NAR Seeks Additional Court Review in DOJ Dispute

Editor’s Note: This article first appeared in Realtor Magazine.

WASHINGTON—The National Association of Realtors on Monday (May 20) petitioned the U.S. Court of Appeals for the District of Columbia Circuit for a rehearing, challenging its ruling that would allow the Department of Justice to reopen a previously closed investigation into NAR’s policies. In the filing, which forcefully advocates for the interests of members, NAR outlines the flaws in the reasoning for the appeals court’s majority decision in favor of the DOJ. This dispute focuses only on the department’s ability to unilaterally withdraw from its settlement agreement with NAR. It does not address any of the department’s claims about NAR policies or antitrust topics.

In 2020, the DOJ and NAR reached an agreement to end an investigation into certain NAR policies—including the cooperative compensation rule and clear cooperation policy—provided that NAR modify four of its policies. NAR fully complied with that agreement, including by submitting proposed rule changes to the DOJ for its review.

Eight months later, the DOJ resumed its investigation into these policies despite the settlement agreement. At the time, the DOJ did not provide additional information to support reopening the investigation, saying it simply was “its preference to do so.” NAR subsequently challenged this decision and asked the District Court for the District of Columbia to prohibit the DOJ from pursuing its investigation.

The district court held the DOJ had to abide by its prior agreement. Ruling in favor of the DOJ “would make its commitment to close the investigation a letter worth nothing but the paper on which it was written,” Judge Timothy Kelly wrote.

The DOJ appealed the district court’s determination, and in early April, the DC Circuit held in a 2–1 decision that DOJ’s 2020 settlement with NAR does not prevent it from reopening its investigation. In his dissenting opinion, Judge Justin R. Walker wrote that no court had previously “endorsed such a reading” of a contract made by the U.S. government and that the decision permits the government to agree to “close” a case or investigation to “lure a party into the false comfort of a settlement agreement, take what it can get, and then reopen the investigation seconds later.”

The government should be held to the terms of its contracts, NAR argues in today’s filing, saying, “the panel’s errors are far-reaching and exceptionally important. Every day, federal agencies resolve civil and criminal enforcement actions through agreements with private parties. It is a bedrock principle that the government must honor its word in those contracts, no matter who occupies the White House or leads the Antitrust Division.”

This dispute could have far-reaching implications beyond the real estate industry, as the split-decision ruling from the Circuit Court conflicts with the existing precedent of both the D.C. Circuit Court and the U.S. Supreme Court. As NAR outlines in its filing, the decision handed down from the D.C. Circuit “will reshape the landscape for all who ‘find themselves on the other side of the bargaining table’ with the government.”

The decision by NAR to pursue additional review is an indication of its intention to pursue all available options to defend its membership. In a statement, NAR said, “As part of our commitment to championing the interests of our members and the home buying and selling public, we are petitioning the court to review the April 5, 2024, decision, uphold the district court’s determination, and hold the Department of Justice to the terms of our 2020 agreement.”

The petition, if successful, will provide an additional opportunity for the D.C. Circuit to review and reverse the DOJ’s ability to reopen the investigation.

The dispute with the DOJ does not affect NAR’s March 15 settlement agreement related to private class action litigation. A hearing is scheduled in November for final approval of that agreement; if approved, the settlement would resolve nationwide litigation over claims from home sellers related to broker commissions.

Editor’s note: This story is unrelated to the private class action litigation in which NAR is a defendant and NAR’s pending settlement agreement in that litigation.