On Thursday, Judge John Michael Vazquez of the District of New Jersey issued an opinion, granting defendants Zillow Group, Inc. and Zillow, Inc.’s motion to dismiss the Second Amended Complaint in an antitrust lawsuit brought forth by EJ MGT LLC.
According to the opinion, the plaintiff claimed that Zillow, an online real estate information company, “illegally contracts with certain real estate brokers to alter the location of those brokers’ property listings’ estimated prices, called ‘Zestimates,’ on Zillow’s web pages while not offering this option to other brokers, agents, and property owners, such as Plaintiff.”
The plaintiff stated that each Zillow listed property shows a ‘Zestimate’ estimating the market value of a home using an algorithm which Zillow claims is a “starting point” for determining home value. The opinion noted that in January 2017, the plaintiff listed a property for sale with a broker and listing agent, however, the Zestimate for the property was allegedly “well below the appraised value of” the property. Allegedly, two potential buyers “were turned off from considering a potential purchase of the property” because of the Zestimate.
Moreover, after the plaintiff filed the complaint, Zillow allegedly “altered the placement of the Property’s Zestimate such that the Zestimate no longer ‘appear(ed) at the top of the property page’ under the listing price; instead, a link with ‘View Zestimate’ appeared.” The plaintiff stated that it asked Zillow to remove the Zestimate but the defendant refused.
The plaintiff proffered that Zillow offers Zestimate Suppression (to relocate the property’s Zestimate) to only one brokerage firm within a geographic market.” As a result, the plaintiff asserted that those not associated with the brokerage “‘are left no choice but to have Zestimates appear prominently’ on their properties’ Zillow pages, putting them at a distinct competitive disadvantage and harming overall competition in the local and national real estate markets.’”
The court considered Article III standing, which it previously found was not adequately established in the first amended complaint and Zillow claimed was still insufficient. The court found that the plaintiff failed to plausibly allege an injury-in-fact for the newly alleged injury – the payment of supracompetitive prices – adding that the other injury-in-fact was also alleged in the first amended complaint where it already determined the plaintiffs failed to adequately plead causation.
For example, the court stated that the “Plaintiff does not allege that it lost any potential buyers to a comparable property sold by one of the Co-Conspirator Brokers in which the Zestimates were in a less prominent position. Plaintiff only indicates that two potential buyers informed Plaintiff that when they viewed the Property in 2017, they ‘were turned off from considering a potential purchase of the property based on the discrepancy between the listing price and the Zestimate.’” As a result, according to the court, “as pled, this alleged injury impacts consumers, not sellers like Plaintiffs.”
Zillow also claimed that the plaintiff failed to adequately allege antitrust standing and antitrust injury. The court stated that it previously found that the plaintiffs failed to establish antitrust standing, regardless of its ruling on Article III standing. Similarly, the court found that the plaintiff “failed to allege causation to establish antitrust standing.” Specifically, the court said the alleged injury was a “personal injury” and, therefore, “not an injury ‘of the type that the antitrust statute was intended to forestall.’” Moreover, the court added that the plaintiffs did not allege a price fixing conspiracy, which would warrant antitrust standing. As for the other antitrust allegations, the court found them insufficiently pled.
The court dismissed the amended complaint with prejudice finding the allegations not sufficiently plead although the plaintiffs had two chances to amend its complaint.
Zillow is represented by Winston & Strawn. The plaintiff is represented by Beattie Padovano.