Six MLSs from across the country have come together to file a lawsuit against Compass International Holdings looking to prevent the real estate behemoth from filing antitrust lawsuits against them.
On Wednesday in U.S. District Court for the Southern District of New York, Arizona Regional MLS, Bridge MLS, Canopy MLS, REcolorado, Hive MLS, and Doorify MLS filed a lawsuit seeking declaratory and injunctive relief.
This lawsuit follows one also filed in U.S. District Court for the Southern District of New York earlier this month by California Regional MLS (CRMLS) which seeks the same outcomes.
As in CRMLS’s lawsuit, the MLS plaintiffs are seeking a declaratory judgement from the court allowing them to continue enforcing their cooperation rules and policies without violating antitrust law. Additionally, as in the CRMLS lawsuit, they are also seeking an injunction permanently barring Compass from “bringing or pursuing any claim against any MLS Party alleging that the Cooperation Rules violate the federal antitrust laws or the state antitrust laws.”
The allegations
In the suit, the plaintiffs argue that Compass’s desire to publicly market office exclusive or private listing properties before sharing them with the wider market via the MLS gives Compass an unfair competitive advantage and undermines the MLS system.
The MLSs claim they were prompted to file this lawsuit after Compass sent demand letters to MLSs across the country in early September, threatening to sue them if they did not stop fining or penalizing Compass’s agents for publicly marketing office-exclusive listings. Compass International Holdings CEO Robert Reffkin reiterated these threats on stage at the Council of MLSs’ Open House conference in late September, claiming that his firm would spend millions of dollars pursuing litigation against MLSs that refused to comply.
While Compass has contended in public statements and in its recently filed lawsuit against CRMLS, that the MLS is anticompetitive as it is made up of a board of competitors that are creating rules governing how Compass and other members can run their businesses, the six MLS plaintiffs argue that their cooperation rules promote competition among broker members.
“By requiring that publicly marketed listings be promptly submitted to the MLS, the Cooperation Rules reduce hidden inventory and improve the completeness, accuracy and timeliness of information to provide an efficient market for all participants and consumers,” the complaint states. “This transparency benefits both buyers, who gain access to a more complete picture of available properties, and sellers, who benefit from the most efficient pricing.”
In addition, the MLS plaintiffs contend that the rules help prevent brokers from using the MLS to find buyers while withholding their own listings from free-riding on the contributions of other participants. The complaint also cites the Federal Trade Commission and Department of Justice‘s 2007 report on competition in real estate brokerage to support its position that MLSs create efficiencies and provide meaningful benefits to consumers.
Compass’s position remains steady
In an emailed statement, a Compass spokesperson reiterated the firm’s position that “homeowners should be able to publicly market any listing, including office exclusive listings, without their agent facing thousands of dollars in fines.”
“Currently, MLSs supporting more than 350,000 real estate agents across 12 states allow sellers to publicly market any listing, and we believe all MLSs should follow their lead, giving homeowners more flexibility in how they market their homes and bringing more inventory to buyers,” the spokesperson added. “Only the law and the homeowner should tell agents how to publicly market a home, and these MLSs are neither the law nor the homeowner. Agents should be free to compete on the marketing strategies they offer.”
Last Friday, Compass filed its own lawsuit against CRMLS, alleging that the MLS’s rules unlawfully restrict how homeowners and their agents can publicly market properties outside the MLS.
What the MLSs have to say
In a letter obtained and verified by HousingWire, AnneMarie DeCatsye, the CEO of Canopy Realtors, which owns Canopy MLS, told participants and subscribers that it joined the litigation to “protect the core purpose of the MLS—maintaining a comprehensive database of accurate, timely information about real estate listings that no individual broker could create.”
DeCatsye wrote that the MLS’s position is that “seller choice, broker innovation, and cooperation are not mutually exclusive.” She said that while Canopy MLS recognizes that sellers have different needs and priorities, which are served by the MLS’s listing options that include Coming Soon, Private Exclusive and Limited Exposure, “there is an important distinction between a seller choosing privacy and a brokerage publicly marketing a property while withholding that listing from the MLS cooperative database.”
“We believe that when a property is marketed publicly, sharing that information through the MLS supports transparency, fair competition, and the interests of consumers,” she wrote. “Canopy MLS serves firms of every size and business model. Our responsibility is to operate in a way that supports competition, provides meaningful choices for consumers, and allows real estate professionals to succeed based on the service and expertise they provide.”
The other MLS plaintiffs did not immediately return HousingWire’s request for comment.
While CRMLS, ARMLS, Bridge MLS, Canopy MLS, REcolorado, Hive MLS, and Doorify MLS are the only MLSs so far to file lawsuits against Compass, both Unlock MLS and OneKey MLS have publicly rejected Compass’s demands.
