countersuit brought by Zillow.
- Zillow's defamation counterclaim against the trade group was allowed to go forward because of NAR's alleged distribution of the whistleblower letter to the media.
- A neutral forensic examination of the electronic devices of three Zillow employees is ongoing.
A countersuit filed by Zillow in August against the National Association of Realtors is packing a bit less of a punch today. A Washington state court has thrown out three of the suit’s claims against the million-member trade group, but allowed claims for defamation and abuse of process to go forward.
Zillow’s counterclaims concern an April letter to attorneys for NAR co-plaintiff Move Inc. by a then-anonymous “whistleblower,” later revealed to be former Zillow executive Chris Crocker.
The letter accused Zillow of stealing listing data from agent websites to shore up its listing quality and accused Zillow exec and former Move employee Errol Samuelson of violating a preliminary injunction.
Letter contents and accuracy ‘hotly disputed’
Zillow alleges the letter publicized by Move and NAR has strained Zillow’s relations with real estate agents and had serious negative effects on Zillow’s reputation and its ability to compete.
In denying NAR’s motion to dismiss Zillow’s defamation claim, Judge Sean O’Donnell of King County Superior Court considered NAR’s alleged distribution of the letter to the media.
“While the letter is attributable to a legal proceeding, the issue here is novel: the contents themselves (and their accuracy) are hotly disputed,” O’Donnell wrote in the Dec. 8 order made public Thursday.
“NAR did not ‘report’ on the proceeding. It allegedly distributed the offending letter to the media … In so distributing the document, it arguably vouched for its accuracy. Accordingly the fair reporting privilege does not apply.”
Concerns with letter accuracy
A heavily redacted transcript of a deposition of Crocker indicates Crocker did not witness Samuelson violating the injunction order, Crocker did not know the contents of the order, and that Crocker knew his days at Zillow were numbered.
But due to the redactions, it is impossible to tell from the transcript what exactly Crocker said in regards to his arguably more significant assertions regarding theft of listing data and of Move’s confidential information.
In the deposition, Crocker does indicate that he has no knowledge of Samuelson using or disclosing Move’s confidential information while at Zillow — but that is an assertion the letter lays at the feet of Curt Beardsley, also a former Move employee that jumped ship to Zillow, not Samuelson. Beardsley has denied these allegations.
Crocker himself has said he stands by the letter.
In an emailed statement, Zillow spokeswoman Amanda Woolley said, “We are pleased the judge recognizes the distribution of the ‘anonymous letter’ was a clear attempt to discredit, disparage and damage both Zillow’s and Errol’s reputations publicly and competitively.
“The letter is a mix of false, misleading and confidential business information, of which the author himself admits he has no knowledge. We will continue to act with the utmost integrity in conducting our business and in defending against this litigation.”
Abuse of process and trade secrets claims
Zillow’s abuse of process claim also survived the judge’s order.
The judge was silent regarding Zillow’s claim that NAR violated the Washington Trade Secrets Act by disseminating the Crocker letter.
NAR told Inman it considered all of Zillow’s claims “frivolous” and planned to seek clarification regarding the trade secrets claim.
Breach and interference claims
In his order, Judge O’Donnell dismissed counterclaims against NAR and its subsidiary, Realtors Information Network (RIN), alleging breach of a protective order; aiding and abetting a breach of duty of confidentiality; and intentional interference with a contractual relationship.
The latter two claims were thrown out because “there have been no facts pled to show that either group knew of a contractual relationship between the anonymous whistleblower and Zillow or that either induced or encouraged the writer to compose and send the letter.”
In an emailed statement, NAR’s General Counsel Katie Johnson said, “[W]e are pleased the court has dismissed half of Zillow’s counterclaims against NAR.
“We think all of Zillow’s counterclaims against NAR are frivolous and look forward to getting those dismissed too. Beyond that, we don’t plan to comment on any specifics of the lawsuit.”
The next move involving Move
The judge’s order does not apply to NAR co-plaintiff Move, who was also named in Zillow’s countersuit. Move declined to comment for this story.
Moreover, the order has no effect on the first legal volley in this litigation battle: the lawsuit NAR and Move filed against Zillow accusing the company of misappropriation of trade secrets and unjust enrichment, among other claims.
As part of that suit, at the end of September the court ordered a neutral forensic examination of the electronic devices of three Zillow employees named in the Crocker letter: Samuelson, Beardsley, and Zillow’s manager of listing quality data Will Hebard. That examination is ongoing.
Editor’s note: This story has been updated to note that Move declined to comment for this story.