NAR Appears Open to Amending or Repealing Clear Cooperation

Back in January, the National Association of REALTORS® (NAR) agreed to extend the statute of limitations in a pocket-listing lawsuit, court documents revealed, with a lawyer representing the REALTOR® organization telling a judge in a separate case last week that NAR needed time to decide if it was “amenable” to repealing or amending the Clear Cooperation policy.

According to a transcript obtained by RISMedia, NAR attorney Ethan Glass, at a hearing in a recently revived lawsuit by Top Agent Network (TAN), a listing service startup, was pressed by Judge Vince Chhabria of the U.S. District Court for the Northern District of California on why NAR had not changed Clear Cooperation, which requires REALTORS® to add properties to NAR-affiliated MLSs within one day of marketing them elsewhere.

Glass acknowledged that NAR had struck a “tolling” agreement in the earlier lawsuit, known as the PLS.com v. NAR—meaning that the statute of limitations for the alleged illegal conduct was extended. And while big MLSs forged a separate agreement to settle that same lawsuit, ending the litigation against, NAR was merely dismissed “without prejudice,” which allows the pocket-listing company to re-file claims against NAR at will.

“So to be completely candid, the National Association of REALTORS® has been very, very busy with a number of other lawsuits and investigations. And so one of the reasons why it made so much sense to dismiss PLS without prejudice was to give the time for NAR to be able to give the focus to Clear Cooperation that (the pocket listing company) wanted,” Glass said.

After the publication of this article, a spokesperson for NAR acknowledged the tolling agreement that was entered into on Jan. 26, saying NAR had nothing new to add on that. The spokesperson also said that NAR “has made no movement on even considering any changes to the Clear Cooperation Policy.”

“NAR and PLS.com stipulated to dismissal of PLS.com’s action on January 26, 2024. NAR did not agree to make any rule changes as part of its agreement with PLS.com,” the spokesperson said.

Back when the PLS.com case was dismissed, NAR did not reveal any details about the negotiations or tolling agreement, saying something similar to the above statement: that the organization was “pleased that PLS decided to dismiss this long-pending litigation without NAR making any payment or rule change.”

Chhabria recently allowed the TAN lawsuit to go forward, based on an appeals court ruling in the PLS.com case—which for now, appears to be dormant, although the existence of the tolling agreement raises questions about how long that might last.

Both plaintiffs allege that Clear Cooperation was created to stymie competition and has been used to maintain a monopoly on the listing service market, while NAR contends the policy is meant to maintain a more transparent property market with protections against misinformation and fraud.

Tobias Snyder, a lawyer representing TAN, told RISMedia via email that Chhabria made “the right decision” in reviving his client’s lawsuit.

“We look forward to proving how the Clear Cooperation Policy harms competition for real estate listing services while removing consumers’ choice in how they market their homes,” Snyder said. “The Policy has been a disaster, and perhaps now the NAR will reconsider whether to die on this hill or to end this ill-advised Policy once and for all.”

Messages left for lawyers and representatives of thePLS.com—now operating as theNLS.com—were not immediately returned.

Back and forth

The exchange about Clear Cooperation at the TAN hearing last week came as Chhabria pressed Glass on why NAR had not already altered or ended the policy, considering the appeals court ruling in the PLS.com case, which was highly critical of Clear Cooperation.

“Where we landed is that we gave them a tolling agreement on the statute of limitations to give us time to figure out whether or not we were amenable to repealing the Clear Cooperation Policy,” Glass said.

“In light of the (appellate court’s) decision, why hasn’t the National Association of Realtors done that yet? I mean, I feel like a long time has passed since that decision came down,” Chhabria responded.

This revelation about the tolling agreement, and potential reconsideration of Clear Cooperation, comes as the TAN lawsuit switches back into gear, and with the DOJ hovering over the NAR settlement process.

Chhabria, in the hearing, said he had re-read and gave some weight to the DOJ’s amicus brief in the case, filed way back in early 2023, which had argued among other things that Clear Cooperation harmed consumers through the restrictions it placed on real estate practitioners, and disputed NAR’s assertion that more listings available to more consumers and agents mad the MLS procompetitive.

“I think the DOJ amicus brief would agree with this. I know that’s not law but, like I said, I found it helpful to read,” said Chhabria. “When you’re focusing on antitrust injury you have to put blinders on, and you have to look at the market for real estate listing services.”

Chhabria also seemed to indicate he believed that Clear Cooperation could be considered harmful to anyone trying to create a rival listing service. Glass argued there should be legal and practical distinctions drawn between how the policy affects different types of competitors, as TAN is itself an exclusive service with services only available to agents who meet certain qualifications, while PLS.com was put listings out publicly.

Glass also made it clear he would continue to argue that Clear Cooperation allows competition, even after the apparent admission that NAR was open to considering amending or repealing it.

“There are lots of ways that another Multiple Listing Service or another listing service could adopt its model that actually is consistent with Clear Cooperation Policy. We briefed that a lot. I don’t want to get into that. But there is an open door to competition with the MLSs,” he said.

Editor’s note: this story was updated on Wednesday, July 24 with comments from NAR.