The legal battle between REX Homes and NAR heats up

Discount brokerage REX Homes (Real Estate Exchange, Inc.) filed a motion on Thursday in federal district court in Seattle challenging the legality of the National Association of Realtors’ claims that REX pushes false advertising, which the trade group alleged in a countersuit filed late last month.

In the NAR’s filing, the organization alleged that REX makes false and misleading claims to deceive consumers, a violation of the Lanham Act. It said such actions discourage consumers “from obtaining the pro-consumer, pro-competitive benefits provided by NAR members and independent, local multiple listing services marketplaces.”

These filings are part of ongoing litigation between NAR and REX in the U.S. District Court for the Western District of Washington in Seattle.

REX filed an anti-trust lawsuit against NAR and Zillow last March, but this countersuit filing comes solely from NAR. NAR is seeking an injunction preventing REX from continuing its false and misleading practices, the monetary damages determined at the trial and the reimbursement of costs and attorneys’ fees, but REX sees things differently.

In this latest filing, REX alleges that its public positions are protected speech.

“While NAR has and continues to robustly argue its own case in this lawsuit and in many other public forums, NAR now seeks to enjoin REX from itself speaking out against and challenging practices that it believes violate antitrust laws and harm competition,” the motion stated.

In the motion, REX claims that the NAR lacks statutory standing to bring its Lanham Act claim because it did not bring the claim on behalf of its member and has admitted that it does not directly compete with REX. Additionally, REX said that the NAR does not adequately plead proximate causation and that the trade group did not allege any facts showing that REX has frustrated its organization mission.

“NAR’s Lanham Act claim should be dismissed because it infringes on REX’s First Amendment right to express opinions on legal and policy matters,” the motion said.

Later in the motion it states that the NAR “should not be allowed to use the Lanham Act to suppress REX’s protected speech just because NAR disagrees with the message.”

To be considered “commercial advertising or promotion” the statements in question made by REX must be commercial speech disseminated to “the relevant purchasing public to constitute “advertising” or “promotion” within that industry” “for the purpose of influencing consumers to buy goods or services.”

In addition, REX claims that the NAR did not explain exactly how REX’s alleged false advertisting harmed the trade organization.

“NAR does not allege that consumers, brokers, or anyone else have withheld trade from NAR itself,” it stated in the motion. “At best, the counterclaim can be read to allege injury to NAR’s members and/or [multiple listing services] that in turn may affect NAR. Absent a showing of ‘direct conflict’ between a defendant’s conduct and an organization’s expressly stated goals, ‘it is entirely speculative whether the defendant’s conduct in impeding the organization’s activities.”

In July, the U.S. Department of Justice (DOJ) fully walked back a settlement agreement it reached with the NAR in the waning months of the Trump administration regarding anti-trust claims. In a statement, the DOJ said it was withdrawing from the settlement so it could undertake a broader investigation into the NAR’s rules.

A few months later, former NAR president Charlie Oppler wrote an op-ed calling for the DOJ to honor the terms of the deal.

The NAR is currently embroiled in several anti-trust lawsuits, including dozens of lawsuits, where the trade organization is the defendant along with Realogy, RE/MAX, Keller Williams and HomeServices of America, from homebuyers and sellers that aim to have homebuyers pay their broker directly instead of the listing broker pay the buyer’s broker from the listing broker’s commission.

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