Judge says agents don’t have a right to benefit from the contributions of fellow Realtors while withholding their own listings. In response, Top Agent Network criticizes policy’s exception for office exclusives.

A federal district court has denied a bid from Top Agent Network, a firm that operates a members-only private group of real estate agents, to stop the National Association of Realtors from enforcing a policy designed to curtail pocket listings. The court’s order also bluntly stated that TAN is “unlikely to succeed” in arguing that NAR’s policy is anticompetitive.

On May 11, TAN filed a lawsuit alleging NAR and fellow defendants the California Association of Realtors (C.A.R.) and the San Francisco Association of Realtors (SFAR) have violated a slew of antitrust and unfair competition laws for adopting the Clear Cooperation Policy, also known as MLS Policy Statement 8.0, which requires listing brokers to submit a listing to their multiple listing service within one business day of marketing a property to the public. The controversial rule is meant to effectively end the growing practice of publicizing listings for days or weeks without making them universally available to other agents.

The Clear Cooperation Policy implementation deadline was May 1, and some MLSs have instituted hefty fines to enforce it, including SFAR. Some brokerages, including Compass and The Agency, and discount franchisor Assist-2-Sell have come out against the policy while MLSs, Redfin’s Glenn Kelman and others argued in favor of it, in part because they believe it promotes fair housing.

On May 13, TAN filed a motion for a temporary restraining order and for a preliminary injunction preventing the three Realtor associations from enforcing the policy until the resolution of the lawsuit. In a May 27 order, Judge Vince Chhabria denied the motion for the restraining order. Last week, on July 16, Chhabria denied TAN’s motion for a preliminary injunction as well, saying TAN had waited six months to sue and, moreover, an injunction “would not serve the public interest.”

“Top Agent Network is unlikely to succeed in arguing that the National Association of Realtors policy amounts to a group boycott or that it otherwise has significant anticompetitive effects,” Chhabria wrote in the latest order.

While TAN’s members are “understandably resistant” to the policy, “that does not mean that NAR has ‘boycotted’ these agents: members of Top Agent Network are free to join any NAR listing service and enjoy its benefits, and they are free to withdraw if they do not like the policies. Antitrust law does not give them a right to benefit from the contributions of fellow NAR members while withholding listings of their own,” he continued.

Chhabria was also skeptical of TAN’s arguments for how the policy hurts buyers and sellers. “It is far more likely that the policy benefits buyers and sellers by increasing access to information about the housing market, thus increasing market efficiency and stimulating competition,” he wrote.

While TAN claimed that NAR possesses monopoly power and is willfully maintaining that power, Chhabria said the firm “has offered almost no legal or factual analysis to support these conclusions. It thus has failed to make a showing that there are at least serious questions as to the merits of this claim.”

In an emailed statement, TAN’s attorney, Paul Llewellyn of Lewis & Llewellyn LLP, said, “While we are disappointed by the Court’s ruling, we continue to believe that the so-called Clear Cooperation Policy is bad for consumers, bad for competition and unlawful. The NAR and its affiliates claim that the policy is pro-competitive and pro-consumer, but such argument is undermined by the fact that they carve out an exception for mega-brokerages. This only serves to hide even more listings from other agents and from consumers. We are confident a jury would agree with TAN.”

Llewellyn’s statement refers to a carve-out for office exclusives in the Clear Cooperation Policy, which allows brokers and licensees of a listing brokerage to promote a listing within the brokerage and to that brokerage’s clients one on one without having to submit the listing to the MLS. TAN CEO and founder David Faudman has previously said the carve-out “encourages double-ending of deals and puts smaller brokerages (and their clients) at a disadvantage compared to larger ones.”

In an emailed statement, NAR President Vince Malta said the 1.4 million-member trade group is pleased with the court’s decision to deny the injunction.

“We are encouraged that the Court appears to agree that the Clear Cooperation Policy benefits buyers and sellers by increasing access to information about the housing market, thus increasing market efficiency and stimulating competition. Advancing equality and access, and preventing racial discrimination in housing is an imperative,” he said.

“The Clear Cooperation Policy helps protect buyers against secretive, ‘pocket listings’ and homes kept close-to-the-chest, off the market or offered only to a choice few buyers. We continue to believe this lawsuit has no legal basis and we will vigorously contest it, as indicated in the motion to dismiss we filed.”

Also in an emailed statement, a spokesperson for the California Association of Realtors said, “C.A.R. is pleased that the court did not stop an MLS policy that is good for the home buying and selling public. The MLS is a service that provides accurate and complete information and particularly gives access to all on an equal basis.”

The more than 200,000-member trade group agreed with Chhabria’s assertions that the policy likely benefits buyers and sellers, prevents agents “‘from benefiting from the contributions of fellow NAR members while withholding listings of their own’ and prevents ‘exploitation of its own service.’ The real winners are those buying and selling homes that want full and fair access to the housing market in an equal way,” C.A.R. said.

The trade group noted that all three defendants had filed a motion to dismiss TAN’s suit and a hearing is set for September 17.

“C.A.R. has filed an additional motion as it does not own, operate or control any MLS. Nevertheless, we are pleased that this procompetitive policy will remain effective while the court is considering that motion. Both buyers and sellers benefit. Buyers of all demographics have access to make offers on all properties, and sellers get the best price by having full market exposure through the MLS,” the spokesperson said.

The San Francisco Association of Realtors declined to comment for this story, citing ongoing litigation.

Read the order:

Email Andrea V. Brambila.
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