Compass International Holdings has filed an antitrust lawsuit against California Regional Multiple Listing Service (CRMLS), alleging that rules at the nation’s second-largest MLS unlawfully restrict how homeowners and their agents can publicly market properties outside the MLS.
Filed on Friday in U.S. District Court for the Central District of California, the complaint claims CRMLS imposes fines of up to $2,500 on real estate agents who follow a client’s lawful instructions to publicly market a property without placing it in CRMLS. In some cases, agents can face suspension or expulsion for noncompliance with the rules, according to Compass.
Compass argues those policies prevent sellers, working with their agents, from choosing a marketing strategy tailored to their needs, such as privacy-sensitive or phased exposure campaigns. The company says builders and developers of new homes are not subject to the same restrictions and contends that individual homeowners should have similar flexibility to market their homes.
Competitors ‘dictating how Compass can compete’
“Every single member of CRMLS’s Board of Directors is a direct competitor of Compass and its agents, and they are dictating how Compass and its agents can and cannot compete, how Compass and its agents can and cannot serve their clients, and how homeowners can and cannot market their own homes,” Compass writes in the complaint. “Only the law and the homeowner should tell agents how to market a home, and CRMLS is neither the law nor the homeowner.”
“Compass’s decision to pursue litigation does not change our commitment to protecting a fair, transparent and competitive real estate marketplace,” said CRMLS CEO Art Carter. “CRMLS stands firmly behind the principles of cooperation that have served brokers, agents, buyers, and sellers for decades. Our rules are designed to support fair competition, preserve seller choice and ensure that no brokerage gains an unfair advantage by benefiting from the cooperative while withholding its own publicly marketed listings.”
A different approach
Compass notes that other MLSs have taken a different approach to private listings. According to the company, MLSs serving more than 350,000 brokers and agents in at least 12 states do not fine or discipline agents for publicly marketing homes outside the MLS when doing so in accordance with a client’s lawful instructions.
In a move with immediate operational implications for agents, Compass said its Compass International Holdings unit will now pay all CRMLS fines levied on agents affiliated with its company-owned brokerages — Coldwell Banker Realty, Compass and Sotheby’s International Realty — when those fines stem from public marketing outside CRMLS that is done at a client’s written direction.
To access that benefit, agents must submit the CRMLS fine notice to a designated Compass email address and assign to Compass their right to sue CRMLS over those fines. Compass said it plans to incorporate those individual claims into its broader antitrust case.
Compass is seeking a court order invalidating what it calls “competition-blocking rules” at CRMLS and recovery of damages related to the policies. Any damages awarded under antitrust law would be automatically tripled.
According to Carter, “We believe cooperation is fundamental to a healthy real estate marketplace, and we will vigorously defend our rules and the interests of the real estate professionals and consumers who depend on them. While we would have preferred to resolve these differences without litigation, CRMLS remains steadfast in its commitment to protecting the integrity of the cooperative marketplace.”
Legal back and forth
This lawsuit comes a little over a week after CRMLS sued Compass in U.S. District Court for the Southern District of New York. In this lawsuit, CRMLS is seeking declaratory judgement that its Cooperation Rules do not violate state and federal antitrust laws and “ an injunction permanently enjoining Compass from bringing or pursuing any claim against CRMLS alleging that the Cooperation Rules violate the federal or state antitrust laws.”
CRMLS filed this suit after receiving a demand letter from Compass in early September in which the real estate conglomerate alleged that its rules violate antitrust law. In late September, CRMLS publicly rejected Compass’s demands that it stop enforcing rules governing when publicly marketed listings must be submitted to the MLS for cooperation.
At the Council of MLS’s Open House conference in late September, Compass CEO Robert Reffkin threatened to sue any MLS that fined his agents for publicly marketing private exclusive listings.
