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Former pocket listing service The PLS is urging the highest court in the land to reject a request from the National Association of Realtors to overturn an appeals court ruling allowing an antitrust case over the trade group’s pocket listing policy to continue.
On Dec. 6, The PLS filed an opposition brief to NAR’s September petition to the U.S. Supreme Court for a “writ of certiorari,” asking the court to review a ruling by the Ninth U.S. Circuit Court of Appeals made in April. That ruling allowed a case filed by The PLS to proceed, overturning a lower court decision that had thrown it out. (The PLS now calls itself The NLS, though it remains The PLS in legal filings.)
The suit alleges that NAR and three of the largest multiple listing services in the nation — California Regional MLS, Bright MLS and Midwest Real Estate Data (MRED) — had violated the federal Sherman Antitrust Act and California’s Cartwright Act for adopting the Clear Cooperation Policy, which requires listing brokers to submit a listing to their MLS within one business day of marketing a property to the public. This includes marketing a property in a private listing service, such as that formerly run by The PLS.
The policy has attracted the attention of the U.S. Department of Justice, which is currently investigating NAR over the CCP and other rules. A DOJ attorney also spoke at oral arguments in The PLS’s appeal in January.
“It would be hard to fathom a more obviously anticompetitive agreement than the Clear Cooperation Policy,” attorneys for The PLS wrote in the opposition filing.
“PLS introduced competition in the market for real estate listing services by giving both sellers’ agents and buyers’ agents a choice.”
In an emailed statement to Inman, NAR spokesperson Mantill Williams argues that the opposition filing overlooked the trade group’s “core position” to “preserve a practice that provides the most information and the best possible market for homebuyers and sellers.”
“As was noted by the federal judge who initially dismissed this case, the Clear Cooperation Policy (CCP) provides consumers with ‘access to more information regarding market conditions, enabling them to make better informed choices about the bundle of real estate brokerage services that will best serve their needs,” Williams said.
“As a leading advocate for homeownership, NAR determined that CCP was needed as a crucial protection for consumers, and it was overwhelmingly adopted. It ensures that publicly marketed property listings are widely available and accessible to all consumers.”
When NAR submitted its petition, the 1.6-million-member trade group argued that the Ninth Circuit’s ruling overturning the dismissal of The PLS’s case was “contrary and erroneous” and failed to follow previous case law, “sowing confusion and inviting future courts to ignore or misapply fundamental principles of antitrust law.”
Specifically, NAR argued against the lower court’s interpretation of the relevant market in the case as well as the lower court’s analysis on standing (the legal right to sue).
But in its opposition filing, The PLS contends that neither issue warranted the Supreme Court’s review. Regarding the former, NAR had argued that the relevant market in the case is MLSs as “a home-listing platform for buyers and sellers” and therefore argued that The PLS must allege a plausible injury to participants on both sides of the real estate market — not just to sellers, but also to buyers.
But The PLS argued that the relevant market is MLSs as listing services for listing agents and buyer agents. The PLS alleged the CCP harmed both types of agents by limiting competition to Realtor-affiliated MLSs and threatening agents with MLS membership suspension if they did not comply with the policy.
“PLS enabled sellers’ agents to choose a listing service that allowed them greater discretion to preserve their clients’ privacy and discretion,” the filing reads.
“But that choice is wiped away if every listing must also be posted on an MLS within 24 hours. PLS gave buyers’ agents the choice of a database granting access to pocket listings that previously would be known only through word of mouth. By forcing all PLS listings to transform into non-pocket listings on MLSs, the Clear Cooperation Policy wiped that choice away too.
“In short, by enacting the Clear Cooperation Policy, NAR and its affiliated MLSs destroyed the opportunity of both buyers’ agents and sellers’ agents to choose the database service they liked best and forced them to use the MLS instead.
“The incumbent MLSs did this not by selling a better product, but by conspiring to destroy the livelihood of any dissenting real estate agent who used PLS without obeying NAR’s commands.”
This caused agents to stop listing solely on The PLS with “devastating consequences” for agents, sellers, buyers and The PLS, according to the filing.
“[A]gents were forced to pay more money for a less valuable service — a service that eliminated both sellers’ freedom of choice and buyers’ opportunities to access a nationwide database of pocket listings,” the filing reads.
“Home buyers and sellers lost the ability to choose their preferred ways to buy and sell houses. And PLS lost listings, participants, commercial opportunities, and access to capital.”
The opposition filing also pushes back against NAR’s assertion that antitrust injuries to real estate agents lack standing to sue because, as members of NAR, they are alleged “co-conspirators” in the adoption of the Clear Cooperation Policy.
But The PLS maintains that agents are not co-conspirators.
“To the contrary, PLS alleges that affected real estate agents resisted promulgation of the Clear Cooperation Policy,” according to the filing.
“To the extent those agents complied with the Clear Cooperation Policy, it was only because MLSs threatened them with fines and expulsion if they did not. Having attempted to squelch those dissenters’ efforts, petitioners cannot turn around and claim that the dissenters are ‘coconspirators’ whose injuries (such as paying supracompetitive prices to access MLSs) must be disregarded.”
To say that a member of an organization can’t suffer an antitrust injury from that organization’s anticompetitive policies is “wrong,” according to the filing.
“Industry organizations routinely impose anticompetitive restraints that harm a subset of their members; those members suffer antitrust injuries and have standing to sue,” the filing reads.
It is unknown when the Supreme Court will decide whether to “grant cert” to review the case, but it may be as soon as two weeks from the filing of the opposition brief.
The odds are on The PLS’s side: According to the federal government, four of the nine justices on the Supreme Court must vote to accept a case and the court only accepts a tiny percentage of the cases it’s asked to review each year: 100-150 of more than 7,000 cases. The court usually only agrees to hear a case if it “could have national significance, might harmonize conflicting decisions in the federal Circuit courts, and/or could have precedential value.”