NAR Files Petition In Response to DOJ Withdrawal Of Consent Agreement

by | Sep 16, 2021 | MLS and NAR, Real Estate News | 0 comments

We recently commented on the July 1 DOJ decision to withdraw from a negotiated settlement agreement with the National Association of REALTORS®. NAR immediately expressed concern they were “blindsided” by the actions of the DOJ in backing out of the consent agreement.

In response to the withdrawal, NAR then filed a 44-page petition to quash a Civil Investigative Demand (CID) issued by the Antitrust Division of the United States Department of Justice “because it violates a binding settlement negotiated and agreed-to by the last Senate confirmed head of the Antitrust Division.”

Some of the key points in the petition are:

  • On November 19, 2020, NAR agreed to the Consent Judgment and the Antitrust Division filed the Consent Judgment with this Court.
  • But on June 30, 2021, the Antitrust Division abruptly issued an ultimatum to NAR: If NAR did not agree to change the Consent Judgment and stipulate that the Antitrust Division could re-open the very same investigations it agreed to close as part of the settlement agreement, the Antitrust Division would withdraw from the Consent Judgment the next day.
  • On July 6, in breach of the Antitrust Division’s prior commitments to NAR, the Antitrust Division issued a new Civil Investigative Demand (CID No. 30729, Glass Decl. Ex. 2), which seeks information from NAR about the Participation Rule and the Clear Cooperation Policy and re-opens the very investigations the Antitrust Division previously agreed to close as part of its settlement with NAR. With few exceptions, the information requests in the newly issued CID are 3 substantively identical (and in many places literally identical) to the CIDs the Antitrust Division agreed to withdraw as part of its agreement with NAR.
  • While this Petition is about NAR and NAR’s recent settlement with the Antitrust Division, much more is at stake. Subjects of government investigations must be able to rely upon the commitments, settlements, and plea agreements entered into by the federal government, particularly in law enforcement matters. If the Antitrust Division can walk away from its agreed to obligations in this matter, it will set a potentially catastrophic precedent that would undermine the strong public policy in favor of settlements and public confidence that the federal government will keep its word in future cases.
  • Consistent with the terms of the parties’ agreement, no later than November 19, the Antitrust Division closed the investigations into the Participation Rule and Clear Cooperation 9 Policy and withdrew the CIDs related to these investigations, as was confirmed in a closing letter sent to NAR by the Division and signed by AAG Delrahim.  That letter stated: This letter is to inform you that the Antitrust Division has closed its investigation into the National Association of REALTORS’ Clear Cooperation Policy and Participation Rule. Accordingly, NAR will have no obligation to respond to CID Nos. 29935 and 30360 issued on April 12, 2019 and June 29, 2020, respectively. No inference should be drawn, however, from the Division’s decision to close its investigation into these rules, policies or practices not addressed by the consent decree.  The closing letter did not include a merger clause or integration clause.
  • In reliance on the closing letter and as part of the overall settlement agreement, NAR agreed to the Consent Judgment and Stipulation. Moreover, pending approval by the Court, NAR agreed to take further actions in reliance on the settlement agreement.
  • Relying on the commitments made by the Antitrust Division, multiple listing services affiliated with NAR and brokers who are members of NAR began to change their practices in reliance of the terms of the proposed Consent Judgment.
  • Without the benefit of the bargain it obtained on the settlement agreement—i.e., closure of the investigations concerning the Participation Rule and the Clear Cooperation Policy, and the withdrawal of the related CIDs—NAR would not have voluntarily undertaken any of these burdens.
  • NAR’s counsel explained that the Antitrust Division’s commitments to (1) close the investigations of the Participation Rule and Clear Cooperation Policy; and (2) withdraw the related CIDs were the only benefits that NAR received from the settlement agreement, and thus the closing letter, which memorialized those commitments, was a key part of NAR’s decision to enter into the settlement agreement, including the Stipulation and Consent Judgment.
  • The Antitrust Division also issued a press release, which stated: “The department is taking this action to permit a broader investigation of NAR’s rules and conduct to proceed without restriction.” . In the press release, Acting-AAG Powers is quoted: “We cannot be bound by a settlement that prevents our ability to protect competition in a market that profoundly affects Americans’ financial well-being.”
  • In reliance on the Antitrust Division’s promises to close the investigations and withdraw the CIDs, NAR agreed to the Consent Judgment and Stipulation, invested resources in publicizing and educating its members about the Consent Judgment, developed proposed changes to its rules to comply with the Consent Judgment, and subjected itself to the risk of follow-on litigation. Some of NAR’s members, including brokers and multiple listing services operated by local associations, have changed rules and practices to align with the proposed Consent Judgment the Antitrust Division filed as part of its settlement with NAR
  • These cases have a unifying theme: “There is no question that a settlement agreement is a contract which, like any other contract, may not be unilaterally rescinded,” and “[t]hat principle applies to the government as to any other party, and it applies irrespective of whether or not the agreement has yet been approved by the court.”
  • The second paragraph of the closing letter provides: “No inference should be drawn, however, from the Division’s decision to close its investigation into these rules, policies or practices not addressed by the consent decree.”  That sentence prevents NAR from arguing that the Antitrust Division had made an affirmative determination about the legality of the Participation Rule or the Clear Cooperation Policy, presumably so that NAR would not argue in pending private civil litigation that the Antitrust Division had approved of either rule.


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