Judge denies Zillow’s motion for summary judgement in the REX suit

Things are continuing to heat up in Zillow Group’s legal battle with discount brokerage REX Homes, as the September 18, 2023, trial date looms ever closer.

On Friday, Judge Thomas Zilly, the U.S. District Court judge in Seattle overseeing the lawsuit, issued a minute order denying in part and deferring in part Zillow’s motion for summary judgement in the case.

In mid-June, the three parties involved in the suit, Zillow, REX and the National Association of Realtors (NAR), all filed motions for summary judgment on at least some issues, if not the entire lawsuit.

Three of REX’s claims Zillow filed motions for summary judgement on were denied by Zilly, while Zillow’s motion for summary judgement on REX’s antitrust claim was deferred.

Originally filed by REX in March 2021, the lawsuit alleges that changes made to Zillow’s website “unfairly hides certain listings, shrinking their exposure and diminishing competition among real estate brokers.”

Two months prior, in January 2021, Zillow began moving homes out of its initial search results for sellers who chose not to use agents adhering to the NAR and local multiple listing service (MLS) practices.

In January 2022, NAR filed a countersuit claiming that REX uses false advertising and misleading claims to deceive consumers in violation of the Lanham Act, but the countersuit was dismissed in late April 2022.

In mid-May 2022, REX ceased its brokerage operations. 

Since then, REX, Zillow and NAR have gone back and forth with filing various motions to compel during the discovery phase of the trial.

In his minute order filed on Friday, Zilly denied Zillow’s motion for summary judgement on REX’s Lanham Act claim, REX’s claim for unfair and deceptive trade practices and REX’s defamation claim.

In regards to REX’s Lanham Act claim, Zillow contended that REX cannot prove that the allegedly false statements in question were made in “commercial advertising or promotion,” and that REX cannot establish injury or damages. However, Zilly felt that Zillow had not demonstrated that REX is unable to satisfy the test for commercial advertising or promotion.

In its motion for summary judgement, Zillow also claimed that REX’s unfair or deceptive trade practices claim should fail if the Lanham Act claim fails. However, according to Zilly’s order, REX has pleaded “both the “unfair” and “deceptive” prongs” of a consumer protection act (CPA) violation.

“Zillow has not demonstrated that it is entitled to judgment as a matter of law with respect to REX’s CPA claim,” Zilly wrote.

Finally, Zillow’s motion for summary judgement on REX’s defamation claim also was also denied. In the motion, Zillow argued that REX’s defamation claim fails as a matter of law as REX cannot prove damages, however, during oral arguments REX noted that it only seeks nominal damages. Zilly denied the motion as he felt that given the record on this claim, “the Court cannot determine as a matter of law whether REX can prove the actual malice necessary to be entitled to nominal or presumed damages.”

NAR and REX also filed motions for summary judgement on the case in June, but rulings have not yet been issued. 

“We continue to maintain the claims made in REX’s lawsuit are without merit. REX chose to use Zillow’s services to advertise their for-sale properties on Zillow – for free. Zillow has consistently advocated for outdated rules to be changed to allow the broader display of all listings on all platforms, including For Sale By Owner and listings from other companies like REX.  Zillow’s business decisions were squarely focused on improving the data on our site and the experience for customers,” Will Lemke, Zillow’s corporate communications manager, wrote in an email. “We hope the court sees this suit for what it is: REX seized upon Zillow’s website design change to hide its own business failings.”

NAR also believes its side will succeed in the lawsuit.

“While NAR was not a party in Zillow’s filing, we still believe the law is on our side and we remain confident we will ultimately prevail,” Mantill Williams, NAR’s vice president of communications, wrote in an email. “NAR guidelines and local broker marketplaces create highly competitive markets, empower small businesses and ensure equitable home ownership opportunities, superior customer service and greater cost options for all buyers and sellers”

Lawyers for REX did not offer comment on the ruling at this time.