REX Real Estate is appealing a federal district court’s decision to toss the discount real estate brokerage’s antitrust lawsuit seeking to stop Oregon officials from enforcing a state anti-rebate law.
Last month, U.S. District Court Judge Marco A. Hernández granted the defendants’ motions to dismiss the case. In doing so, Hernández stressed that he wasn’t ruling “on the wisdom of Oregon’s anti-rebate policy” and noted that REX had made “compelling arguments that excessive fixed broker commissions harm consumers and the housing market.”
“Plaintiff notes that the U.S. Department of Justice has begun to take action against the anti-competitive activity of traditional real estate brokers and that many states allow commission rebates to home buyers,” he wrote.
On Monday, REX filed a notice of appeal to the 9th U.S. Circuit Court of Appeals in the case.
“We’re appealing because the state of Oregon failed to show any reason why consumers should be forced to pay thousands of dollars more to buy homes,” Michael Toth, REX’s general counsel, told Inman via email.
“More choice and competition is what home buyers need if we are going to see the American Dream survive. The law and facts support REX’s claim and we’re going to keep fighting for consumer choice until home shoppers everywhere are finally back in control.”
REX, a licensed and active broker in 17 states, is a discount full-service real estate brokerage that says it uses “scalable technology” as a means to deliver discounts to buyers through commission fee rebates. The brokerage says its program results in homes costing, on average, 1.25 to 1.5 percent less for buyers.
The brokerage launched in Oregon in January 2019 and soon after received a letter from the Oregon Real Estate Agency — the state agency that licenses real estate brokerage and agents and regulates real estate activity — targeting REX’s buyer rebate program.
REX was violating state law by sharing commission dollars with an unlicensed individual — in this case, the homeowner — the agency said in that March 2019 letter. REX stopped offering rebates in Oregon after that and filed the suit against state officials just over a year ago, alleging the state’s law both harms consumers and stifles competition by barring new entrants and protecting incumbent brokers who benefit from artificially high commissions.
According to Hernández, a state acting in its sovereign capacity “is generally immune from federal antitrust laws” and Governor Kate Brown and the other state officials the brokerage sued were acting on behalf of the state to enforce an anti-rebate law enacted by the state legislature and were thus protected from antitrust liability.
In addition, “[e]ven if Defendants were not entitled to state-action immunity, Plaintiff has failed to allege facts that make its antitrust claim plausible on its face,” Hernández wrote.
He pointed out that “the Sherman Act requires an agreement to restrain trade made between ‘separate economic actors pursuing separate economic interests’” but that the defendants were all members of the executive branch of the Oregon state government.
REX had also sued state officials alleging violations of the due process and equal protections clauses of the Fourteenth Amendment, but the court didn’t buy those claims either, noting that the defendants had stated a “legitimate purpose” behind the law: preventing individuals without real estate licenses from receiving compensation for work that can only be performed by state-licensed real estate professionals.
Only seven states now prohibit real estate commission rebates altogether — Oregon, Kansas, Oklahoma, Missouri, Tennessee, Mississippi, and Alaska — and two states restrict rebates, Iowa and New Jersey.