Zillow Group will have to defend against an antitrust lawsuit brought by real estate agents who allege the housing platform used its market position to pressure them to direct prospective borrowers toward Zillow Home Loans.
US District Judge James L. Robart on Sept. 28 rejected Zillow’s request to dismiss the case, allowing claims brought by Washington real estate agent Stephanie Dupuis and other agents to move forward, according to Real Estate News. The decision does not determine whether the allegations are ultimately true but finds that the plaintiffs have pleaded claims sufficient to proceed at this stage of the litigation.
Dupuis filed the proposed class action in January on behalf of agents who participated in Zillow Group’s Preferred or Flex Agent programs beginning in January 2022. Agents from Maryland and Oregon have also joined the case, Real Estate News reported.
At the center of the dispute is the relationship between Zillow’s agent-referral business and its mortgage operation.
The complaint alleges that agents participating in Zillow’s program can receive different volumes or quality of customer leads depending on their success in obtaining Zillow Home Loans preapprovals for prospective buyers. It also alleges that Zillow monitors agents through its Follow Up Boss customer-management platform and penalizes agents who fail to meet mortgage-related targets, according to Real Estate News. Zillow disputes the allegations.
The plaintiffs characterize those practices as an unlawful use of Zillow’s market power and contend that participation in the company’s referral network effectively ties agents to other Zillow products and services.
Robart concluded that the alleged consequences for agents who did not meet Zillow Home Loans targets were sufficient to support the case at the pleading stage. According to Real Estate News, the judge pointed to allegations of lost business, shrinking lead pipelines and removal from Zillow’s Preferred program as potential injuries to agents’ businesses.
The ruling also rejected, for purposes of the motion to dismiss, Zillow’s argument that agents could avoid the alleged pressure by leaving the company’s platform. Robart cited Ninth Circuit precedent concerning tying claims and found that the plaintiffs had plausibly alleged that Zillow’s importance as a source of prospective homebuyers could make withdrawing from its referral system commercially difficult for independent agents, Real Estate News reported.
We’d love to be your preferred source for news.
Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!
Related: Zillow’s Chicago Antitrust Fight Heads to Arbitration
Zillow said it continues to dispute the case.
“Buyers on Zillow are always in control of which agent and lender they work with,” a company spokesperson said in a statement provided to Real Estate News. The company said its services provide consumers and agents with choice and that it intends to defend itself against the lawsuit.
The decision comes as Zillow faces several legal disputes involving its role in the U.S. residential real estate market.
A separate case, commonly referred to as Taylor/Armstrong, has also challenged relationships among Zillow’s lead-generation business, affiliated agents and Zillow Home Loans. Robart dismissed that lawsuit in July while permitting the plaintiffs to amend their complaint. The plaintiffs subsequently filed another version, and Zillow has asked the court to dismiss it with prejudice, according to Real Estate News.
The outcomes so far illustrate the different procedural paths that similar challenges to Zillow’s business practices can take. In the Taylor/Armstrong litigation, Robart previously found deficiencies in claims involving federal real estate settlement law and consumer disclosures. In the Dupuis case, however, the judge determined that the agents’ antitrust allegations met the lower threshold required to survive an initial dismissal request.
The Dupuis ruling means the litigation can continue into later stages, where the plaintiffs will face a higher burden than the plausibility standard used to evaluate a motion to dismiss. The court has not ruled that Zillow violated antitrust law or that the plaintiffs will ultimately prevail.
Source: Real Estate News
Add as Preferred Source