DOJ can reopen its investigation into NAR, appeals court rules
Ruling could lead to further changes in industry practices by allowing the Department of Justice to revisit an antitrust case originally settled in 2020.
The U.S. Court of Appeals ruled that the Department of Justice can reopen its investigation into the National Association of Realtors, a key decision that could lead to even more changes for an already shaken industry.
In a 2-1 decision filed Friday, the court decided that the DOJ is within its rights to reopen the investigation into potentially anticompetitive practices taking place in the real estate industry through rules set by NAR.
What the judges said: In writing for the majority, Judge Florence Pan said the original agreement included a "Reservation of Rights" clause that generally preserved DOJ's ability to bring actions against NAR in the future.
"As framed by the parties, the issue before us is narrow. DOJ argues only that the plain language of the closing letter does not bar it from reopening its investigation and issuing a new CID (Civil Investigative Demand) regarding the Participation Rule and the Clear Cooperation Policy. We agree," Pan said.
Dissenting view: In a dissenting opinion, Judge Justin Walker argued that context determines meaning and that the agency should not be allowed to immediately reopen.
"I accept DOJ's abstract contention that 'closed' and 'reopen' are sometimes compatible. But because "context may drive such a statement in either direction," a promise to close something may at times preclude an immediate reopening," Walker said.
DOJ response: A news release from the government agency didn't specify what it would do next, but reiterated that it is committed to fighting to lower the cost of buying and selling a home.
"Real-estate commissions in the United States greatly exceed those in any other developed economy, and this decision restores the Antitrust Division's ability to investigate potentially unlawful conduct by NAR that may be contributing to this problem," said Jonathan Kanter, assistant attorney general.
What this means: While a blow to NAR, it still has the option of appealing to the Supreme Court. Real Estate News has reached out to NAR for comment on whether it plans to appeal.
It's also possible that the DOJ may not open the investigation now that NAR has reached a settlement agreement with home sellers about buyer agent commissions.
That doesn't appear likely, given that the DOJ has asked for further steps be taken in the Nosalek case against MLS PIN, suggesting one proposal was an injunction "that would prohibit sellers from making commission offers to buyer brokers at all," which would completely change how commissions work.