The U.S. Department of Justice can reopen an antitrust investigation of the National Association of Realtors, an appeals court ruled Friday.
A divided three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit held that the department could withdraw a 2020 consent agreement reached with NAR over certain alleged anticompetitive practices and reopen its investigation of policies surrounding multiple listing services.
“The fact that DOJ ‘closed its investigation’ does not guarantee that the investigation would stay closed forever,” the US Court of Appeals for the DC Circuit wrote in a 2-1 decision. “The words ‘close’ and ‘reopen’ are unambiguously compatible,” Judge Florence Y. Pan wrote for the majority.
The 2020 proposed settlement, which had not been finalized with a federal court’s approval, covered four NAR policies, but the Justice Department refused the association’s request to promise not to investigate the association’s longtime “participation rule,” which requires listing brokers to offer the same commission to all buyer-brokers when listing a property on an MLS, and its “clear cooperation policy,” which requires listing brokers to post a property on an MLS within one day of when they begin to market the property.
But the department did issue a “closing letter” that said its investigation of the participation rule and clear cooperation policy was “closed” and NAR did not need to respond to subpoenas related to them.
In 2021, the Justice Department withdrew its consent to the settlement agreement and served NAR with a fresh subpoena seeking information on the participation and clear cooperation policies. NAR objected, saying the closing letter amounted to a contract, and a federal district court agreed, blocking the reopening of the investigation.
In its Friday decision in United States v. National Association of Realtors, the federal appeals court panel reversed the district court. The closing letter discharged NAR of requirement to comply with two specific subpoenas, the court said. But “we discern no commitment by DOJ — express or implied — to refrain from either opening a new investigation or reopening its closed investigation, which might entail issuing new [subpoenas] related to NAR’s policies,” the appeals court majority said.
Pan noted that NAR gained some benefit from the temporary closure of the investigation, as it quickly alerted a judge overseeing a private antitrust lawsuit over the association’s policies that it was no longer being investigated by the Justice Department.
“As articulated by Judge Walker in his dissenting opinion, NAR believes that the government should be held to the terms of its contracts,” the Chicago-based realtors group that represents more than 1.5 million agents said in a statement. “We are reviewing today’s decision and evaluating next steps.”
The Justice Department didn’t respond to a request for comment on Friday’s ruling.
The industry has come under increased scrutiny in recent years, with a Missouri jury in October finding the NAR and others liable of colluding to keep commissions high in a $1.8 billion verdict. To resolve that case and others, the NAR agreed in March to a settlement that would pay sellers roughly $418 million, with the group saying it would also change some of its rules.
The settlement agreement, which needs to be approved by a court, could pressure fees over time, experts have said, although the exact impact is still uncertain.
