DOJ Tells Supreme Court It Has A Right To Investigate NAR Policies
In its response to an NAR appeal, the DOJ acknowledged that, although it had closed an investigation into two NAR policies in 2020, it didn’t agree not to reopen it.
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The Department of Justice clearly left open the ability to reopen its investigation into policies created by the National Association of Realtors, and it should therefore be free to continue looking into said policies, the agency wrote in a filing to the Supreme Court on Wednesday.
Attorneys for the DOJ responded to an appeal NAR submitted to the high court in October, in which the Realtor trade group asked the justices to review an April ruling by the U.S. Court of Appeals for the District of Columbia Circuit allowing the DOJ to reopen an investigation into NAR’s rules, including controversial rules around commissions and pocket listings at issue in multiple antitrust suits against NAR.
In its filing, the DOJ acknowledges that it agreed in 2020 to close its investigation into the Participation Rule and the Clear Cooperation Policy.
“There is no dispute that the Division agreed in 2020 to ‘close’ its investigation into two of petitioner’s rules, the Participation Rule and the Clear Cooperation Policy,” the DOJ wrote. “The disputed question is whether, in addition to agreeing to close the investigation, the Division agreed not to reopen it.”
The DOJ said that throughout settlement negotiations with NAR, it had left open the right to examine the policies again at some point in the future.
“During negotiations, the Division repeatedly informed petitioner that, even if the Division agreed to close an investigation, it could not commit to refraining from investigating petitioner’s rules in the future,” the DOJ wrote to the Supreme Court.
The DOJ wrote that it began its investigation into NAR’s rules in 2018 after receiving a complaint from an industry participant.
Specifically, the department was looking into the Participation Rule and the Clear Cooperation Policy. The Participation Rule required listing brokers to offer compensation to buyer brokers. The Clear Cooperation Policy requires listing brokers to post a property on a multiple listing service within a day of marketing the property.
The DOJ issued two civil investigative demands (CIDs) requesting substantial documents around the two policies.
The parties eventually negotiated a settlement whereby the DOJ would close its investigation, and the DOJ filed the settlement in U.S. District Court in November 2020.
Eight months later, the DOJ filed a new CID in July 2021 seeking information about the Participation Rule and Clear Cooperation Policy.
NAR challenged the move in district court, winning a favorable judgment that was reversed on appeal earlier this year.
In October, NAR took the issue to the Supreme Court.
“[T]he majority’s position permitted DOJ to evade its contractual obligations based solely on its preference to do so — a result that no other litigant could obtain and no other court would permit,” the petition reads.
In its response, the DOJ said that it was unambiguous throughout its negotiations with NAR and in its other briefings that it reserved the right to open investigations in the future.
It said that the court of appeals invoked the “unmistakability principle, which holds that a contract should not be interpreted to ‘cede a sovereign right of the United States unless the government waives that right unmistakably.’”
Meanwhile, the DOJ wrote, NAR benefited from the DOJ closing its investigation in 2020 by not having to respond to the CIDs, contingent on the possibility that the investigation wasn’t reopened, and by using the closure in antitrust litigation at the time.
“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,” the DOJ wrote to the Supreme Court. “That decision is correct, and it does not conflict with any decision of this Court or another court of appeals.”
“The government’s decision to reopen the investigation thus involved no withdrawal from, or repudiation of, any ‘binding’ commitment,” the attorneys wrote. “Because the decision below does not implicate the question presented in the petition, this case would be a poor vehicle for the Court’s review.”
