‘Not Warranted’: DOJ Pushes Again In opposition to NAR Rehearing Request

At Inman Connect Las Vegas, July 30-Aug. 1 2024, the noise and misinformation will probably be banished, all of your huge questions will probably be answered, and new enterprise alternatives will probably be revealed. Join us.

A rehearing of the U.S. Department of Justice‘s enchantment to reopen its investigation into the Nationwide Affiliation of Realtors is “not warranted,” the federal company informed an appeals courtroom Monday.

In April 2024, the U.S. Court docket of Appeals for the District of Columbia ruled that the DOJ could reopen an investigation into NAR’s guidelines, together with a controversial fee rule at difficulty in a number of antitrust lawsuits towards the commerce group.

On Could 20, NAR petitioned for a rehearing “en banc,” which means earlier than all judges of the appeals courtroom, not simply the three who initially heard the enchantment. On June 17, the DOJ responded.

“The panel resolution is fact-bound and ‘slender,’ accurately counting on the plain language of the three-sentence letter,” the DOJ’s response filing reads.

“The Petition doesn’t establish any errors of legislation or reality meriting panel rehearing and falls far wanting assembly the ‘demandingly excessive’ requirements warranting rehearing en banc.”

The three-sentence letter refers to a doc despatched by the DOJ to NAR in November 2020, at NAR’s request, confirming that the DOJ “has closed” its investigation into the commerce group’s guidelines. The letter’s language steered a backward-looking assertion, whereas NAR had sought out future assurances, which the DOJ didn’t give, the company stated in its submitting.

Whereas NAR’s petition contends that the DOJ must be held to its alleged promise to shut its investigation, the DOJ disagreed, noting that NAR itself steered the backward-looking “has closed” language and that the DOJ didn’t instantly reopen the probe.

“[T]right here was no false consolation right here,” the DOJ’s response reads.

“Nor did the Division reopen the investigation ‘seconds later,’ however fairly eight months later after re-evaluating the details and the persevering with anticompetitive results of NAR’s guidelines on the real-estate business.”

If the appeals courtroom denies NAR’s petition for en banc evaluation, the case returns to the district courtroom. NAR’s petition particularly requested the district courtroom to both put aside a civil investigative demand (CID) — a sort of administrative subpoena — from the DOJ or modify it. As a result of the district courtroom initially dominated on the previous request and never the latter, the appeals courtroom didn’t opine on the latter request. Due to this fact, NAR could try and have the district courtroom modify the demand earlier than the commerce group is required to reply to it.

“We filed our petition in furtherance of NAR’s dedication to championing the pursuits of our members and the house shopping for and promoting public,” NAR spokesperson Mantill Williams informed Inman in an announcement.

“NAR continues that work by searching for to make sure the DOJ is held to the phrases of our 2020 settlement.”

In November 2020, the DOJ and NAR agreed to a settlement following its investigation into NAR guidelines, which required NAR to extend business transparency in relation to dealer commissions and to cease claiming that purchaser dealer providers are freed from cost.

In July 2021, the DOJ withdrew from the settlement (often known as a “consent decree”), stating that the agreed-upon phrases prevented regulators from persevering with to analyze different NAR insurance policies that they felt may hurt homebuyers and sellers.

“[T]he Division determined that it was essential to reopen its investigation into a number of NAR guidelines and practices—together with the 4 guidelines within the withdrawn consent decree, the Participation Rule, and the Clear Cooperation Coverage — in gentle of proof of their persevering with menace of anticompetitive results within the residential real-estate market,” DOJ’s response submitting reads.

Days later, the company despatched NAR one other CID searching for new data on the commerce group’s guidelines, together with:

• The Participation Rule, which requires itemizing brokers to supply a blanket, unilateral provide of compensation to purchaser brokers as a way to submit an inventory right into a Realtor-affiliated a number of itemizing service.
• The Clear Cooperation Coverage, which requires itemizing brokers to submit an inventory to their Realtor-affiliated MLS inside one enterprise day of promoting a property to the general public.

Then in September 2021, NAR filed a petition for the DOJ to both modify or pause its investigation into NAR.

In January 2023, Decide Timothy Kelly of the U.S. District Court docket for the District of Columbia dominated in favor of NAR, stating that the sooner settlement phrases had been nonetheless legitimate. Later that spring, the DOJ appealed the ruling and the three-judge panel heard oral arguments from NAR and the DOJ in December 2023. In April 2024, the Court of Appeals reversed the decision of the district courtroom, permitting the DOJ to proceed its investigation.

NAR filed its rehearing petition in Could 2024, stating that the courtroom’s resolution contained “far-reaching and exceptionally vital” errors.

The DOJ’s response to that petition additionally states that the petition doesn’t declare the panel’s resolution “conflicts with some other courtroom of appeals resolution addressing related details and circumstances,” opposite to a degree NAR made in its petition.

The petition acknowledged, “The divided panel’s resolution on this vital government-contract interpretation case goes ‘the place no courtroom has gone earlier than,’ immediately conflicts with precedents of this Court docket and the Supreme Court docket, and can reshape the panorama for all ‘who discover themselves on the opposite aspect of the bargaining desk’ with the federal government.”

The DOJ additionally famous that the three-judge panel had discovered NAR obtained vital advantages because of the DOJ’s three-sentence letter, together with having the ability to current the letter to the courtroom in its litigation with ThePLS.com over its pocket itemizing rule, the CCP.

“NAR could have wished extra from the letter than what it truly supplied — together with a forward-looking dedication — however that doesn’t make the Division’s promise to offer the letter illusory,” the DOJ’s response reads. “Unable to extract a dedication to not reinvestigate from the Division in negotiation, NAR can not now learn unspoken phrases into the letter’s plain language to achieve the very same advantages the Division informed NAR it could by no means grant.”

The DOJ’s response additionally shut down NAR’s suggestion in its petition that reopening the investigation would have “sweeping penalties for different non-public events when coping with the federal government in different contexts.”

The circumstances of the litigation between NAR and the DOJ are “particular” and “idiosyncratic,” which matches towards NAR’s competition that the appeals courtroom’s resolution to permit the DOJ to reopen its investigation could have such penalties, in keeping with the DOJ.

“Federal antitrust investigations and enforcement actions sometimes are resolved by a consent decree, with none letter just like the one at difficulty right here,” the submitting reads.

Regardless, any such consent decree is topic to public remark and a judicial evaluation course of beneath the Tunney Act and will due to this fact benefit modification earlier than being finalized, the submitting suggests.

“NAR’s unsupported rhetoric concerning the authorities repudiating its obligations and needing to show ‘sq. corners’ is query begging, as a result of it incorrectly assumes that the Division made a promise to chorus from future investigation — which by no means occurred and isn’t mirrored anyplace within the proposed consent decree or closing letter,” the DOJ’s response acknowledged.

“NAR’s argument that the Division ‘sought to decrease’ the guarantees made by the previous administration fails for a similar motive,” it continues. “On the contrary, the Division’s place then and now is identical — that it could not and couldn’t promise to chorus from future investigation due to inside insurance policies towards limiting the longer term train of prosecutorial discretion.”

The DOJ additionally filed an announcement of curiosity in February following a settlement in a serious fee case generally known as Nosalek, which referred to as for a number of itemizing service MLS Property Data Community (MLS PIN) to make adjustments in how commissions are agreed upon. How these arguments pan out may even have implications for a way the federal government handles its case towards NAR, ought to the DOJ’s investigation be allowed to proceed. Final week, MLS PIN urged Decide Patti B. Saris of the U.S. District Court docket for the District of Massachusetts to reject the DOJ’s arguments towards the settlement.

Learn the DOJ’s response to NAR’s petition:

Editor’s be aware: This story has been up to date with additional particulars from the DOJ’s response submitting and a remark from NAR.

Email Lillian Dickerson