An analysis of the association’s petition offers a step-by-step timeline of the events leading up to the DOJ’s launch of a new probe into NAR rules.

On Monday, the National Association of Realtors sued the U.S. Department of Justice in an effort to compel the agency to stop investigating its rules regarding commissions and pocket listings. But that suit didn’t come out of nowhere. Here’s a behind-the-scenes look at the events that preceded the lawsuit, including details from NAR‘s petition against the DOJ.

June 5, 2018

The DOJ and the Federal Trade Commission held a real estate brokerage competition workshop in Washington, D.C. where panelists, including NAR’s general counsel, Redfin CEO Glenn Kelman and others, discussed pocket listings, regulation of MLSs, commissions, anti-rebate laws, agent steering of buyers and backlash against discount brokerages.

Redfin CEO Glenn Kelman, left, with Inman founder Brad Inman at Inman Connect. Both Kelman and Inman participated in the FTC’s workshop. Credit: Inman

September 18, 2018

NAR submitted to the DOJ’s Business Review program a proposed policy to incentivize brokers to enter all listings in the MLS, but subsequently withdrew that request.

November 18, 2018

A 10-year-old consent decree between the DOJ and NAR expired. The settlement mandated that the trade group not discriminate against real estate brokers using virtual office websites (VOWs). NAR pledged to keep multiple listing service (MLS) rules regarding VOWs as is, but still carefully kept the door open for possible changes to its MLS rules later.

April 12, 2019

The DOJ sent NAR a civil investigative demand seeking all documents related to the DOJ’s investigation of the Greater Las Vegas Association of Realtors (GLVAR), to rules prohibiting display of compensation offered by listing brokers to buyer brokers, to rules requiring listing brokers to offer compensation to buyer brokers in order to participate in an MLS, to restrictions on the negotiating of that compensation, to allowing brokers to filter listings by commission and to discouraging discount brokerages from offering lower commissions, among many other issues.

April 16, 2019

The DOJ issued a civil investigative demand to MLS vendor CoreLogic. The agency demanded CoreLogic turn over a bevy of information, including all documents relating to any MLS members’ ability to search based on compensation offered by listing brokers to buyer brokers. It also requested documents related to any policy or language governing the licensing of MLS data, policies relating to data protection and destruction and datasets on the frequency of searches. CoreLogic told Inman the company was not the focus of the investigation.

October 1, 2019

The DOJ filed a statement of interest in the Sitzer antitrust commission case seeking to correct what it called an “inaccurate portrayal” of the 2008 consent decree by NAR.

October 8, 2019

The DOJ filed a similar statement of interest in the larger Moehrl antitrust commission lawsuit.

November 11, 2019

NAR’s board of directors overwhelmingly approves the controversial Clear Cooperation Policy. The policy became effective January 1, 2020, with a May 1, 2020, implementation deadline.

NAR board members gathered in San Francisco in November 2019 to approve the Clear Cooperation Policy. Credit: Andrea V. Brambila

June 29, 2020

The DOJ sent NAR a civil investigative demand seeking all documents since Jan. 1, 2013, relating to off-MLS listings, including pocket listings or “coming soon” listings, or to public marketing of homes that are not listed on an MLS.

The demand also asked for all documents related to the Clear Cooperation Policy as well as the above-mentioned policy that would have incentivized brokers to submit all of their listings to the MLS.

Among many other requests, the order also sought all documents related to any communication to NAR that indicated that if offers of compensation were prohibited that that person would stop participating in an MLS or would end their NAR membership.

October 14, 2020

The DOJ sent NAR an initial draft of a proposed settlement.

October 16, 2020

NAR struck out the DOJ’s proposed reservation of rights clause from the draft, which said: “Nothing in this Final Judgment shall limit the right of the United States to investigate or bring future actions to prevent or enjoin violations of the antitrust laws concerning any NAR Rule, including any rules relating to the payment of Broker commissions or offers of compensation (e.g. NAR’s Participation Rule) or any other Rule adopted or enforced by NAR or any Member Board, that is not already specifically enjoined by this Final Judgment.”

October 21, 2020

The DOJ sent NAR a new draft with a new reservation of rights clause that omitted any reference to the Participation Rule and read: “Nothing in this Final Judgment shall limit the right of the United States to investigate and bring actions to prevent or restrain violations of the antitrust laws concerning any Rule or practice adopted or enforced by NAR or any of its Member Boards.”

October 26, 2020

NAR responded to the draft with this comment:

“NAR will only agree to sign a consent decree including this provision [the reservation of rights clause] if DOJ provides written confirmation, prior to the execution of the decree, that it will issue a closing letter to NAR upon execution of the decree that confirms:

1. the Division has closed its investigation of the Participation Rule;

2. the Division has closed its investigation of the Clear Cooperation Policy;

3. NAR has no obligation to respond to CID No. 29935 (in its entirety); and

4. NAR has no obligation to respond to CID No. 30360 (in its entirety).”

The association added that these terms “extend the contemplated terms of the closing letter to cover the Clear Cooperation Policy in return for NAR’s agreement to provide access to lockboxes.”

October 28, 2020

In an email, Samer M. Musallam, senior counsel for the office of Assistant Attorney General Makan Delrahim, responded that “once the consent decree is filed, the Division will notify NAR in its closing letter that it has closed its investigation into the Participation Rule and the Clear Cooperation and that NAR will have no obligation to respond to CID Nos. 29935 and 30360.”

November 19, 2020

NAR agreed to the proposed settlement and the DOJ filed its complaint against NAR as well as the proposed settlement with the court. Delrahim sent NAR’s attorneys a letter affirming that the DOJ had closed its investigation into the Participation Rule and the Clear Cooperation Policy and that NAR had no obligation to respond to the civil investigate demands issued in April 2019 and June 2020.

Immediately thereafter, NAR appointed its deputy general counsel, Lesley Muchow, as its Antitrust Compliance Officer as required by the settlement.

NAR told Inman that the trade group would be working with the DOJ to agree on exact rule changes within 45 days and then hold a special, virtual meeting of the NAR board of directors to approve the new rules. NAR anticipated the new rules would take effect in the first quarter of 2021.

Assistant Attorney General for Antitrust Makan Delrahim in Washington, D.C., in 2018. Credit: Chip Somodevilla Getty Images.

January 4, 2021

NAR submitted proposed rule changes to the DOJ as required by the settlement. NAR said the DOJ never responded to that proposal.

January 25, 2021

Homebuyer Judah Leeder filed an antitrust lawsuit seeking class action status against NAR alleging that the sharing of commissions between listing and buyer brokers is a conspiracy in restraint of trade in violation of the Sherman Antitrust Act for inflating buyer costs in the form of higher home prices. That suit heavily referenced the allegations in the DOJ’s November complaint against NAR.

January 29, 2021

Taking its cue from the proposed settlement, RE/MAX announced it would officially begin displaying the buyer broker commission percentage on all listings in 65 markets where the MLS data that populates its site makes the data available. Redfin followed soon thereafter.

February 15, 2021

California Regional MLS (CRMLS), the largest MLS in the nation, began displaying buyer broker commissions publicly.

March 19, 2021

Homebuyer Alfio Conti filed an antitrust lawsuit against NAR with allegations similar to the Leeder suit and to the DOJ’s complaint.

March 23, 2021

NAR told Inman the trade group is still working through the details of the settlement with the DOJ and said the process could ultimately take months.

April 15, 2021

DOJ staff contacted NAR’s counsel to schedule a time to discuss the proposed settlement.

April 19, 2021

According to NAR, its counsel and Antitrust Division staff spoke over the phone and the latter mentioned for the first time that they wanted to change the reservation of rights clause in the proposed settlement to: “The final judgment shall only terminate the claims expressly raised in the complaint. The final judgment shall not in any way affect any other charges or claims filed by the United States subsequent to the commencement of this action.”

Antitrust Division staff allegedly said they would not discuss NAR’s proposed rule changes or anything else related to the settlement until NAR agreed to the clause change. According to NAR, NAR’s counsel asked whether the change was meant to modify the agency’s commitment to close its prior investigations and the division’s staff allegedly responded that they were not prepared to answer that question.

The U.S. Department of Justice in Washington D.C. Credit: Getty Images

April 22, 2021

The two sides spoke again by phone during which NAR said it would consider the clause change, but again asked if its purpose was to change the agency’s commitment to close the previous investigations.

NAR said its counsel acknowledged that the trade group did not have immunity from all future investigations and that if NAR were to make material changes to the Participation Rule and the Clear Cooperation Policy, the agency would be able to investigate those changes. The DOJ’s staff then allegedly said they would discuss the issue internally and contact NAR’s counsel in a few days.

May 11, 2021

Katie Johnson

At NAR’s midyear conference, the association’s general counsel and chief member experience officer Katie Johnson discussed a number of lawsuits NAR was fighting, such as those dubbed Moehrl and Sitzer after their lead plaintiffs, as well as the DOJ case. She specifically revealed that NAR was still negotiating the four anticipated rule changes included in the proposed settlement.

June 1, 2021

The DOJ reached out to NAR’s counsel to ask for a third call and NAR agreed to talk the next day.

June 2, 2021

During that call, NAR alleges Antitrust Division staff claimed NAR’s position was that it would only agree to modify the reservation of rights clause if the agency agreed that Delrahim’s closing letter forever barred any investigation of NAR, to which NAR’s counsel allegedly replied that NAR had never made such a demand and that the trade group just wanted to understand how the clause change would impact the agency’s commitment to close the prior investigations before considering the modification. The DOJ’s staff then allegedly ended the call and promised to get back to NAR “promptly.”

That same day, the DOJ argued in a legal filing that a judge erred when dismissing an antitrust lawsuit against NAR over the Clear Cooperation Policy. The case was filed by the PLS, formerly a private listing network for real estate agents, and argued that NAR and various MLSs broke the law when they banned pocket listings.

The DOJ also revealed at the time that it had investigated the policy, but ultimately closed its investigation.

June 29, 2021

The DOJ sent NAR a letter saying that NAR was conditioning its consent to modify the reservation of rights clause “on the Division agreeing that a revised Reservation of Rights in no way limits NAR from arguing against any future investigation by the Division based on the letter that was sent … on November 19, 2020, where the Division informed you that it was closing its investigation.

“We cannot accept NAR’s condition. The Division does not agree that the letter in any way provides a legal defense for NAR with respect to our ability to investigate NAR’s conduct in the future. As we pointed out, there is nothing in the letter that imposes on the Division any such restriction.”

The DOJ then gave NAR until noon Eastern time on July 1 to let the agency know whether it would agree to “remove its condition” and modify the clause.

June 30, 2021

NAR’s counsel replied asking for more time to respond to the DOJ’s letter. At 7:19 p.m. that day, the DOJ threatened — for the first time, according to NAR — to withdraw from the settlement if NAR did not “agree to modify the decree unencumbered by its condition.”

July 1, 2021

At 11:27 a.m., NAR’s counsel said NAR would respond to the DOJ’s demand by July 16 and requested a meeting with Acting Assistant Attorney General for the Antitrust Division Richard Powers before the DOJ decided whether to withdraw from the settlement.

At 1:18 p.m. Antitrust Division staff replied that Powers wanted to know the purpose of the meeting to decide whether it was “worth holding” and that NAR should respond by 2 p.m. “as the Division is prepared to file the notice to withdraw depending on your response.”

“Is this meeting about how you can resolve the issue in a manner that allows the Division to investigate and potentially challenge in the future NAR’s rules, policies and conduct unencumbered by the current decree or any deal you think you had with the Division?” the DOJ staffer wrote. “Or does NAR have some other reason for this meeting? For the Front Office meeting to occur tomorrow, we need assurances from you that NAR is committed to resolving our concerns regarding the proposed settlement.”

At 1:57 p.m., NAR’s counsel responded, “We are not going to capitulate to the Division’s unilateral demands, including your demand that our client must make a decision of this magnitude on such short notice.” At 2:45 p.m., the DOJ replied, “It should be no surprise to you that, as we are at an impasse on amending the proposed decree, we need to move forward to resolve this matter in order to protect consumers and the Department’s interests.”

An hour later, at 3:47 p.m., the DOJ filed a notice of withdrawal from the proposed settlement with the court and voluntarily dismissed its lawsuit against NAR.

July 6, 2021

The DOJ issued a new civil investigative demand to NAR asking for “all documents” related to a wide range of topics, including not only the Participation Rule and the Clear Cooperation Policy, but also a rule discount brokerage REX Real Estate has sued NAR over that allows MLSs to require that brokers display MLS and non-MLS listings separately, buyer steering based on the commission offered by listing brokers, buyer and seller rebates and the Moehrl and Sitzer antitrust commission lawsuits.

Discount brokerage REX has sued NAR over listing display rules. Credit: REX

July 14, 2021

The DOJ hinted that it was digging into the Clear Cooperation Policy in a letter to the court in the PLS case.

July 25, 2021

NAR and the DOJ agreed to extend to Sept. 13 NAR’s deadlines to comply with the July 6 CID and to file a petition to set aside or modify the CID.

August 10, 2021

The DOJ filed a statement of interest in a lawsuit filed by REX against NAR and Zillow over a NAR rule that prompted Zillow to separate non-MLS listings from MLS listings on its website. The statement said that the DOJ had not determined whether the rule at issue in the REX case was consistent with antitrust laws, pro-competitive or lawful as part of the NAR-DOJ 2008 consent decree and NAR’s implication that the rule had been approved by the agency was “incorrect.”

NAR hit back by urging the court to “ignore” the DOJ’s filing, saying the agency was attempting to “rewrite” the history of the rule — a rule that was required in the 2008 settlement approved by the DOJ.

September 13, 2021

NAR filed suit against the DOJ in order to quash or at least modify the July 6 civil investigative demand.

Charlie Oppler

In a statement on Monday, NAR President Charles Oppler suggested that if the DOJ is allowed to back out of the settlement agreement it could have far-reaching legal implications.

“By its action, the DOJ thinks it should be free to reconsider the terms of an agreement at any time, for any reason — or no reason at all,” Oppler argued. “If that view prevails, it would undermine the strong public policy in favor of upholding settlement agreements and public confidence that the government will keep its word in future cases.”

Email Andrea V. Brambila.

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