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On Monday, a long legal battle involving the National Association of Realtors and the Department of Justice finally came to an end.
Or did you do it?
The case revolves around a Department of Justice investigation into two rules regarding NAR listings and agent compensation. The Justice Department wanted to reopen an investigation into the rules, but NAR argued that federal authorities had agreed not to investigate. NAR appealed to the Supreme Court, which declined to take the case on Monday. Mr. Inman reported on the situation in detail, but at first glance the Supreme Court’s decision has an air of finality.
Nevertheless, NAR struck a defiant tone, asserting in a statement Monday that it will “take every possible step to fight for the interests of our members and the consumers they serve.”
With that in mind, Inman reached out to several lawyers who specialize in real estate, antitrust, or both to find out what’s next and what kind of battles lie ahead. The takeaway from these conversations is that most lawyers were not surprised by the Supreme Court’s results. But that result doesn’t mean the end of the story. There are likely to be many legal wranglings ahead, but there is at least one big wild card: a new presidential administration.
In other words, the battle between NAR and the Department of Justice will continue, but its outcome is by no means certain.
what happens next
The legal battle between NAR and the Department of Justice stems from a settlement the two organizations agreed to in November 2020. In July 2021, the Department of Justice withdrew from the settlement. The Department of Justice subsequently reopened an investigation into NAR’s regulations. NAR responded by attempting to force the Department of Justice to uphold the original agreement. And the specific issues that NAR brought to the Supreme Court included requests for information from industry groups, or subpoenas, or civil investigative demands (CIDs).
So now that the Supreme Court has passed this case, what will immediately happen is that NAR will have to comply with that request.
marty green
“This is a disputed discovery case where the Department of Justice filed a discovery request and the NAR said, “Wait a minute, you agreed to settle with us and close the investigation, so they’re appropriate.” Please keep in mind that this is not a request for investigation.” said Mr. Green, principal of Polunsky Beitel Green. “Essentially, your place is back in the courtroom below. So the Department of Justice can continue to do what it’s trying to do.”
Green added that NAR’s efforts to fight CID are “exhausted” at this point.
But the legal battle is far from over.
Dylan Carson, an attorney and partner at the law firm Manatt, Phelps & Phillips, told Inman that NAR may deny certain requests in the future. For example, if the Department of Justice requests a deposition or specific documents from a particular person, the NAR could theoretically determine at the district court level that the scope or nature of such request is inappropriate for some reason. It is possible to claim that.
dylan carson
Carson went on to say that because “CID law is fairly well-established,” NAR may have a hard time defending certain Justice Department requests for information, but compromises may result. Ta.
All of this means there’s more conflict to come, but it’s likely to happen somewhat in the weeds.
“The law is pretty clear on a lot of these things, what’s relevant and what’s appropriate,” said Inman, said Stephen Lebowski, a partner at Manatt, Phelps & Phillips. told. “You might debate, ‘Do I need this person or do I need that person?’” Do you need a two-day deposit or a one-day deposit? Or 3 hours? ‘But I’m hopeful that this will be a more classy approach, in the sense that some sensible head will come along and say, we all know what to do, let’s get it done. ”
playing card wild card
Considering all of the above, this case involves unexpected issues. It’s the impending inauguration of President Donald Trump. But what that means for the situation is unclear.
Earlier in his career, Carson worked in the Antitrust Division of the Department of Justice. He told Inman that the office’s non-political staff lawyers will remain in place even with a new White House administration, and that new political appointees will be in charge. In this case, that means the Justice Department could continue its investigation, but its top leadership is theoretically and ultimately more likely than not compared to what happened during President Biden’s administration. May take a different, less aggressive position.
It is also worth noting that NAR and the Department of Justice reached a settlement during President Trump’s first term, but the Justice Department withdrew from the agreement after Biden took office. So, could reconciliation be revived with Trump’s return? perhaps.
“During the transition period, there will typically be a briefing on what investigations are currently underway, and decisions may be made to change enforcement priorities once the new person takes over,” Carson said. spoke. “So they can reconsider and go back to the agreement that NAR made with the previous administration.”
But Carson and Lebowski both pointed to President Trump’s nomination of Gale Slater to head the Justice Department’s antitrust division. Mr. Slater previously worked for the FTC, and both attorneys who spoke about Mr. Inman characterized him as a serious lawyer who may not want to simply abandon a case.
Stephen D. Lebowski
“I suspect that Gail Slater, who was nominated to head the antitrust division, will continue many of the current enforcement priorities,” Lebowski said. “So I think real estate will continue to be a focus.”
Lebowski also pointed to the 1983 breakup of telecommunications giant Bell Systems as a parallel. He recalled that the company first came under antitrust scrutiny during President Jimmy Carter’s era. When Ronald Reagan subsequently became president, many expected the case to be closed or diminished. But the Reagan administration did exactly the opposite.
“They doubled down, tripled on this issue and got even more aggressive because they took a fresh look at it and said, ‘Not only is this a great case, this is the right thing to do.’ ,” Lebowski said.
All of this is a long way of saying that the Trump administration is a factor in what happens next. It is impossible to say what factors are involved.
no big surprises
The only certainty at this point seems to be that the battle between NAR and the Department of Justice will continue in some form, but lawyers who spoke with Inman weren’t necessarily surprised by this week’s Supreme Court outcome.
“This was exactly what I expected,” Green said. “Because this issue was not the kind of issue the Supreme Court would normally consider. In fact, the Supreme Court hears so few cases that discovery disputes and related contract issues are It doesn’t seem to warrant involvement.”
ed zone
Other lawyers agreed. However, Ed Zorn, broker, attorney and general counsel for California Regional MLS, noted that NAR prevailed in the lower courts and had “some very valid arguments.”
“It’s not like this was a slam dunk anyway,” he told Inman.
But Zorn wasn’t shocked by the Supreme Court’s outcome either.
“I think the Supreme Court should have taken it,” he said. “But it wasn’t unexpected.”
Zorn, who has emerged as one of the real estate industry’s prominent legal voices in recent antitrust cases, criticized the Justice Department’s actions in the case, including the multi-year investigation period and lack of specificity of the violations. criticized some of the
“I think it’s the government’s duty to clearly explain what the problem is,” Zorn said. “Frankly, it’s unfair and un-American to expect a solution without clearly explaining what the problem is.”
Zorn also argued that the case could theoretically be concluded by March if lawyers, especially those at the Justice Department, come together and reach an agreement. But even Zorn wasn’t sure if such a scenario would actually occur in the real world.
“Can we actually end the case with the Justice Department? Is that even possible?” he wondered. “I don’t know. “
Email Jim Dalrymple II
