California Association of Realtors hit with antitrust suit over listing requirement

A group of real estate agents filed an antitrust lawsuit Monday against the National Association of Realtors and its subsidiaries in California, accusing them of abusing their market dominance by requiring them to use the association's listing service.

The lawsuit was filed by Top Agent Network Inc., a group of real estate agents who buy and sell homes for clients without using the multiple listing service in so-called "pocket listings." Its "matchmaking service" is popular with celebrities who are selling their homes and other property owners who either don't want to disclose information or are testing the market.

Last year, the National Association of Realtors passed a rule requiring all brokers to submit the listing to the service within one business day. The rule went into effect May 1, and the San Francisco Association of Realtors has threatened to fine brokers $5,000 for the first violation, with the penalty doubling or tripling for subsequent violations, according to the complaint.

"You can't set unlawful, anticompetitive rules," said Paul T. Llewellyn, a partner at Lewis & Llewellyn LLP who represents Top Agent Network(TAN), a private company with nearly 10,000 members in 31 chapters across the nation, mostly in regions with high real estate values, such as California and Hawaii. The members pay $475 a year.

Llewellyn wrote in the complaint, "In San Francisco, for example, Off-MLS sales increased 68% between 2010 and 2018. As explained below, TAN provides an 'Off-MLS' alternative choice for home sellers and buyers." Top Agent Network Inc. v. National Association of Realtors et al., 20-CV03198 (N.D. Cal., filed May 11, 2020).

The lawsuit alleges violations of federal and state antitrust statutes, a violation of California's unfair competition law, and intentional interference with Top Agent Network's contractual relations with its members.

Mantill Williams, a spokesperson for the National Association of Realtors, said in a statement the group would fight the litigation, which he said "has no legal basis."

The new association policy "ensures greater transparency and competition between real estate listings and between brokers, while still addressing privacy concerns," the statement added.

"Importantly, the policy only applies to listings that are publicly marketed," Williams added. "In those instances, the REALTOR(r) has concluded cooperation with other MLS participants is in their client's interests and enables the listing to be shared with the widest group of potential buyers. This benefits both sellers and buyers and promotes equal opportunity for all."

Llewellyn, however, said in the complaint the National Association of Realtors is just trying to eliminate a competitor. He claims the rule forces agents to "violate the California Consumer Privacy Act by listing clients' protected, personal information on the MLS for thousands of people to find, forcing sellers to choose either to risk their privacy or not to have their home marketed in any way."