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A three-judge panel on the Ninth Circuit Court of Appeals has ruled against REX Real Estate, affirming lower court rulings that threw out its antitrust claims against the National Association of Realtors and Zillow and denied the now-defunct real estate brokerage a new trial against Zillow.
Ninth Circuit judges Sidney R. Thomas, Daniel Aaron Bress, and Ana de Alba ruled Monday that REX, also known as Real Estate Exchange, had failed to provide direct or circumstantial evidence of “concerted action” between NAR and Zillow and that the NAR rule at issue itself was not direct evidence of such action and therefore the lower court did not err in its ruling.
The rule at issue in the U.S. District Court for the Western District of Washington was NAR’s no-commingling rule, which Realtor-affiliated MLSs may adopt to prohibit their participants from displaying listings that come from MLSs together with listings that come from non-MLS sources.
Once Zillow changed its business model to become an MLS participant in order to receive MLSs’ Internet Data Exchange (IDX) listing feeds, the company changed its website design to a two-tab display where the default tab showed MLS listings and “Other Listings” appeared in a separate tab that users had to click in order to see. Because for much of its existence REX did not participate in MLSs, the brokerage alleged that the rule and Zillow’s subsequent implementation caused traffic to its listings to plummet and violated state and federal antitrust laws.
On Feb. 13, the Ninth Circuit held oral arguments in the case, with each side and the U.S. Department of Justice getting a chance to speak. Alice A. Wang, counsel to the assistant attorney general at the DOJ’’s Antitrust Division, asked that the case be sent back to the district court, arguing that “an optional rule could be mandatory in practice,” “the adoption of an optional rule can itself be concerted action,” and “an optional rule can serve as an invitation for others to join in a common plan.”
But the three-judge panel disagreed.
“Each NAR-affiliated multiple listing service (‘MLS’) independently chose whether to adopt the rule, and indeed twenty-nine percent of them did not,” the ruling says.
“The rule was in fact optional and does not establish a [Sherman Act] agreement by itself.”
The judges also concluded that Zillow independently redesigned its site to comply with the rule.
“REX has not provided either direct or circumstantial evidence demonstrating that NAR agreed to this website design, or that Zillow did anything more than ‘merely accept[]’ and comply with the optional no-commingling rule promulgated by NAR and adopted by some MLSs,” the ruling says.
“Nor did the no-commingling rule itself direct how Zillow or others should separately display listings from MLS and non-MLS sources.”
The judges noted that REX hadn’t clearly made any separate claim of conspiracy between Zillow and individual MLSs that didn’t include NAR.
“In its Amended Complaint, REX referred repeatedly to the ‘NAR/MLS regime’ or ‘NAR/MLS cartel,'” the ruling says.
“REX also alleged a nationwide conspiracy ‘[b]ecause Zillow’s universal display change concealing non-MLS listings is implemented nationally’ and did not limit its allegations to only those jurisdictions where an MLS had adopted the no-commingling rule.
“Any conspiracy between Zillow and MLSs alone was not clearly raised before the district court and accordingly need not be considered on appeal.”
The judges concluded that Zillow had provided “sufficient evidence” for the district court to instruct the jury on Zillow’s reasonable business practice defense to REX’s claims.
“As the district court noted in its denial of REX’s motion for a new trial, Zillow provided evidence at trial that it designed its two-tab display thinking REX’s listings would not be included on either tab after Zillow switched to IDX feeds,” the ruling says.
“Later, at REX’s request, Zillow accommodated REX by including its listings on the ‘Other listings’ tab. The district court correctly noted that ‘[t]he jury could have viewed this last-minute decision as being in the best interests of both REX and Zillow and therefore reasonable.’
“Zillow was thus entitled to receive a jury instruction on its reasonable business practice defense.”
In an emailed statement, an NAR spokesperson told Inman, “In affirming the decision of the district court, the appeals court emphasized what we’ve said from day one—NAR’s no-commingling rule never constituted an antitrust violation.
“The rule is optional, leaving MLSs the choice whether to adopt it, and, in fact, 29% of them chose not to. We are pleased to put this meritless lawsuit behind us and maintain our focus on delivering value for our membership.”
Inman has reached out to REX’s outside counsel, Boies, Schiller & Flexner, and will update this story if and when a response is received.
“Zillow was founded on increasing transparency in real estate, and we have a long history of advocating for consumers through our products and services,” a Zillow spokesperson told Inman.
“We’re pleased with the Ninth Circuit having affirmed what we’ve said all along – REX’s claims have been without merit since the start of this matter.”
REX first sued NAR and Zillow in March 2021. When reports indicated that REX was closing shop in May 2022, REX blamed NAR and Zillow for the death of REX’s business model.
REX’s antitrust claims against NAR and Zillow were thrown out before trial, REX lost on its remaining claims at trial, and then the brokerage was subsequently denied a request for a retrial. REX appealed in February 2024 and today’s ruling comes just over a year later.
Unless REX chooses to take its case to the U.S. Supreme Court, this may be the end of the line for the flame-throwing brokerage.
Founded in 2015, REX began as a self-described disrupter that employed salaried agents, charged homesellers a 2-percent listing fee, had a policy of never paying outside buyer’s brokers and eschewed MLSs, at least initially.
REX’s investors and advisors included Governors Chris Christie and Jeb Bush. The company alleged it had worked with the DOJ in an investigation against NAR and sent the antitrust enforcer hundreds of recordings of agents steering their buyer clients away from REX listings.
In October 2021, REX operated in 41 markets in 20 states. At that time, the brokerage told Inman its overall market share in the second quarter of 2021 was 0.05 percent. REX’s market share was highest in Jacksonville, Florida (0.16 percent) and Los Angeles (0.15 percent).
As of Aug. 23, 2021, REX had 145 real estate licensees, who were salaried, and 402 employees total, including client support staff and data scientists. The brokerage had 235 active listings. Counting those that had signed a listing but had not gone live yet and those that were in escrow, REX had 548 committed listings, the company told Inman.
The firm would cease operations less than a year later.
Read the appeals court’s ruling (re-load page if document is not visible):
Editor’s note: This story has been updated with statement from NAR and Zillow and background information about REX.
