A real estate technology company has asked a judge to dismiss a counterclaim against it filed by the National Association of Realtors (NAR). REX sued NAR in March 2021, claiming its competitive mode is threatened by the concerted action of NAR and Seattle-based Zillow, along with their multiple listing services (MLS) affiliates.

REX is seeking an award of treble damages and reasonable attorneys’ fees for alleged violations of the Sherman Antitrust Act and Washington Consumer Protection Act (CPA).

REX claimed Zillow’s decision to join NAR and affiliated MLSs to conceal all non-MLS listings on Zillow’s heavily trafficked websites has led to a dramatic loss of traffic to REX’s listings and higher commissions for NAR members. REX then filed an amended complaint acknowledging many NAR MLSs did not require Zillow to make changes to its website.

Last month, NAR and Zillow asked the court to dismiss the amended complaint, alleging REX’s latest theory meant NAR’s rules apply equally to all NAR-affiliated MLSs—and thus did not require MLSs to prohibit commingling, and, by extension, did not require Zillow to make changes to its website.

U.S. District Judge Thomas Zilly previously concluded the amended complaint plausibly alleges Zillow changed its websites because of NAR’s rules, meaning REX’s antitrust lawsuit against NAR and Zillow Group could move forward. 

After Zilly’s decision, NAR filed a counterclaim alleging its rules have a legitimate business justification and accusing REX of engaging in deceptive practices through the lawsuit.

NAR is seeking an injunction under the Lanham Act – which protects businesses against the unfair competition of misleading advertising or labeling –to permanently prevent REX from making false statements about its services and commercial activities. The trade association is also seeking unspecified damages and attorneys’ fees.

However, REX is arguing the counterclaim should be dismissed for several reasons.

“First, NAR lacks Article III standing to assert this claim on its own behalf,” REX attorney Michael Vaska stated in the suit. “NAR admits it does not bring this claim on behalf of its members, and it fails to plead the elements of organizational standing or to allege a concrete and particularized injury in fact. Spending money to defend this lawsuit is not sufficient injury to confer standing. 

“Second, NAR lacks statutory standing to bring this claim under the Lanham Act because it does not adequately plead proximate causation. Alleging injury to NAR members—real estate brokers who compete with REX—is not the same as alleging injury to NAR itself.

“Finally, NAR fails to plead sufficient facts to state a claim for false advertising. REX’s commentary on the state of the real estate industry is not commercial speech, as the Lanham Act requires. It is speech about important legal and policy issues and is protected by the First Amendment. REX’s views on commercial, legal, and social matters are also not statements of fact, but opinions.”

NAR’s counterclaim alleged its reputation with consumers and its own members have been harmed by REX’s allegations.

REX argued NAR’s counterclaim aims to penalize it for speech that is protected under the First Amendment, including certain statements critical of NAR that appeared in media outlets.

“NAR may not use the Lanham Act to silence speech with which it disagrees,” Vaska added.  The counterclaim should be dismissed.”

The case is REX – Real Estate Exchange, Inc. – v. Zillow, Inc.; Trulia, LLC and The National Association of Realtors (U.S. District Court Western District of Washington at Seattle, No. 21-cv-00312).