“You made that bet and you lost”: Court backs feds on NAR antitrust probe

Appellate judges inclined to let agency reopen investigation

Appellate Judges Slam Realtors on DOJ Antitrust Probe

Attorney General Merrick Garland and NAR's Tracy Kasper (Getty, NAR)

Sheridan Wall

Dec 1, 2023, 7:55 PM

Appellate court judges pushed back against the National Association of Realtors’ attempt to stop the Department of Justice from reopening its probe of the trade group.

NAR’s attorney Christopher Michel argued on Friday that by closing its investigation into the organization’s “clear cooperation” rule in 2020, the federal agency agreed not to reopen its inquiry unless material changes occurred.

But members of the three-judge panel challenged NAR’s assertions and questioned whether a closing letter issued by the department prevented it from revisiting the investigation.

“I don’t see how you can read into this [letter] any kind of commitment about not prosecuting in the future,” Judge Florence Pan said.

During the Trump administration, the Justice Department agreed to settle its investigation into NAR’s commission-sharing policies, then withdrew from its deal under the Biden administration. A district court ruled it could not reopen the investigation, but the department filed an appeal in June.

During oral arguments, Justice Department attorney Frederick Liu argued that both the closing letter and communication between the department and the trade group prior to the agreement made clear that the agency did not agree to permanently abandon the probe.

The agency’s antitrust division “repeatedly rejected a commitment throughout negotiations,” Liu said. “The record shows that when the division does intend to make such a commitment, it does so in unmistakable language.”

When a judge questioned what purpose the letter had if not to dismiss the inquiry entirely, Liu pointed to NAR’s use of the letter as a reference in other litigation. He also argued that by making a deal to close the case, NAR bought itself time, as the decision to reopen it would only come after an internal review process.

NAR’s lawyer, Michel, tried to counter that by dismissing the benefits outlined by Liu and questioning why the department didn’t immediately reopen the investigation if that intention was made clear in the negotiations.

But Judge Justin Walker said an immediate reopening of the case would have been “pretty inexplicable.”

“You gained the benefit of being pretty confident that if the personnel and the antitrust division didn’t change after the [presidential] election, you’d be good to go,” Walker said. “You made that bet, and you lost.”

NAR’s clear cooperation policy is the subject of a host of lawsuits against the organization and some of the nation’s largest brokerages. The lawsuits challenge whether the group’s rule requiring listing brokers to offer compensation to buyer’s agents violates antitrust laws.

On Oct. 31, a Missouri jury ruled against NAR, Keller Williams and HomeServices of America in the first of the cases to go to trial. The jury awarded the plaintiffs — a group of more than 500,000 homesellers — $1.8 billion in damages.

The verdict still awaits the judge’s final decision, which could triple the damages to $5 billion under antitrust laws and mandate policy changes for the defendants.

The next trial is expected to begin in Chicago early next year.

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