The Supreme Court didn’t explain its reasoning for the decision, which will now allow the Department of Justice to reopen its investigation into the association’s cooperative compensation rule.
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The National Association of Realtors faced another legal blow on Monday when the U. S. Supreme Court declined to take its case against the Department of Justice.
The Supreme Court didn’t explain its reasoning for the decision, which now allows the Department of Justice to reopen its investigation into the association’s controversial commission and pocket listing rules.
“While the Supreme Court ultimately decided against reviewing the lower court’s decision, NAR remains committed to taking every possible step to fight for the interests of our members and the consumers they serve,” a NAR spokesperson told Inman in a statement.
How NAR will continue its fight is unclear. NAR’s loss of its appeal means that the case returns to the district court where NAR’s petition to either pause or modify the DOJ’s investigation was originally filed.
Now that NAR has failed in stopping the probe, the trade group may attempt to have the administrative subpoena the DOJ sent the trade group back in July 2021 cut back to make it less onerous.
The subpoena, also known as a civil investigative demand (CID), sought information on some of NAR’s rules, including:
- The now-defunct Participation Rule, which required listing brokers to offer blanket, unilateral offers of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated multiple listing service.
- The Clear Cooperation Policy, which requires listing brokers to submit a listing to their Realtor-affiliated MLS within one business day of marketing a property to the public.
Both rules have been the subject of multiple antitrust lawsuits, some of which are still ongoing. NAR eliminated the Participation Rule, also known as the cooperative compensation rule, as part of its landmark $418 million nationwide settlement of commission-related cases last year. The deal also prohibited listing brokers from making pre-emptive offers of compensation to buyer brokers via the MLS.
However, the DOJ has indicated that that settlement did not go far enough and that the federal agency would prefer that listing brokers and sellers not be able to make pre-emptive offers of compensation to buyer brokers anywhere, including outside of the MLS. Resuming its probe into the rule may be an initial step for the DOJ in a road toward a lawsuit against NAR.
NAR and the DOJ reached a proposed settlement in November 2020, which led to the association making several clarifications regarding the now-defunct cooperative compensation rule and lockbox access for agents who aren’t subscribed to the MLS.
However, in July 2021 the DOJ withdrew from the settlement, saying NAR refused to agree to a modification that would protect the Department’s right to investigate future anticompetitive claims. A few months later it was revealed that the DOJ resumed its investigation into NAR’s commission and pocket listing rules a few days after withdrawing from the settlement and dropping its initial complaint.
NAR jumped into action, hoping to force the DOJ to uphold the original agreement. NAR took its case before the U.S. Court of Appeals for the District of Columbia Circuit in December 2023, and when that failed, NAR filed a petition in October to hand the case over to the Supreme Court, saying the DOJ must keep “contractual promises just like other parties.”
“If left in place, the decision below will unsettle the interests of the diverse private parties who routinely contract with the government, from sophisticated firms vital to our nation’s economy to criminal defendants confronted with the government’s vast prosecutorial advantages,” NAR’s attorneys wrote in the October filing.
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