Seattle-based Zillow won a federal court case against a real estate startup Friday, defeating claims that it violated antitrust and consumer protection laws when it separated certain listings on its website.
More than two years after the Texas-based real estate brokerage Rex filed the case in federal court in Seattle, a jury sided with Zillow Friday.
The lawsuit stemmed from a 2021 change to Zillow’s website. After Zillow joined the National Association of Realtors and began gathering listings directly from multiple listing services, the company categorized properties for sale online under two separate tabs. One tab, “agent listings,” showed properties from multiple listing services, where agents traditionally share property listings. Other homes were on an “other listings” tab.
Rex marketed homes without listing them in a multiple listing service, and so its listings were relegated to the “other listings” tab. The change allegedly tanked traffic to Rex’s listings, and the company sued Zillow and the National Association of Realtors, claiming the change illegally limited competition.
Rex argued that separating the listings served to keep real estate commissions high by favoring traditional agents and amounted to collaboration between Zillow and the NAR to deny non-MLS members access to prominent portions of Zillow’s site.
Rex also claimed that Zillow violated the Washington Consumer Protection Act and federal laws against false advertising because the separate tab could “deceive consumers into the false belief that REX listings are not by licensed real estate agents.” Zillow and the NAR denied the allegations.
A federal judge in August dismissed Rex’s antitrust claims, finding that Rex failed to show a conspiracy between Zillow and NAR. Zillow “independently designed and implemented” the change to its website, wrote U.S. District Judge Thomas Zilly.
On Friday, a jury sided with Zillow in the other claims, too.
The jury denied Rex’s claim that Zillow engaged in false advertising. On another claim that Zillow violated the Washington Consumer Protection Act, the jury found that Rex proved its elements of that claim but Zillow prevailed because the changes were “reasonable in relation to the development and preservation of its business,” an allowed defense under state law.
“We’re pleased with today’s victory and are ready to move on and focus on what matters: helping customers who come to Zillow get into their next home,” Zillow said in a statement Friday night.
Rex appeared to shutter its residential real estate business last year, blaming the Zillow change, according to court records and media reports. The company did not return a request for comment.