NAR petitions for rehearing in appeals court decision of DOJ probe

The National Association of Realtors (NAR) has petitioned a circuit court of appeals in Washington, D.C., for a “panel rehearing and rehearing en banc” of the three-judge panel’s decision to allow the Department of Justice (DOJ) to reopen its investigation into the trade group. 

In a document filed on Monday afternoon, attorneys for NAR called the court’s decisions 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.

At the center of the appeal is a letter the DOJ sent to NAR in November 2020, in which the DOJ agreed to close its investigation into NAR. 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 its petition for a rehearing, NAR states that when the DOJ reopened its investigation in July 2021, it “did not purport to identify any changes in the law or facts; its only stated basis for resuming the investigation was ‘its preference to do so.’”

NAR’s attorneys wrote that a rehearing is warranted because the panel’s decision conflicts with at least three strains of circuit court and Supreme Court precedent, including basic contract principals. Additionally, NAR claims that the decision was made by relying on arguments that neither party presented, and that it was a mistake to apply the “government-favoring ‘unmistakability doctrine’ to a settlement in which DOJ compromised only its own enforcement authority.”

Looking at the bigger picture, the trade group claims that noting these errors are important because federal agencies regularly resolve civil and criminal enforcement actions through agreements with private parties. 

“It is a bedrock principle that the government must honor its word in those contracts, no matter who occupies the White House or leads the Antitrust Division,” the petition states. “If the DOJ position adopted by the divided panel here is ultimately accepted, ‘businesses and private citizens w[ill] be exposed to perpetual uncertainty regardless of the commitments or representations made by the Government in settling investigations.’” 

Since the announcement of the three-judge panel’s decision, many have expected the DOJ to intervene in the Sitzer/Burnett commission lawsuit, as the terms of NAR’s nationwide settlement agreement do not align with the DOJ’s call for a complete ban on the practice of cooperative compensation.

Ultimately, it will be up to Judge Stephen R. Bough, who is overseeing the suit, to decide whether or not to grant final approval of the settlement agreement.