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The U.S. Justice Department told an appeals court on Monday that there is “no need” to revisit the U.S. Department of Justice’s request to reopen its investigation into the National Association of Realtors.
In April 2024, the U.S. Court of Appeals for the District of Columbia ruled that the Justice Department could reopen its investigation into NAR rules, including the Commission’s rules at issue in multiple antitrust lawsuits against the trade group.
On May 20, NAR requested an “en banc” rehearing, meaning a rehearing before all the judges of the Court of Appeal, not just the three who originally heard the appeal. On June 17, the U.S. Department of Justice responded.
“The panel’s decision is fact-based, ‘narrow,’ and correctly relies on the simple language of the three-sentence letter,” the Justice Department’s response document reads.
“The petition does not allege any errors of law or fact that warrant rehearing by the panel, and falls far short of the ‘demandingly high’ standard warranting rehearing. on the bench”.
The three-sentence letter refers to a document the DOJ sent to NAR in November 2020 at its request, confirming that the DOJ “has concluded” its investigation into the trade group’s rules. The agency said in its filing that the letter’s language suggested a backward-looking statement and that NAR had sought assurances about the future, which the Justice Department did not provide.
While NAR’s petition argued that the DOJ should abide by its purported promise to close the investigation, the DOJ disagreed, noting that the NAR itself implied backward-looking “closed” language and that the DOJ did not immediately reopen the investigation.
“[T]There is no false comfort here,” the Justice Department’s response read.
“The Department also did not reopen the investigation ‘seconds later,’ but eight months later after reassessing the facts and the NAR rule’s ongoing anticompetitive effects on the real estate industry.”
If the appeals court denies NAR’s request for en banc review, the case will return to the district court. NAR’s petition specifically asks the district court to set aside or modify the Department of Justice’s civil investigative demand (CID), a type of administrative subpoena. Because the district court originally ruled on the former request but not the latter, the Court of Appeals did not express its opinion on the latter request. Therefore, NAR may try to get the district court to modify the request before asking the trade group to respond.
In November 2020, the Justice Department and NAR agreed to a settlement following an investigation into the NAR rule, which requires NAR to increase industry transparency related to broker commissions and stop claiming that buyer broker services are free.
In July 2021, the Justice Department withdrew the settlement agreement, also known as a “consent order,” saying the agreed-upon terms prevented regulators from continuing to investigate other NAR policies that they believed could harm homebuyers and sellers.
“[T]The Department determined that it was necessary to reinvestigate several of NAR’s rules and practices, including four rules in the withdrawn consent order, the Rules of Engagement, and the Clear Cooperation Policy, because of evidence that these rules and practices continued to threaten anticompetitive effects. residential real estate market,” the Justice Department’s response document reads.
Days later, the agency sent another CID to NAR seeking new information about the trade group’s rules, including:
- this rules of engagementwhich requires the listing broker to provide a buyer’s agent with a package of unilateral compensation for submitting the listing to a real estate broker-affiliated multiple listing service.
- this clear cooperation policythe listing agent is asked to submit the listing to their real estate agent-affiliated MLS within one business day of marketing the property to the public.
Subsequently, in September 2021, NAR submitted a petition to the DOJ requesting that the investigation into NAR be modified or suspended.
In January 2023, Judge Timothy Kelly of the U.S. District Court for the District of Columbia ruled in favor of NAR, saying that the terms of the previous settlement remained in effect. Later that spring, the Justice Department appealed the ruling, and a three-judge panel heard oral arguments from NAR and the Justice Department in December 2023. The Justice Department continues to investigate.
NAR filed a petition for rehearing in May 2024, stating that the court’s decision contained “far-reaching and extremely important” errors.
The U.S. Department of Justice’s response to the petition also noted that the petition certainly not Claiming that the panel’s ruling “conflicts any other Court of Appeals ruling dealing with similar facts and circumstances,” is contrary to the argument NAR made in its petition.
The petition states that “the divided panel’s decision in this momentous government contract interpretation case is ‘something the Court has never done before,’ is in direct conflict with precedent from this Court and the Supreme Court, and will reshape all who ‘find themselves ‘ pattern.
The Justice Department also noted that the three-judge panel found that NAR derived substantial benefits from the Justice Department’s three-sentence letter, including being able to submit the letter to the court in its litigation with ThePLS.com over its pocket listing rules. , the Communist Party of China.
“NAR may have hoped for more from this letter than what it actually provided, including forward-looking promises, but that does not mean the department’s commitment to provide the letter was illusory,” the Justice Department said in response wrote. “Having been unable to negotiate a commitment from the department not to reinvestigate, NAR is now unable to interpret the unstated terms of the letter into plain language and gain exactly the same benefit that the department told NAR it would never grant.”
The DOJ’s response also rejected NAR’s suggestion in the petition that reopening the investigation would have “sweeping consequences for other private parties dealing with the government in other contexts.”
According to the Justice Department, the circumstances of the litigation between NAR and DOJ are “specific” and “unique,” contradicting NAR’s argument that the appeals court’s decision to allow DOJ to reopen the investigation would have such consequences.
“Federal antitrust investigations and enforcement actions are typically resolved through consent orders and are not subject to any correspondence like the one discussed here,” the filing reads.
In any event, any such consent decree would be subject to public comment and judicial review processes under the Tunney Act, and therefore may need to be revised before being finalized, the documents show.
“NAR’s baseless assertion that the government refuses to meet its obligations and needs to ‘beat around the bush’ is questionable because it wrongly assumes that the department made a commitment not to pursue future investigations—a commitment that never occurred, Nor is it reflected in the proposed consent.
“NAR’s argument that the department ‘attempted to dilute’ the commitments made by the previous administration fails for the same reason,” it continued. “Instead, the Division’s position then is the same as it is today – that the Division would not and could not commit to not conducting future investigations because of internal policy against limiting the future exercise of prosecutorial discretion.”
The Justice Department also filed a statement of interest in February following the settlement of a major Nosalek commission case that asked the Multiple Listing Service MLS Property Information Network (MLS PIN) to change the way commissions are negotiated. The outcome of these arguments could also have implications for how the government handles cases against NAR if the Justice Department is allowed to continue its investigation. Last week, MLS PIN urged U.S. District Judge Patti B. Saris of the District of Massachusetts to reject the Justice Department’s arguments against the settlement.
Read DOJ’s response to the NAR petition:
Editor’s note: This article has been updated with additional details from the Justice Department’s response documents.
Email Lillian Dixon
