Zillow wins verdict in case brought by defunct brokerage

Seattle-based real estate tech company Zillow Group Inc. (Nasdaq: ZG) has closed the book on a lawsuit first filed more than two years ago.

On Sep. 29, a jury decided in favor of Zillow, which was accused of false advertising and unfair or deceptive trade practices by Real Estate Exchange (Rex), a now-defunct Austin, Texas-based real estate brokerage that ceased operations in May 2022. Rex had voluntarily withdrawn a charge of defamation against Zillow.

“We’re pleased with this victory and are ready to move on and focus on what matters: helping customers who come to Zillow get into their next home,” a Zillow spokesperson said in a statement to the Business Journal.

Rex first filed its lawsuit against Zillow and the National Association of Realtors (NAR) in March 2021 in the Western District of Washington court after Zillow redesigned its website and moved Rex’s listings on its “agent listings” tab to the more obscure “other listings” tab. Rex alleged the move hurt the company’s business.

In August, U.S. District Judge Thomas Zilly dismissed antitrust claims by Rex against Zillow and NAR. At issue was an optional NAR rule that says listings obtained through Multiple Listing Service (MLS) internet data exchanges should be separate from other listings. Rex alleged its listings were moved to “other listings” even though it used licensed real estate agents.

Rex claimed Zillow and NAR conspired to enforce this optional rule, which in turn damaged Rex’s business. Rex was not a member of NAR or any MLS.

Zilly wrote in his August ruling that “Zillow ultimately chose, without input from NAR or any MLS, to implement the two-tab display on its platforms.” Zilly also noted that Zillow experimented with different ways to display non-MLS listings before settling on the “agent listings” and “other listings” displays.

NAR was no longer a defendant in the case after Zilly’s ruling. Zillow, meanwhile, still faced Rex’s claims of false advertising, unfair or deceptive trade practices and defamation before the jury verdict.

Rex didn’t immediately respond to a request for comment on the jury verdict.

Zillow, founded in 2004, offers a home and rentals search tool, mortgages and a platform for partner agents called Premier Agent. The company generated $506 million in revenue during the second quarter of this year, up slightly from $504 million during the same period last year.