WASHINGTON (CN) — A split D.C. Circuit panel ruled on Friday that the Justice Department can reopen an antitrust investigation into the National Association of Realtors.
A three-judge panel, made up of U.S. Circuit judges Florence Pan, Karen Henderson and Justin Walker found that language in a 2020 settlement agreement between the parties did not foreclose the reopening of the probe into the trade group’s listing and agent compensation policies.
The judges — Pan a Joe Biden appointee, Henderson a George H.W. Bush appointee, and Walker a Donald Trump appointee — ruled 2-1, with Walker dissenting.
Pan, writing the majority opinion, noted that the issue before the court was a narrow one which hinged on whether the settlement represented a quid pro quo between the parties, as Walker understood it.
In his view, the trade group agreed to give up four alternate policies in exchange for the DOJ closing its investigation into the two listing and agent compensation policies.
“Put simply, the fact that DOJ ‘closed its investigation’ does not guarantee that the investigation would stay closed forever,” Pan wrote. “The words ‘close’ and ‘reopen’ are unambiguously compatible.”
In 2018, the DOJ’s Antitrust Division opened an investigation into the trade group’s operation of “multiple-listing services,” an online, subscription-based database that lists properties on the market in certain areas. There are hundreds of these sites throughout the country, some with tens of thousands of participants.
In April 2019, the DOJ focused on a longstanding policy, first implemented in the 1970s, known as the “Participation Rule.” The policy required listing brokers to offer the same commission to all buyer-brokers when listing a property on the listing sites. In the government’s eyes, the rule restrained price competition among buyer-brokers and lead them to push customers to higher-commission listings.
In June 2020, the DOJ turned its attention to a newly adopted rule, the “Clear Cooperation Policy,” that required listing brokers to post a property on the online listing sites within one day of when they begin marketing the property.
The government believed the policy restricted home-seller choices and blocked new competitive listing services from entering the market.
The real estate group moved to settle the case, originally demanding the government agree not to investigate the participation rule for the next decade, but the DOJ refused. The parties ultimately agreed to settle, leaving the participation rule and the clear cooperation policy alone for the time being, but reserving the government’s right to return to the issues in the future.
In exchange, the rules the realtors group agreed to bring in line with antitrust laws included: A rule that allowed brokers to hide the unilateral blanket-commission buyer-brokers receive from homebuyers; a rule that allowed brokers to market their services as free; a rule that allowed brokers to filter properties on the listing sites by commission rates; and a rule that barred non-National Association of Realtor brokers from accessing lockboxes that held keys to listed properties.
However, the real estate group asked the DOJ to issue a closing letter, indicating that it had closed the probe into the two policies. Again, the government agreed, but wrote that “no inference should be drawn” from its decision to close the investigations.
"The plain meaning of that provision is that DOJ closed its then-pending investigation and relieved NAR of its obligation to respond to two specifically identified Civil Investigative Demands,” Pan wrote. “We discern no commitment by DOJ — express or implied — to refrain from either opening a new investigation or reopening its closed investigation, which might entail simply issuing new CIDs related to NAR’s policies.”
In Walker’s dissent, he asked what, if anything, the DOJ had given up by agreeing to close its investigation into the two policies.
“Nothing, if we believe DOJ. As it sees things, it could immediately reopen its investigation because anything ‘closed’ can be reopened at any time,” the Trump appointee wrote.
“No court identified by DOJ has endorsed such a reading. Nor should we. Because DOJ misreads one isolated word (‘closed’) to nullify what the realtors gained from an otherwise comprehensive and comprehensible contract, I respectfully dissent,” Walker wrote.
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