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DOJ responds to NAR’s petition for a rehearing of its appeal

An appeals court ruled in April that the DOJ could reopen its investigation into NAR

The Department of Justice has responded to the National Association of Realtors’ (NAR) petition for a rehearing of the DOJ’s appeal to reopen its investigation into the trade group, and it is strongly against a rehearing.

In a response filed on Monday, the DOJ claims that a rehearing is unwarranted because the decision that was reached by three-judge panel, which ruled on the appeal, “is fact-bound and ‘narrow,’ correctly relying on the plain language of the three-sentence letter. The Petition does not identify any errors of law or fact meriting panel rehearing and falls far short of meeting the ‘demandingly high’ standards warranting rehearing.”

The three-sentence letter at the center of the appeal was sent by the DOJ to NAR in November 2020. In the letter, the DOJ agreed to close its investigation into NAR. Earlier in 2020, the DOJ’s antitrust division agreed to a settlement after investigating the trade group’s listing and agent compensation policies. The settlement proposed at the time included requirements for NAR to boost transparency about broker commissions and to stop misrepresenting that buyer broker services are free.

But the DOJ, under new leadership in the Biden administration, withdrew the settlement in July 2021, stating that the terms of the agreement prevent regulators from continuing to investigate certain association rules that they feel harm buyers and sellers.

NAR filed a petition in September 2021 to set aside or modify the DOJ’s probes into the trade group.

In late January 2023, Judge Timothy Kelly of the U.S. District Court for the District of Columbia — a Trump administration appointee — ruled in favor of NAR. He stated that the earlier settlement terms were still valid and that allowing the investigation to continue would take away the benefits NAR had negotiated in the original settlement.

The DOJ appealed the ruling in March 2023, and the three-judge panel heard oral arguments from NAR and DOJ in early December 2023 before making a ruling in April 2024.

In addition to stating that a rehearing in unwarranted, the DOJ’s response states that the petition does not claim that the panel’s decision “conflicts with any other court of appeals decision addressing similar facts and circumstances.”

In NAR’s petition, the trade group claims that a panel rehearing should occur because the court’s decision was full of “far-reaching and exceptionally important” errors.

“The divided panel’s decision in this significant government-contract interpretation case goes ‘where no court has gone before,’ directly conflicts with precedents of this Court and the Supreme Court, and will reshape the landscape for all ‘who find themselves on the other side of the bargaining table’ with the government,” the petition states.

The DOJ, however, believes these arguments are “unavailing.” The department also notes that the panel found that NAR experienced several significant benefits from the November 2020 letter, including using it to its advantage in private litigation.

“NAR may have wanted more from the letter than what it actually provided — including a forward-looking commitment — but that does not make the Division’s promise to provide the letter illusory,” the response states. “Unable to extract a commitment not to reinvestigate from the Division in negotiation, NAR cannot now read unstated terms into the letter’s plain language to gain the exact same benefits the Division told NAR it would never grant.”

The response also addresses one of NAR’s harshest claims in the petition. In its rehearing petition, NAR contends that “the decision somehow will have sweeping consequences for other private parties when dealing with the government in other contexts.”

According to the DOJ, federal antitrust investigations and enforcement actions are typically resolved by a consent decree and not a letter like the one at question in this appeal.

“NAR’s unsupported rhetoric about the government repudiating its obligations and needing to turn ‘square corners’ is question begging, because it incorrectly assumes that the Division made a promise to refrain from future investigation — which never occurred and is not reflected anywhere in the proposed consent decree or closing letter,“ the DOJ wrote.

“NAR’s argument that the Division ‘sought to diminish’ the promises made by the former administration fails for the same reason,” the response states. “To the contrary, the Division’s position then and now is the same — that it would not and could not promise to refrain from future investigation because of internal policies against restricting the future exercise of prosecutorial discretion.”

In an emailed statement, Mantill Williams, the vice president of communications at NAR, said the trade group is confident in its petition.

“We filed our petition in furtherance of NAR’s commitment to championing the interests of our members and the home buying and selling public.  NAR continues that work by seeking to ensure the DOJ is held to the terms of our 2020 agreement,” Williams wrote.

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