Editor’s note: This story is unrelated to the private class action lawsuit in which NAR is a defendant, or NAR’s pending settlement agreement in that lawsuit.
The National Association of Realtors (NAR) on Monday filed a petition for review with the U.S. Court of Appeals for the District of Columbia Circuit, challenging a ruling allowing the Department of Justice to reopen a closed investigation into NAR policies. In its motion, which powerfully argues its members’ interests, NAR argues that the rationale for the Court of Appeals’ majority decision in favor of the Department of Justice is flawed. The challenge focuses solely on whether the Department of Justice can unilaterally revoke its settlement agreement with NAR, and does not address NAR policies or the Department of Justice’s antitrust claims.
In 2020, DOJ and NAR reached an agreement to end its investigation of certain NAR policies, including the Collaborative Compensation Rule and the Clear Collaboration Policy, provided that NAR amended four policies. NAR has fully complied with the agreement, including by submitting proposed rule changes to DOJ for review.
Eight months later, the Department of Justice reopened its investigation into these policies despite the settlement agreement. At the time, the Department did not provide any additional information to support its reopening, simply stating that it would be “preferable to do so.” NAR subsequently challenged this decision, asking the District Court for the District of Columbia to enjoin the Department of Justice from continuing its investigation.
The district court ruled that the Justice Department must honor its prior agreement: ruling in its favor would “reduce its promise to close its investigation to nothing more than a letter worth nothing more than the paper it was written on,” Judge Timothy Kelly wrote.
The DOJ appealed the district court’s decision, and in early April, the D.C. Circuit ruled 2-1 that DOJ’s 2020 settlement with NAR did not bar the reopening of the investigation. Judge Justin R. Walker wrote in dissent that no court had ever “approved such an interpretation” of a contract entered into by the U.S. government, and that the decision allows the government to agree to “close” a case or investigation, “luring the parties into a false sense of security that a settlement agreement will allow them to take whatever they can get, only to reopen the investigation seconds later.”
The government must abide by the terms of the contracts, NAR argued in today’s filing, saying, “The Commission’s errors are widespread and extremely serious. Every day, federal agencies resolve civil and criminal enforcement actions through private settlements. No matter who controls the White House or who is in charge of the Antitrust Division, it is a fundamental principle that the government must abide by the terms of its contracts.”
The dispute could have far-reaching implications beyond the real estate industry, as the Circuit’s decision conflicts with existing precedent from the D.C. Circuit and the U.S. Supreme Court. As NAR outlines in its filing, the DC Circuit’s decision “will be game-changing for everyone on the other side of the negotiating table with the government.”
NAR’s decision to seek further review signals its intention to pursue all options to protect its members’ rights. “As part of our commitment to defend the interests of our members and homebuyers and sellers, we will petition the Court to reconsider its April 5, 2024 ruling, affirm the District Court’s decision, and force the Department of Justice to uphold the terms of the 2020 settlement,” the organization said in a statement.
If the petition is successful, the D.C. Circuit would have another opportunity to review and overturn the Department of Justice’s authority to reopen the investigation.
The dispute with the Justice Department does not affect the private class action settlement agreement NAR entered into on March 15. A hearing on final approval of the agreement is scheduled for November, and if approved, the settlement would resolve nationwide litigation over claims from home sellers regarding broker commissions.
