Zillow Prevails Over REX in Deceptive Practices Lawsuit

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In a recent development, online home-listing giant Zillow (ZG.O) successfully thwarted a bid by discount home brokerage REX – Real Estate Exchange for a new trial in a federal lawsuit. The lawsuit, centered around accusations of deceptive business practices, concluded with a jury’s verdict on September 29 after an eight-day trial.

Judge Upholds Verdict

In an order on Thursday, U.S. District Judge Thomas Zilly asserted that REX had failed to meet its burden to challenge the jury’s verdict. Attorneys for REX, represented by Boies Schiller Flexner, accused Zillow of suppressing the brokerage’s home listings by placing them under a secondary “other” tab on the website. The jury’s decision favored REX’s claim that Zillow violated a consumer protection law by relegating REX’s home listings to a secondary page.

Allegations of Consumer Deception

REX, positioning itself as a “disruptor,” alleged hundreds of millions of dollars in damages, claiming consumer deception and false advertising. The company, known for offering consumers the opportunity to sell their homes with lower commissions, sought a retrial on its allegation of unfair practices under Washington state’s consumer protection law.

  

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Judge Zilly emphasized that REX’s lack of success on its consumer protection claim was not due to any procedural flaw but instead supported by the record and the jury’s verdict.

Zillow’s Response

Zillow, headquartered in Seattle, expressed satisfaction with the court’s ruling, stating it would “move forward.” The company, denying any wrongdoing, cited legitimate business reasons for its website redesign, including featuring some listings on a secondary tab rather than the default site for “agent” listings. Zillow argued that REX’s closure in 2015 was unrelated to Zillow’s business practices and highlighted that its two-tab display aimed to help consumers locate real estate listing information on its website.

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Jury’s Findings

The jury found that REX had successfully proven Zillow’s violation of a consumer protection law by placing REX’s home listings on a secondary page. However, the same panel deemed Zillow’s conduct as “reasonable with the development and preservation of its business,” as stated by Judge Zilly.

Antitrust Claims Dismissed

Zillow had previously succeeded in dismissing other claims in the 2021 lawsuit before trial. The judge dismissed allegations that Zillow abused its market power, violating U.S. antitrust provisions.

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