California Regional Multiple Listing Service sued Compass on Monday, moving first in an escalating legal fight over the public marketing of listings withheld from the MLS.
CRMLS filed the lawsuit Oct. 5 in U.S. District Court for the Southern District of New York, one day before a deadline Compass gave the MLS to stop fining or otherwise punishing agents who publicly market what Compass calls office-exclusive listings.
The lawsuit asks a federal judge to declare CRMLS Rules 7.9 and 7.9.1 lawful under both Section 1 of the Sherman Antitrust Act and California’s Cartwright Act. CRMLS is also seeking a permanent injunction that would prevent Compass from bringing or pursuing antitrust claims against CRMLS over the rules, along with attorneys’ fees and costs.
The CRMLS filing follows a week of rapidly escalating public threats between the two sides.
Compass sent CRMLS a formal demand letter Sept. 8 giving the organization until 5 p.m. ET Oct. 6 to confirm it would no longer enforce rules penalizing agents for publicly marketing office-exclusive listings. The letter threatened a federal antitrust lawsuit if CRMLS refused, with Compass saying that the company would “spend millions of dollars to sue CRMLS and other MLSs” and seek attorneys’ fees and triple damages.
CRMLS publicly rejected that demand on Sept. 30, saying it would stand by its cooperation rules and pursue counterclaims if Compass sued. The MLS also announced plans for a legal defense fund intended to support cooperation rules and potentially aid other MLSs facing similar litigation threats.
Later that day, Compass CEO Robert Reffkin told attendees at the Council of Multiple Listing Services’ Open House conference in Fort Lauderdale that Compass planned to begin filing lawsuits in mid-October against MLSs that continued fining or punishing agents for publicly marketing office-exclusive listings. CRMLS cited those remarks in its complaint as evidence that the threatened litigation was imminent.
Reffkin reiterated Compass’ plans in social media posts over the weekend, writing that the company was “preparing a federal antitrust lawsuit against CRMLS” and telling followers to expect it “in the next few weeks.”
In the post, Reffkin also pointed to a 2018 CRMLS seller exclusion form that allowed sellers to instruct brokers to “Market the Property, but do not submit the Listing in to the MLS” until a specified date. He argued the form showed CRMLS had previously allowed the type of public marketing Compass now says should remain permissible.
In response to Inman’s request for comment, a Compass International Holdings spokesperson pointed to the company’s Sept. 8 demand letter and Reffkin’s recent social media posts, while reiterating that “homeowners should be able to publicly market any listing — including office-exclusive listings — without their agent facing thousands of dollars in fines.” The spokesperson also pointed to other MLSs that Compass says already permit public marketing of office-exclusive listings, adding that MLSs supporting more than 350,000 agents across 12 states allow the practice and that Compass believes others should follow suit.
At the center of the dispute is CRMLS Rule 7.9, which implements the National Association of Realtors’ Clear Cooperation Policy and requires brokers to submit certain residential listings to the MLS within one business day of publicly marketing them. Rule 7.9.1 allows an exclusively retained broker to keep what CRMLS calls a “No Cooperation Listing” within the brokerage without submitting it to the MLS, so long as the property is not publicly marketed.
Compass argues sellers should be able to publicly market office-exclusive listings without their agents facing MLS fines or other penalties. CRMLS, however, takes a different position. In the federal complaint, the MLS argues that a brokerage should not be able to publicly market a property while withholding it from other members of the cooperative whose listing data that brokerage continues to use.
“What the rules do not permit is having it both ways — publicly marketing a property to attract buyers while simultaneously withholding that property from the MLS cooperative and the thousands of other brokers and their buyer clients who participate in it and who do actually share their listings with the MLS cooperative,” CRMLS attorneys wrote.
The lawsuit contains two causes of action, both seeking declaratory judgments. It does not yet assert several affirmative claims CRMLS general counsel Ed Zorn previewed in a Sept. 30 response to Compass that CRMLS shared with trade media, including a Cartwright Act group-boycott claim, unfair competition and interference claims.
The case was filed in New York, where Compass is headquartered. CRMLS argues the Southern District of New York has jurisdiction because Compass is based there and conducts substantial business in the district.
