An antitrust lawsuit claiming that Zillow created an illegal tying arrangement between its marketing platform and Zillow Home Loans has been allowed to continue.
In a ruling on Tuesday, Judge James Robart of U.S. District Court for the Western District of Washington denied Zillow’s motion to dismiss the Dupuis suit, allowing the plaintiffs’ antitrust, consumer-protection and unjust-enrichment claims to move forward.
The lawsuit was filed in January by Stephanie Dupuis, the team leader and owner of a Kitsap County-based real estate team. In the suit, the plaintiffs claimed that Zillow is a “monopoly power” and agents like Dupuis feel it is “impossible to do business” without Zillow being involved in at least part of their business. It is due to this that Dupuis said she and her team felt like they needed to get into the Zillow ecosystem, signing an agreement to become a Preferred Agent.
Notable in the ruling is that the plaintiffs’ monopoly claims survived, with the judge noting Zillow’s referral commission of 35%-40%, which the plaintiffs claim is above the market average of 20%-25%, as potential evidence of Zillow’s ability to leverage its position in the home-search ecosystem. Additionally, Judge Robart found that the plaintiffs’ allegations that Zillow has over 60% audience share was sufficient to plead barriers to entry.
In looking at Zillow’s market power, the court also found that the plaintiffs had plausibly alleged that Zillow uses its power over referrals to force agents to use its CRM Follow Up Boss.
“The fact that Zillow could successfully force high-volume real estate teams nationwide to adopt or maintain an otherwise unwanted CRM platform under threat of immediate referral termination is, in itself, a plausible behavioral indicator of market power,” the judge wrote.
In reaching this conclusion, Judge Robart rejected Zillow’s argument that agents could simply leave the platform if they didn’t like the terms, noting that antitrust liability isn’t necessarily defeated simply because customers theoretically have the option of walking away.
Additionally, the plaintiffs’ claims that agents who fail to meet targets for mortgage pre-approvals through Zillow Home Loans could receive fewer or lower-quality leads or ultimately lose access to the program were also allowed to stand.
In an emailed statement, a Zillow spokesperson told HousingWire that the company continues “to believe the plaintiff’s claims are fundamentally flawed.”
“Buyers on Zillow are always in control of which agent and lender they work with. Zillow gives consumers and agents genuine choice, and nothing alleged in this litigation changes that. We will continue to vigorously defend ourselves,” the spokesperson added.
