A federal judge on Monday dismissed a proposed class-action lawsuit accusing Zillow and several brokerage partners of misleading homebuyers about the company’s agent referral and mortgage programs.
The case, Taylor v. Zillow, alleged Zillow violated the Real Estate Settlement Procedures Act, state consumer protection laws and the Racketeer Influenced and Corrupt Organizations Act through its Flex program, which charges participating agents a referral fee on closed transactions and includes performance targets tied to Zillow Home Loans.
The plaintiffs claimed those arrangements inflated commissions and deprived buyers of opportunities to secure better mortgage terms. The litigation has also involved eXp Realty, The Real Brokerage, GK Properties and the Frano Team, although Real and the Frano Team were dismissed from the federal case in June after the court compelled the claims against them to arbitration.
When the case surfaced in April, an eXp spokesperson told Inman that the firm had “been improperly named in this matter.”
U.S. District Judge James Robart of the Western District of Washington granted motions to dismiss filed by Zillow and GK Properties, finding that the plaintiffs had not adequately supported their claims.
On the consumer-protection allegations, Robart wrote that the plaintiffs “fail to identify any deceptive conduct or problematic representations by the Zillow Defendants that is likely to mislead a reasonable consumer.” He added that their claims of insufficient notice were “implausible given Zillow’s express, repeated disclosures.”
Robart also found that the plaintiffs had not adequately shown financial harm, writing that they failed to allege facts demonstrating that Flex commissions were higher than those charged by non-Flex agents or that Zillow’s preapproval process caused them injury.
In a blog post Monday, Zillow characterized the ruling as a rejection of a “baseless” lawsuit, saying the plaintiffs had described ordinary business activity and called it a conspiracy. Zillow also noted Judge Robart’s finding that Zillow displays the property’s actual listing agent on its website.
Zillow said buyers are not required to use a Zillow-connected agent or obtain financing through Zillow Home Loans and argued that the plaintiffs failed to show that either service increased their housing or borrowing costs.
The dismissal does not necessarily end the case, as Robart ordered the plaintiffs to file an amended complaint by Aug. 17.
