DOJ Defends Investigation to Supreme Court, Says NAR Petition Lacks Merit

The Department of Justice (DOJ) Antitrust Division appears committed to pushing forward with a long-running investigation into National Association of REALTORS®’ (NAR) policies, despite the looming transition to a new presidential administration, continuing to defend its inquiry all the way to the Supreme Court.

After sending a lawyer to speak at the final court hearing for NAR’s landmark settlement deal, the DOJ yesterday filed its first brief to the nation’s highest court, urging the justices to deny NAR’s request that they intervene and block the investigation.

“The court of appeals in this case determined that the government had made no commitment to refrain from reopening an antitrust investigation that the government had closed. That decision is correct, and it does not conflict with any decision of this Court or another court of appeals,” DOJ lawyers wrote. 

Continuing to defend its investigation—which began more formally in 2018 and has carved a long and tumultuous path across the last six or so years—indicates that the DOJ wants to at least reserve the right to keep putting pressure on NAR under the upcoming Trump administration. 

While it was under Trump that the DOJ originally agreed to “close” the inquiry, it is not at all clear whether a second Trump term would end it. Chris Bauer, the DOJ trial lawyer who attended the NAR settlement hearing, said specifically that the Antitrust Division sent out more civil subpoenas related to the investigation in May, but also admitted that the DOJ has “been investigating issues in the real estate space, including conduct by NAR, for decades.”

The Supreme Court represents a last attempt by NAR to prevent the DOJ from reopening its inquiry, which is focused on Clear Cooperation and “other rules,” and originally included more policies (many of which have since been modified or repealed). The DOJ admits it agreed to “close” the investigation in 2020 after negotiating with NAR, but in its brief, urges the Supreme Court to focus on supporting details.

According to the brief, the NAR asked the DOJ to commit to keeping the investigation closed for at least 10 years, which the DOJ declined to do. 

“The (Antitrust) Division responded that it could not make ‘a commitment to not challenge (NAR’s) rules and policies in the future.’ The Division explained that it viewed such a commitment as ‘a nonstarter, especially in light of longstanding Department policies concerning settlements that affect future potential investigations,’” the brief says.

While NAR previously argued that allowing the DOJ to restart the inquiry set a bad precedent and could negatively affect trust in law enforcement in the future, the DOJ referred repeatedly back to the previous appellate court ruling, which focused on the “plain language” of the DOJ’s letter.

“(B)ased on the plain language and various other aspects of that agreement, the court held that the government had made no commitment to refrain from reopening the investigation in the first place,” the DOJ wrote.

It also spent time pushing back against some of the more technical legal arguments made by NAR, including that the agreement to close the investigation was an “illusory promise,” that the DOJ received favorable treatment and that the contract issues were improperly presented to the appeals court. NAR specifically claimed that the appeals court misapplied the “unmistakability principle,” a precedent that states contracts should not be viewed to “cede a sovereign right” of the United States government unless the government “unmistakably” waives that right.

“And (NAR’s) assertion that any ‘thumb on the scale’ should have favored petitioner, rather than the government, ignores the fact that (NAR) itself proposed the language of the first sentence of the closing letter,” the DOJ claimed.

At the highest level, NAR’s appeal to the Supreme Court would appear to be a long shot, with that court only taking up a tiny fraction of appeals, and mostly focusing on urgent legal questions or inconsistent rulings by lower courts. The DOJ, in its arguments, claimed that this case is a “poor” example of the kind of issues the Supreme Court focuses on.

“The (appellate court) decision…did not hold that ‘the United States enjoys greater rights than a private party to withdraw from a contract based solely on its determination that it no longer wishes to be bound by that contract,’” the DOJ argued. “That ‘narrow,’ case-specific holding does not implicate the question presented in the (NAR) petition.”

The investigation is only one aspect of the DOJ’s interest in real estate, with the NAR settlement serving as something like a second front. Judge Stephen R. Bough gave his final approval to the settlement last month, despite the DOJ’s explicit objections and threats that it could investigate antitrust conduct even if it was allowed—or mandated—under the deal.

Responding to Bauer’s concerns about buyer agreements at the settlement hearing last month, Ethan Glass, an attorney representing NAR, argued that the DOJ’s investigation and interventions could put NAR in a legally unwinnable position.

“If NAR is compelled under pain of contempt to require written buyer agreements, it can’t be that there is an investigation, a litigation, or anything by someone challenging NAR for doing that and circumventing this court’s order,” he said.