[00:01:03] Speaker 04:
Okay, this is the time set for argument in case 24-685, real estate exchange versus Zillow.

[00:01:11] Speaker 04:
I think our courtroom deputy, Mr. Price, has let the parties know.

[00:01:16] Speaker 04:
We'll hear first from the appellant, and then we'll hear from the Department of Justice, followed by the two appellees, and then we'll hear a rebuttal from Mr. Ingarro.

[00:01:27] Speaker 04:
Mr. Ingarro, good morning.

[00:01:30] Speaker 02:
So my name is Ursula Anguero.

[00:01:33] Speaker 02:
I'm with Boys Schiller Flexter, and I'm here with two of my partners, and we represent REX Realty Exchange.

[00:01:40] Speaker 02:
My plan, which may be a little ambitious, is to address four significant issues from the judge's summary judgment order, and then separately address what we contend is the error in the WCPA instructions.

[00:01:55] Speaker 02:
The four errors that I intend to address, if I have time,

[00:02:00] Speaker 02:
are that the agreement that we allege proved and argued at summary judgment was the agreement between NAR and Zillow to segregate listings, not to conceal, segregate, and demote, that the segregation rule is direct evidence of an actionable agreement between NAR and Zillow, that the segregation rule is direct evidence of concerted action despite the optional label, and that the evidence showed that Zillow's agreement to adhere to the segregation rule was not made independently of

[00:02:30] Speaker 02:
the National Association of Realtors, which I am calling NAR.

[00:02:34] Speaker 02:
So let me turn first to the issue of segregate, conceal, and demote.

[00:02:39] Speaker 02:
As we explain at pages 17 through 21 of our reply brief, conceal and demote was not part of the agreement we alleged, and it also is not what we sought to prove or what the parties argued at summary judgment.

[00:02:53] Speaker 02:
The phrase segregate, conceal and demote appears in one paragraph out of 260 paragraphs of the amended complaint.

[00:03:01] Speaker 02:
Everywhere else conceal or demote is used to describe the effect of the segregation or is relevant to Rex's Lanham Act claim or WCPA claim.

[00:03:10] Speaker 02:
Most telling is the briefing on the summary judgment motion.

[00:03:14] Speaker 02:
We never argued an agreement to segregate, conceal, or demote.

[00:03:18] Speaker 02:
And the transcript of the summary judgment hearing itself reflects that none of the parties argued segregate, conceal, and demote.

[00:03:27] Speaker 02:
And even the counts of the complaint reflect, the antitrust counts do not reflect an agreement of segregate, conceal, and demote.

[00:03:36] Speaker 02:
And that makes sense because the restraint that we're challenging is the restraint imposed by the segregation rule, which is the requirement that listings be segregated and no more.

[00:03:47] Speaker 02:
That's the starting point, that's where the meeting of the minds occurs.

[00:03:51] Speaker 02:
Can I ask you about that, though?

[00:03:53] Speaker 04:
It would seem that what was most problematic for your clients was the website layout and design, but I see you saying no.

[00:04:07] Speaker 04:
That is the question I have.

[00:04:10] Speaker 04:
When the district court characterized the problem that your clients have with this, it seems that the problem was more specifically with the website, which is really an effort to implement the rule and is not necessarily the rule itself.

[00:04:25] Speaker 02:
Obviously, our claim is a Sherman Act, Section 1 claim, and we're talking about an agreement in restraint of trade.

[00:04:33] Speaker 02:
Our position consistently was that the agreement in restraint of trade was the agreement to segregate.

[00:04:40] Speaker 02:
Yes, the website is the implementation of the rule, but under this court's decision in Plymouth Dealers Association of Northern California, the starting point is the restraint.

[00:04:53] Speaker 02:
What happens beyond that is implementation and should be of no consequence.

[00:04:58] Speaker 04:
Could the segregation have been done in a way that was favorable to Rex?

[00:05:02] Speaker 02:
I think only in the most theoretical of ways.

[00:05:05] Speaker 02:
And I think that the antitrust jurisprudence says, we need to look at the practical economic realities here.

[00:05:13] Speaker 02:
And the, as I intended to discuss further on in my argument, the MLS listings are far less numerous and less remunerative for brokers and agents than the MLS listings.

[00:05:28] Speaker 02:
And the,

[00:05:29] Speaker 02:
natural tendency of the separation, to use a phrase from Eastern State Lumber Dealers Association, is that the MLS listings are going to get more prominent treatment than the non-MLS listings.

[00:05:43] Speaker 02:
And in fact, the proof is sort of in the pudding in what happened with Zillow.

[00:05:48] Speaker 02:
Zillow tells you that they spent an enormous amount of effort trying to accommodate the rule and get all the listings easily acceptable to its users.

[00:05:59] Speaker 02:
yet the non-MLS listing still ended up nearly invisible.

[00:06:04] Speaker 00:
Council, was Zillow required to consider and protect REX's interest in its website display when it decided to change it to comply with the no commingling rule?

[00:06:14] Speaker 02:
Zillow, had it not combined with the National Association of Realtors, could have taken any position that it wanted to as to REX.

[00:06:23] Speaker 02:
The problem is that Zillow combined with NAR in an anti-competitive scheme.

[00:06:29] Speaker 00:
So how, I want you to explain that to me a little bit more in depth because the record shows that Zillow tried to lobby NAR, correct, to allow co-mingling.

[00:06:38] Speaker 00:
So how are they now scheming together?

[00:06:41] Speaker 02:
Well, the reason that Zillow, Zillow will tell you, the reason that they joined NAR was because they had made a decision to seek listings data through IDX feeds.

[00:06:57] Speaker 02:
They had no choice but to join NAR because otherwise IDX feeds would not have been available.

[00:07:04] Speaker 02:
So they didn't like the rule.

[00:07:08] Speaker 02:
And as you point out, after they implemented it, they went to NAR to see that it be changed.

[00:07:16] Speaker 02:
But the fact that they reluctantly joined NAR in order to obtain the IDX feed should have no

[00:07:23] Speaker 02:
impact on the court's assessment of whether or not there was a Section 1 agreement, if I've answered your question.

[00:07:31] Speaker 04:
Thank you.

[00:07:32] Speaker 04:
Where was the agreement between NARA and Zillow to design the website in the way that it did?

[00:07:39] Speaker 02:
Well, there was an agreement between NARA and Zillow to segregate.

[00:07:43] Speaker 02:
How Zillow decided to segregate was entirely up to Zillow.

[00:07:47] Speaker 02:
But the segregation is what is inimical.

[00:07:52] Speaker 04:
But isn't how Zillow did this what's really causing the problem for your clients?

[00:07:57] Speaker 02:
I cannot agree with you about that.

[00:08:00] Speaker 04:
I didn't think you would, but I wanna know why.

[00:08:03] Speaker 02:
No, of course, our position is that it's the segregation that creates the problem, and what follows from the segregation is mere implementation, and again, in the words of Plymouth Dealers Association, of no consequence.

[00:08:19] Speaker 00:
Council, in your view, how could Zillow have changed its business model to get the IDX data and avoid antitrust liability?

[00:08:28] Speaker 00:
What could it have done?

[00:08:30] Speaker 02:
Well, I don't know.

[00:08:31] Speaker 02:
I haven't really given that a lot of thought, but the fact of the matter is that in order to get the IDX data, they had to join the anti-competitive scheme.

[00:08:40] Speaker 02:
There is nothing else they could have done under the circumstances.

[00:08:44] Speaker 02:
If they were going to pursue IDX data, they had to do this.

[00:08:48] Speaker 04:
So one question that we haven't touched on yet is whether the rule is optional or not and does this matter?

[00:08:56] Speaker 04:
And so why don't you tell us where you are on that?

[00:09:00] Speaker 02:
Our position on the optional label that NAR attached to the rule is that it's a red herring.

[00:09:07] Speaker 02:
The real issue is concerted action.

[00:09:10] Speaker 02:
And for over a century, the United States Supreme Court has looked past optional labels at the practical reality of what it is that's going on in the trade association.

[00:09:24] Speaker 02:
So I would point you to, for instance, the case of American Column and Lumber from 1921, in which the Supreme Court examined a plan that was labeled optional by the Lumber Dealers Association.

[00:09:40] Speaker 02:
It was labeled expressly optional.

[00:09:45] Speaker 02:
And the Supreme Court found that participation in the plan was concerted action.

[00:09:51] Speaker 02:
In fact, they went so far as to call out the Lumber Association for the misleading misnomer.

[00:09:58] Speaker 04:
Do you say that every optional rule is concerted action or do you think you have to look at the evidence and the record and determine whether in practice it was something more than just optional?

[00:10:09] Speaker 02:
I think you have to look at the rule and see how it operates.

[00:10:13] Speaker 02:
In American column and lumber, it was an optional plan that involved a very extensive exchange of information that was then used to set prices.

[00:10:25] Speaker 02:
And the determination by the Supreme Court did not rely on evidence, it relied on examining the rule.

[00:10:36] Speaker 02:
Or the plan, rather.

[00:10:38] Speaker 02:
It wasn't a rule, it was a plan.

[00:10:40] Speaker 04:
I mean, the rule on its face says it's optional.

[00:10:43] Speaker 04:
So would you not need to be looking at more of the implementation or how it works in practice to be able to assess whether this is concerted action?

[00:10:51] Speaker 02:
Well, it's only optional for the MLSs.

[00:10:54] Speaker 02:
And also, by the way, NAR provided in the manual, where the rule appears for the adoption by the MLSs, that the rule could not be modified

[00:11:05] Speaker 02:
by the MLSs if they adopted it.

[00:11:09] Speaker 02:
And it required that the MLSs impose the rule on the MLS participants who are like the subscribers in the MLS.

[00:11:20] Speaker 02:
And so it's not, it's optional at one level.

[00:11:25] Speaker 02:
At the next level, it's not optional.

[00:11:29] Speaker 02:
It's mandatory.

[00:11:30] Speaker 02:
If the MLS adopts it, they have to impose it on the participants.

[00:11:34] Speaker 02:
If the participants violate the rule, then they're subject to sanctions.

[00:11:39] Speaker 02:
And importantly, for Zillow's purposes, one of the sanctions would have been potentially the loss of the IDX feeds.

[00:11:47] Speaker 04:
I mean, one question then one would raise is there is clearly some requirement at some level, but where is this being done between NAR and Zillow?

[00:12:03] Speaker 02:
Oh, so you're asking me about the fact that the MLSs are interposed in between... Correct.

[00:12:08] Speaker 04:
Right, which starts to lead us into the question of is there a theory against the MLSs, which I want to hear your view on, too.

[00:12:14] Speaker 02:
Well, I think there is a theory against the MLSs, just as there's a theory against NAR.

[00:12:19] Speaker 02:
So let's talk about the fact that... What is it that NAR and the MLSs are?

[00:12:28] Speaker 02:
So what they are is they are instrumentalities of members

[00:12:33] Speaker 02:
of the National Association of Realtors, who are brokers and agents who compete against each other for listings and commissions, but use the National Association of Realtors to coordinate their activities and legislate the terms on which competition can occur by promulgating rules that are then deployed to the MLSs for adoption, implementation, and enforcement.

[00:13:01] Speaker 02:
Under American Needle and under AP, NAR and the MLSs are liable.

[00:13:08] Speaker 02:
Now we didn't name them MLSs, but under conspiracy law, we don't have to name every potential conspirator.

[00:13:15] Speaker 02:
We named the ones that we wish to focus on, which were NAR and Zillow.

[00:13:21] Speaker 02:
And just to add a finer point to it, our position is, of course, that the MLSs are instrumentalities of NAR as well as instrumentalities of the membership.

[00:13:34] Speaker 02:
And we believe that to be totally consistent with American Needle.

[00:13:43] Speaker 04:
I guess the question I have looking at this is, when you have an optional rule like this that's put out by a trade association,

[00:13:51] Speaker 04:
What kind of record evidence does one need to make that rule seem non-optional or more concerted in practice?

[00:13:59] Speaker 04:
And maybe I'm thinking about it the wrong way, but that's a question I have hearing this presentation.

[00:14:05] Speaker 02:
So the concerted action at the rule level is the concerted action of the members of the National Association of Realtors to cause the promulgation of the rule.

[00:14:17] Speaker 02:
Where does Zillow come in?

[00:14:18] Speaker 02:
Zillow comes in at a different step when it agrees to adhere to the rule.

[00:14:24] Speaker 02:
Does that answer your question?

[00:14:25] Speaker 04:
Well, it sort of restates the issue because here we have 71% of, and so I look at that number and I ask, it could be higher, it could be lower, what do we draw from that?

[00:14:34] Speaker 02:
But the significance of that is only that it determines the scope of the conspiracy.

[00:14:40] Speaker 02:
So our conspirators are NAR and the MLSs that adopted the rule.

[00:14:47] Speaker 02:
We're not including the MLSs that didn't adopt the rule.

[00:14:50] Speaker 02:
So that's the significance of the 71%.

[00:14:53] Speaker 02:
There's no legal significance to the fact that some adopted it and some didn't because like I said,

[00:15:01] Speaker 02:
the fundamental issue is concerted action.

[00:15:04] Speaker 02:
And there was obviously concerted action with respect to the members of NAR and the members of the MLSs that adopted the rule.

[00:15:15] Speaker 02:
So I would like to, if I could, I'd like to move on to something else which perhaps is of concern to you, which is the issue of whether or not

[00:15:24] Speaker 02:
the segregation rule is on its face an anti-competitive restraint.

[00:15:29] Speaker 02:
And we have two reasons that we believe that it is.

[00:15:33] Speaker 02:
The first is that where it is adopted, it requires MLS participants like Zillow to display non-MLS listings separately from non- I'm sorry, non-MLS listings from non-NARS sources

[00:15:48] Speaker 02:
separately from MLS listings.

[00:15:51] Speaker 02:
And by doing that, it constrains conduct in commerce and it deprives the marketplace, using the language of American needle, of entrepreneurial diversity and actual or potential competition.

[00:16:05] Speaker 02:
The other reason it's a facial restraint

[00:16:07] Speaker 02:
is, again, using the phrase from the Eastern State Lumbers case, its natural tendency is to disadvantage non-MLS listings by making them less visible.

[00:16:21] Speaker 02:
And again, the proof of that is what happened with Zillow.

[00:16:25] Speaker 02:
Zillow tried to accommodate both the rule and its interest in making the listings visible to the users, and the listings still ended up

[00:16:37] Speaker 02:
invisible.

[00:16:39] Speaker 02:
Now, if I could, I'd like to turn to this issue of whether or not there was direct evidence, because that is a very important issue in this case.

[00:16:48] Speaker 02:
If there was direct evidence of a Section 1 agreement

[00:16:51] Speaker 02:
then Matsushita and N-ray citric acid don't apply and REX had no burden to rebut Zillow's business justification for its pursuit of IDX feeds and its implementation of the segregation rule.

[00:17:10] Speaker 02:
There's direct evidence in this case because there's a rule that's anti-competitive on its face that Zillow agreed to adhere to.

[00:17:19] Speaker 02:
It's as simple as that, but there is more.

[00:17:24] Speaker 02:
Using the language from the Nareb decision, we know indisputably that NAR is the architect of the rule.

[00:17:33] Speaker 02:
In addition, NAR is also the ringleader of the scheme created by the rule.

[00:17:39] Speaker 02:
And I say that because it proposed its adoption by the affiliated MLSs, it dictated where adopted, it could not be modified, it dictated that the adopting MLSs impose the rule on their participants such as Zillow, and it proposed a range of sanctions for non-compliance, which

[00:17:59] Speaker 02:
In our view explains why Zillow went to NAR and not to the MLSs to seek the replacement of the rule with a mandatory commingling rule.

[00:18:13] Speaker 02:
Now turning to Zillow's, I think I should turn to Zillow's independence because we've covered the optional label.

[00:18:21] Speaker 02:
Again,

[00:18:25] Speaker 02:
The judge concluded that REX failed to produce evidence that Zillow did not act independently in redesigning its website.

[00:18:34] Speaker 02:
That would be REX's burden under Matsushita and in-ray citric acid if the record did not contain direct evidence of concerted action.

[00:18:43] Speaker 02:
But as I've already explained, it does.

[00:18:49] Speaker 02:
The relevant issue should be whether Zillow's participation in the scheme

[00:18:55] Speaker 02:
I'm sorry.

[00:18:56] Speaker 02:
The relevant issue as to Zillow's participation in the scheme is whether Zillow would have redesigned its websites but for NAR's segregation rule.

[00:19:05] Speaker 02:
And we review the evidence in detail at pages 33 through 36 of our opening brief and five through six of our reply brief with extensive citations to the record, which

[00:19:19] Speaker 02:
In our view, catalogs, the evidence, which is conclusive, that Zillow redesigned its websites because adhering to the segregation rule was the only way it could get IDX listings data.

[00:19:31] Speaker 02:
And the but for makes this the antithesis of independence.

[00:19:38] Speaker 02:
In fact, not even Zillow will tell you that it decided on its own to segregate listings.

[00:19:44] Speaker 02:
It segregated because it was the only way that it could get the IDX data.

[00:19:52] Speaker 02:
Zillow also tells you then in its brief, it tells you that it redesigned its websites to conform to NAR's rules governing access and display of IDX data.

[00:20:02] Speaker 02:
That's at pages 11 and 13 of their briefs.

[00:20:06] Speaker 02:
So these facts don't require any inference at all to demonstrate that Zillow agreed to enforce the rule.

[00:20:14] Speaker 04:
What you seem to be saying is that just Zillow's compliance with what is on its face an optional rule is sufficient to create an agreement between Zillow and NAR?

[00:20:25] Speaker 02:
Well, I'm not sure if you're referring to the Toscano case, but if you are, we think Toscano is significantly different than this case.

[00:20:34] Speaker 02:
Zillow was not a passive party that simply acquiesced to non-negotiable terms and conditions as occurred in the Toscano case.

[00:20:45] Speaker 02:
Zillow altered, fundamentally altered the way it had been doing business for 15 years in order to accommodate the segregation rule.

[00:20:55] Speaker 02:
And unlike the local golf associations in Toscano that deferred

[00:21:00] Speaker 02:
to the National Association for Eligibility Criteria and to set the slates for the competition and for the slates of the competitors and the individual tournaments.

[00:21:12] Speaker 02:
Zillow, as it tells you, made an enormous effort to accommodate this rule and then built into its system a mechanism to enforce it, to ensure

[00:21:28] Speaker 02:
that non-MLS listings would not end up on in the MLS category.

[00:21:36] Speaker 02:
So again, our position is in-ray citric acid and Matsushita are inapplicable here because the case is really based on direct evidence and the direct evidence is obvious.

[00:21:50] Speaker 02:
It is the smoking gun evidence.

[00:21:52] Speaker 02:
The smoking gun evidence is the rule.

[00:21:55] Speaker 02:
and the fact that indisputably Zillow agreed to adhere to it.

[00:22:01] Speaker 02:
I would also, maybe I should point out that- We've taken you a little bit over your time.

[00:22:05] Speaker 04:
I want to know, do you want to maybe reserve time for rebuttal?

[00:22:08] Speaker 02:
Yes, I do and I meant to say so.

[00:22:09] Speaker 04:
Okay, why don't we put three minutes on the clock for rebuttal and we'll see you in a few.

[00:22:13] Speaker 04:
Thank you.

[00:22:31] Speaker 01:
May it please the court, Alice Wang, on behalf of the United States.

[00:22:35] Speaker 01:
We're here today to protect the legal framework for concerted action.

[00:22:40] Speaker 01:
Concerted action is the threshold requirement in a Section 1 claim.

[00:22:44] Speaker 01:
In American Needle, the Supreme Court said that concerted action had to be defined broadly as encompassing any arrangement that joins together independent centers of economic decision making.

[00:22:56] Speaker 01:
Now, in the context of trade associations, there are three different ways, at least, that an optional rule can support concerted action.

[00:23:05] Speaker 01:
And importantly, we don't read Gnar and Zillow as disputing the viability of any of these theories.

[00:23:11] Speaker 01:
First, an optional rule could be mandatory in practice.

[00:23:16] Speaker 01:
Second, the adoption of an optional rule can itself be concerted action.

[00:23:20] Speaker 01:
And third, an optional rule can serve as an invitation for others to join in a common plan.

[00:23:28] Speaker 01:
The district court here considered the first theory.

[00:23:30] Speaker 01:
It found that the no commingling rule was in fact optional for the MLSs to adopt, but it didn't look at the second or third theories.

[00:23:39] Speaker 01:
And its opinion could be read to foreclose these other viable theories of what concerted action can encompass.

[00:23:46] Speaker 01:
While we don't have access to the full record,

[00:23:49] Speaker 01:
We understand that Rex alleged a scheme to segregate and thereby conceal listings that come from sources other than these NAR affiliated MOSs.

[00:24:00] Speaker 01:
There are aspects of that scheme that evoke the third theory, which involves an invitation that's followed by action showing acceptance.

[00:24:09] Speaker 01:
So first, the invitation.

[00:24:11] Speaker 01:
As the district court found, NAR created and adopted the new commingling rule and it published the handbook, the rule in its handbook for the MLSs to adopt.

[00:24:23] Speaker 01:
There was also evidence in the record that the relevant provisions of the handbook prohibited MLSs that adopted the rule from making any modifications such that all members would adopt the same rule if they chose to do so.

[00:24:38] Speaker 01:
And then we have action showing acceptance.

[00:24:41] Speaker 01:
The district court found that a majority of MLSs accepted that invitation and chose to adopt the no commingling rule.

[00:24:50] Speaker 01:
And then they required their members like Zillow to implement and follow the no commingling rule.

[00:24:55] Speaker 04:
I'm not sure the district court really would take issue with anything that you just laid out.

[00:25:00] Speaker 04:
It seemed that the district court was more troubled by the lack of

[00:25:07] Speaker 04:
involvement between NAR and Zillow on just exactly how Zillow implemented the rule and viewed the complaint as challenging the implementation of the rule and not solely the rule, it's the segregation rule itself.

[00:25:22] Speaker 01:
As to the implementation, Your Honor, that is like Plymouth Dealers Association where

[00:25:28] Speaker 01:
there's an agreement to segregate.

[00:25:33] Speaker 01:
And the means of implementation of how exactly that segregation would occur was within Zillow's control, but that doesn't mean that there wasn't concerted action on the first point of whether there was a plan to segregate.

[00:25:49] Speaker 01:
So we don't see the fact that Zillow retains some discretion over

[00:25:53] Speaker 01:
the method of implementation as being dispositive on the question of concerted action.

[00:26:00] Speaker 04:
What do you think the district court should have done differently?

[00:26:03] Speaker 01:
So, you know, the analysis isn't completely clear.

[00:26:07] Speaker 01:
We read the district court's analysis as essentially stopping after theory one.

[00:26:12] Speaker 01:
It said, okay, I've determined that the MLSs didn't

[00:26:18] Speaker 01:
weren't forced to adopt the rule, that it was in fact truly optional for them to adopt the rule, and it didn't consider anything beyond that.

[00:26:26] Speaker 01:
And so we're concerned about a broad reading of the district court's opinion that there's only one path for an optional rule to become concerted action.

[00:26:34] Speaker 01:
So that's why we would ask the court to vacate and remand for the district court to consider these other possible theories, specifically the third theory.

[00:26:52] Speaker 01:
And if I may briefly go to Toscano, which your honor's discussed with counsel for Rex.

[00:27:00] Speaker 01:
Toscano, we read as being a case about membership liability.

[00:27:05] Speaker 01:
The appellate decision is a little bit less than clear, but right in the context of a district court opinion, it seems like

[00:27:15] Speaker 01:
that case is really considering whether the local sponsors could be a part of the concerted action.

[00:27:21] Speaker 01:
The summary judgment was only addressed to that, the local sponsors and the title sponsors in that case.

[00:27:28] Speaker 01:
We think a more apt example is this court's decision in Epic v. Apple.

[00:27:34] Speaker 01:
In Epic v. Apple, the court was clearly considering the question of concerted action and

[00:27:41] Speaker 01:
it said that even if there is a contract of adhesion that one of the parties had no opportunity to negotiate, that that was sufficient to form concerted action.

[00:27:53] Speaker 04:
The district court did walk through what it regarded as key evidentiary issues here, that there was no consequence if an MLS decided not to adopt a rule, that the lack of enforcement mechanisms, lack of monitoring, the 71%, so is that not, was that not sufficient analysis in your view in terms of what the district court was supposed to do?

[00:28:17] Speaker 01:
No, Your Honor.

[00:28:18] Speaker 01:
It's a relevant factor, but we don't think it's dispositive as to concerted action.

[00:28:23] Speaker 01:
It's certainly relevant under theory one, because if there's no enforcement mechanism, that probably suggests that the rule is truly optional.

[00:28:32] Speaker 01:
But under theory three, for example,

[00:28:36] Speaker 01:
there doesn't need to be an enforcement mechanism in order for there to be an invitation to a common plan that's subsequently adopted.

[00:28:44] Speaker 04:
That's- It's not just different ways of saying kind of the same thing?

[00:28:50] Speaker 01:
The different theories, Your Honor?

[00:28:52] Speaker 04:
Well, yeah, I mean, some of these points we're talking about, it seems that we could restyle them in the way that you're discussing and much of what the district court said could slot into that too.

[00:29:02] Speaker 01:
I'm not sure that's the case.

[00:29:04] Speaker 01:
As I read the district court's opinion, I don't see where the district court analyzed anything past whether the rule was truly optional.

[00:29:12] Speaker 01:
There were four cases that were excited below.

[00:29:16] Speaker 01:
it seemed to me that the only analysis that the district court offered to distinguish those cases was that those cases involved optional rules instead of mandatory rules, and that was the end of the analysis.

[00:29:27] Speaker 01:
So I don't see any consideration of the third theory of invitation and acceptance.

[00:29:35] Speaker 01:
I see I'm out of time.

[00:29:38] Speaker 01:
So we would ask that the court vacate and remand the case for the district court to consider the evidence based on the correct legal framework.

[00:29:47] Speaker 04:
Thank you very much.

[00:29:48] Speaker 01:
Thank you.

[00:29:56] Speaker 04:
Mr. Michelle, good morning.

[00:29:58] Speaker 06:
Good morning, your honor.

[00:30:01] Speaker 06:
Thank you Judge Bress and may it please the court, Chris Michelle on behalf of the Appellee National Association of Realtors or NAR.

[00:30:08] Speaker 06:
The District Court carefully considered a detailed summary judgment record and correctly held that REX failed to present sufficient evidence of its Section 1 conspiracy claim against NAR.

[00:30:19] Speaker 06:
That decision reflects a straightforward, common-sense application of settled Section 1 precedent, and this Court should affirm.

[00:30:27] Speaker 06:
At its core, Rex's claim stems from Zillow's redesign of its website.

[00:30:32] Speaker 06:
But under Section 1, there must be an agreement, a meeting of the minds between multiple parties, to restrain trade.

[00:30:40] Speaker 06:
The principal argument that REX advances here is that the optional model rule adopted by NAR was the source of an agreement with Zillow, but as the district court correctly found, that argument fails for multiple reasons.

[00:30:54] Speaker 06:
First and foremost, NAR's optional model rule is not an agreement with anyone to do anything.

[00:31:00] Speaker 06:
It is fully optional.

[00:31:02] Speaker 06:
to the extent that Zillow was required to not commingle its listings.

[00:31:07] Speaker 06:
That is because of the intervening decisions of the distinct MLSs, as I think Judge Bress indicated in one of his questions at the opening.

[00:31:16] Speaker 06:
And in any event,

[00:31:17] Speaker 06:
It's probative that REX decided to adopt a browser modification nationwide after, as I think Judge DeAlba suggested, considering the pros and cons of that decision, including in the jurisdictions, which amount to 29 percent of all MLSs, that's dozens or perhaps hundreds of MLSs.

[00:31:35] Speaker 06:
that have not adopted the no commingling rule.

[00:31:38] Speaker 06:
So for all three of those reasons, any one of which would be sufficient, there was independent action by Zillow that defeats an agreement.

[00:31:46] Speaker 06:
Separately, and as another alternative basis on which this court could affirm, the claim that Rex pled, including in page 60 of its complaint, was not merely an agreement to separate, but an agreement to separate, conceal, and demote.

[00:32:00] Speaker 06:
Now I know my colleague

[00:32:01] Speaker 06:
for Rex has a somewhat different view of the allegations today, but those are the allegations in the complaint and they're in the complaint for a good reason, because simply segregating listings would not cause any harm to Rex.

[00:32:13] Speaker 06:
Businesses, of course, segregate or separate products all of the time without any implication that the separation would diminish or demote one of them.

[00:32:22] Speaker 06:
In fact, as I think Judge Bresch suggested,

[00:32:24] Speaker 06:
it's entirely possible that Rex, that Zillow could have separated the listings in a way that was favorable to Rex.

[00:32:31] Speaker 06:
So separation alone simply can't be enough.

[00:32:34] Speaker 06:
And in any event, to the degree there was any harm caused by the separation, it was again Zillow's independent choice on how to design its browser that resulted in that harm, not any agreement between Zillow and NAR.

[00:32:46] Speaker 04:
I mean, it seems maybe the suggestion is that once Zillow's in a world in which it has to comply with

[00:32:51] Speaker 04:
a no commingling rule as a condition of getting the IDX feeds that just inevitably, given the number of agent listings versus people like Rex, there's going to be some of concealment or demotion, however you want to characterize it.

[00:33:06] Speaker 04:
It could never really be equal.

[00:33:08] Speaker 06:
Well, a couple of responses.

[00:33:09] Speaker 06:
First, I think this only goes to sort of the second of the arguments that I was discussing.

[00:33:15] Speaker 06:
I think your question started with to the extent that REX was required to comply with the no commingling rule.

[00:33:21] Speaker 06:
Now, it's critical that REX was only required to comply with the no commingling rule if an MLS, not NAR, an intervening MLS, which is a distinct entity as the district court's opinion at page 25 note five recognizes.

[00:33:35] Speaker 06:
Decided to adopt the no commingling rule.

[00:33:37] Speaker 06:
So I think that is a sufficient basis to not even reach that question But to the extent that you did reach the that question the district court carefully analyzed the evidence that Rex presented and determined that it hadn't presented evidence that there was

[00:33:51] Speaker 06:
that there was demotion and concealment in addition to segregation.

[00:33:56] Speaker 06:
I actually think it's telling that much of Rex's theory is about trying to prefer NAR MLSs, but it's telling that in some MLSs, which are not affiliated with NAR, and there are some out in the world,

[00:34:09] Speaker 06:
They've also adopted the no-commingling rule.

[00:34:12] Speaker 06:
They've decided on their own that that's a valuable policy for them to have for reasons that NAR considered in the first instance.

[00:34:19] Speaker 06:
We're ensuring quality and reliability of listings.

[00:34:22] Speaker 06:
So this theory that the no-commingling rule inherently demotes or favors NAR is belied by the fact that non-NAR MLSs have actually adopted that rule.

[00:34:32] Speaker 04:
The last point I'd make, and I don't think- Let me ask you on the optionality of a trade association rule, in your view, when is that going to cross the line?

[00:34:41] Speaker 04:
I take it your position is going to be just an optional rule standing alone is not enough.

[00:34:45] Speaker 04:
I assume that's your view.

[00:34:47] Speaker 06:
I think in almost all cases, an optional rule truly standing alone will not be enough.

[00:34:52] Speaker 06:
I don't think the court needs to announce a categorical rule that that's always the case.

[00:34:59] Speaker 06:
We're not asking the court to announce such a categorical rule.

[00:35:05] Speaker 06:
Judge Zilli, I don't think, purported to announce such a categorical rule, read fairly his opinion, considered all of the evidence that was presented, and only got to the optionality of the rule after he had separately discussed the

[00:35:17] Speaker 06:
arguments for directed and circumstantial evidence that Rex had presented.

[00:35:21] Speaker 06:
I think this court's decision, the Tuolumne case, though, is particularly probative on that case.

[00:35:26] Speaker 06:
That was a case in which there was a claim that a hospital board that had adopted the recommendations of the medical providers was engaged in a section one agreement with the medical providers, and this court said no, because the recommendation was truly optional, and the board made a separate decision

[00:35:45] Speaker 06:
There's not a Section 1 agreement, even though in that case the recommendation was adopted in every single one of the cases.

[00:35:52] Speaker 04:
Is your position any different if here we have 71 percent?

[00:35:54] Speaker 04:
What if it had 99.9 percent?

[00:35:57] Speaker 06:
So I think Rex would have a stronger case if it was 99.9%.

[00:36:00] Speaker 06:
I'd hasten to say some of the other arguments that I've mentioned would still mean that there would not be a section one agreement in that case.

[00:36:09] Speaker 06:
But I think it's telling that there is nothing like that in this case.

[00:36:13] Speaker 06:
Not only is it only 71% adoption, but some of the largest MLSs, including the California regional MLS, the largest in the country, has not adopted it.

[00:36:21] Speaker 06:
And not only does NAR not.

[00:36:23] Speaker 06:
Why have they not adopted it, do you know?

[00:36:25] Speaker 06:
I think, I'm not sure they've elucidated the exact reasons, but I think they, you know, have decided that for their market, it's better, you know, to allow co-mingling, which they're, again, perfectly able to do.

[00:36:36] Speaker 06:
They remain the largest MLS in the country with no consequences from NAR, and not only does NAR not

[00:36:42] Speaker 06:
in post consequences, we don't even track which MLSs are doing that and we didn't even know until this litigation what the 71% figure was.

[00:36:51] Speaker 06:
We only learned that in response to Rex's discovery request.

[00:36:55] Speaker 06:
So this is really the polar opposite end of the spectrum from the kind of cases like Goldfarb and other cases in which the Supreme Court or other courts have said that a rule that's optional on its face is actually mandatory and evidence of an agreement in practice.

[00:37:11] Speaker 03:
Would you address the government's third theory, which is the invitation to join line of cases?

[00:37:18] Speaker 03:
I think Interstate Circuit's probably the primary case.

[00:37:22] Speaker 06:
Yeah.

[00:37:22] Speaker 06:
So I think, uh, you know, interstate circuit, um, is not a case that, well, first of all, it's not a case that Rex particularly relied on in this case.

[00:37:31] Speaker 06:
I think ultimately, and I think Judge Bress said something like this earlier, the interstate circuit just speaks to another way to demonstrate an agreement.

[00:37:39] Speaker 06:
And we agree that, uh, circumstantial evidence can be a basis for, uh, for discerning an agreement.

[00:37:46] Speaker 06:
There, there was very strong circumstantial evidence after all.

[00:37:49] Speaker 06:
The film exhibitors sent a letter to eight distributors and said, you know, I expect, Springport called them demands and said, I expect all of these to be adopted at once.

[00:38:00] Speaker 06:
They were proposing a radical change in the market, a price fixing scheme, the paradigmatic antitrust violation.

[00:38:07] Speaker 06:
So that, I think, you know, the government has a certain taxonomy and I don't have a strong view one way or the other, whether it's right.

[00:38:14] Speaker 06:
I think there are different ways to think about it.

[00:38:17] Speaker 06:
But the interstate circuit invitation theory is a very poor fit for this case, and that's why Rex, I think,

[00:38:23] Speaker 06:
to its credit hasn't really advanced that theory.

[00:38:25] Speaker 06:
After all, there was no invitation in this case from NAR to Zillow.

[00:38:31] Speaker 06:
Nothing like the invitation in the Interstate Circuit case from the film exhibitor to the film distributor.

[00:38:36] Speaker 06:
And also critically, the distributors in the Interstate Circuit case were competitors with each other and they had a reason to uniformly accept the exhibitor's request or the exhibitor's demand.

[00:38:50] Speaker 06:
In this case, the MLSs, critically, are not competitors with each other.

[00:38:54] Speaker 06:
They are operating in separate markets.

[00:38:56] Speaker 06:
And so there's none of the background principles that led the court to infer cooperation or conspiracy in the Interstate Circuit case are present here.

[00:39:08] Speaker 06:
I think the Supreme Court's decision in theater enterprises is helpful.

[00:39:13] Speaker 06:
It came about 15 years later in the same industry, the movie industry, and I think

[00:39:17] Speaker 06:
clarified, you know, that some of the broad language in the Interstate Circuit should not be over-read.

[00:39:23] Speaker 06:
I think we're not going to eviscerate the conspiracy requirement from Section 1, and I think that's sound logic that the Supreme Court has continued to rely on, including in the America Needle case that my friend mentioned.

[00:39:34] Speaker 06:
Justice Stevens' opinion for the court points out that the agreement requirement plays an important role because, after all, the standard for Section 1 and reasonable restraint of trade is much lower than the standard for Section 2 monopolization, and to allow unilateral action to be a subject of a Section 1 claim in the way that it is a Section 2 claim would be to deviate from an important distinction that Congress made in Section 1.

[00:40:00] Speaker 06:
I think also, just to go back to the question Judge Bress asked about model, about optional rules, maple flooring, and a long series of cases, including many from this court, honey bums, citric acid, musical instruments, have all talked about the premise that trade associations do not become walking conspiracies simply because

[00:40:19] Speaker 06:
They adopt rules or recommendations that their members, you know, have the option to follow.

[00:40:25] Speaker 06:
And in fact, there can be pro-competitive benefits of trade associations sharing valuable information.

[00:40:30] Speaker 06:
We would not want an antitrust law that discourages people sharing expertise with each other.

[00:40:38] Speaker 06:
The Court has no further questions.

[00:40:39] Speaker 06:
We'd ask to affirm.

[00:40:55] Speaker 05:
Good morning, Your Honor.

[00:40:57] Speaker 05:
May it please the Court?

[00:40:58] Speaker 05:
Steve Engel for Zillow.

[00:41:01] Speaker 05:
This case is about how Zillow sought to improve its consumer listings by redesigning its own website.

[00:41:08] Speaker 05:
Rex objected to how Zillow chose to display Rex's listings for free and filed an antitrust lawsuit.

[00:41:15] Speaker 05:
580,000 documents later, two dozen depositions, the District Court correctly granted summary judgment on the record

[00:41:23] Speaker 05:
because Rex had established no evidence of an agreement between NAR and Zillow to boycott, demote, conceal Rex's listings.

[00:41:37] Speaker 05:
Rex, this morning, tries to shift from the theory that it relied upon before the district court, stating that the sole thing it cared about was the uncontested fact that in order for Zillow to obtain the IDX listings, it had to enter into subscription agreements, which included licensing restrictions, that required separation, and therefore that caused Zillow to redesign his website.

[00:42:01] Speaker 05:
But that was not the theory under which Rex brought its case in the first instance.

[00:42:07] Speaker 05:
And I could cite a litany of statements of Rex's about this, but I'll just start with the very first sentence of Rex's opposition to Zillow's motion for summary judgment states,

[00:42:19] Speaker 05:
In January 2021, Zillow agreed with NAR to segregate and demote the listings of non-NAR affiliated brokers such as Rex.

[00:42:31] Speaker 05:
And that's at page 27 of the further excerpts of record.

[00:42:35] Speaker 05:
We can go to the First Amendment, the operative complaint.

[00:42:39] Speaker 05:
Rex's complaint, the first count in which they allege an antitrust conspiracy.

[00:42:43] Speaker 05:
They say, defendant NAR and Zillow with non-party MLSs

[00:42:48] Speaker 05:
entered into horizontal combination, et cetera, to boycott and deprive non-MLS, non-NAR members, including RECs, effective access to prominent Zillow residential real estate aggregator websites.

[00:43:03] Speaker 04:
I guess their position is the only reason they did all these things is because they agreed to abide by the no commingling rule.

[00:43:11] Speaker 05:
So the key factual issue, the key issue on summary judgment was what was the scope of the agreement.

[00:43:17] Speaker 05:
They were alleging a group boycott and there was just no evidence of an agreement between NAR and between Zillow with respect to this boycott.

[00:43:26] Speaker 05:
In fact, what all the evidence showed was that Zillow had considerable discretion in how it was to implement

[00:43:33] Speaker 05:
the no co-mingling rules in the jurisdictions that applied.

[00:43:36] Speaker 05:
Zillow could have adopted a no co-mingling rule in the jurisdictions that said no co-mingling, the 70% of them, a different co-mingling rule in the other 30%.

[00:43:47] Speaker 05:
It could have dropped recs entirely.

[00:43:50] Speaker 05:
Again, Zillow was listing Rex's listings for free.

[00:43:54] Speaker 05:
There was no contractual obligation to carry Rex's listings.

[00:43:57] Speaker 05:
Zillow wanted to carry Rex's listings.

[00:43:59] Speaker 05:
Zillow wanted to promote all the listings.

[00:44:01] Speaker 05:
Zillow entered into these IDX agreements because it was concerned about the quality and the completeness and the timeliness and the security of its existing listings.

[00:44:10] Speaker 05:
It wanted to expand them.

[00:44:12] Speaker 05:
Many other aggregator websites like

[00:44:14] Speaker 05:
major competitors like Redfin, they never carried Rex's listings.

[00:44:18] Speaker 05:
Rex's was .05 percent of the national market.

[00:44:23] Speaker 05:
Zillow wanted to make those listings available to consumers.

[00:44:26] Speaker 05:
It wanted to keep making those listings available to consumers.

[00:44:29] Speaker 05:
It not only came up with on its own, independently, which is a relevant question for antitrust purposes,

[00:44:35] Speaker 05:
this two-tab display, but when its early studies showed that there was a problem with the contrast, it increased the contrast.

[00:44:45] Speaker 05:
It adopted an FAQ.

[00:44:48] Speaker 05:
It adopted pop-ups to sort of try to drive consumer traffic to tab two also.

[00:44:53] Speaker 05:
And it did all these things because it wanted consumers to have access to everyone's websites.

[00:44:57] Speaker 05:
In fact, it also came up with an idea that RECS could

[00:45:02] Speaker 05:
It came up with a workaround of the IDX's that Rex could have come to Zillow paid a dollar a listing and wound up on tab one before Zillow was able to present this to Rex, Rex suit and so here we are and so at the end of the day this is Rex pled

[00:45:20] Speaker 05:
a weak antitrust case, it went to full discovery, and the district court found that there was simply no agreement because Zillow bent over backwards, frankly.

[00:45:29] Speaker 05:
Its principal goal was to help consumers, but it also wanted to keep all the listings on, on its website.

[00:45:35] Speaker 05:
And so there was no conspiracy to boycott Rex, no effort to harm Rex.

[00:45:40] Speaker 04:
What does one make of some of the internal documents about concerns within Zillow about whether the no commingling rule would be anti-competitive?

[00:45:49] Speaker 05:
It's clear that the no co-mingling rule is not the favorite rule that Zillow has to comply with.

[00:45:54] Speaker 05:
And in fact, Zillow's need to comply with the no co-mingling rule as a licensing condition for certain IDX feeds was something that cost Zillow a lot of money and that required Zillow to think about how it was going to, in the most consumer-friendly way, redesign its website.

[00:46:09] Speaker 05:
I think it demonstrates that Zillow had no conscious commitment to a common conspiracy.

[00:46:17] Speaker 05:
Zillow was very much like the golf sponsors in Toscano, who the price of running a PGA tour, and these guys were not passive operators, these guys were operating the tour.

[00:46:28] Speaker 05:
They were picking the golf club, they were bringing in the volunteers, and they were running, they were setting the rules for the tour.

[00:46:34] Speaker 05:
The price of doing so was that they had to agree with the PGA's rules.

[00:46:38] Speaker 05:
just like the price of getting these IDX feeds, as Judge Del Alba mentioned, the only way to get these feeds was to comply with the licensing conditions.

[00:46:46] Speaker 05:
And so Zillow's discomfort with the no co-mingling rule demonstrates that it wasn't part of any kind of scheme and was actually seeking to minimize what it thought were the costs to Zillow and the cost to consumers that would come from it.

[00:47:01] Speaker 04:
What's your response to the United States's, you know, the way they've kind of arranged the theories and their focus on the third one?

[00:47:09] Speaker 05:
So honestly, I don't know why the United States is here, but it seems to me that their third theory tracks this notion of a conscious commitment to a common plan.

[00:47:20] Speaker 05:
I mean, the no commingling rule

[00:47:26] Speaker 05:
The reason why the district court thought the optionality of the no-quamangling rule was relevant was because Rex argued a direct conspiracy in an agreement between NAR and Zillow.

[00:47:38] Speaker 05:
And it's certainly relevant in deciding whether NAR and Zillow, which have no agreements between the two of them, it's certainly relevant to think that all NAR apparently has done is propose an optional rule 20 years ago that some others have followed.

[00:47:50] Speaker 05:
And so it was a relevant factor in this.

[00:47:52] Speaker 05:
The bottom line is that there was just no agreement to boycott Rex, and certainly no agreement between Nor and Zillow.

[00:48:00] Speaker 05:
And so the government says, well, gee, you know, maybe the district court could have thought about option three a little bit better.

[00:48:06] Speaker 05:
But again, I think it's within the record.

[00:48:08] Speaker 05:
And the district court understood that optionality was not dispositive.

[00:48:11] Speaker 05:
It was one factor.

[00:48:12] Speaker 05:
And the key fact was that

[00:48:15] Speaker 05:
the record did not show an agreement to boycott, demote, conceal Rex's listings.

[00:48:21] Speaker 05:
And that was why the district court's opinion is replete with this.

[00:48:25] Speaker 05:
And the government doesn't have access to the summary judgment record.

[00:48:28] Speaker 05:
So the idea that if only the district court after full discovery had kind of written his opinion a little bit clearer, then maybe we should go back and have him do it again.

[00:48:38] Speaker 05:
That's not a vacate and remand idea, it seems to me.

[00:48:41] Speaker 05:
It seems like to the extent the government wants to say,

[00:48:44] Speaker 05:
this court should not hold optional rules can never be antitrust conspiracies, that's fine.

[00:48:50] Speaker 05:
But I don't think that's the position of NAR and it's certainly not the position of Zillow here.

[00:48:53] Speaker 05:
And it wasn't what the district court said below.

[00:48:55] Speaker 04:
What about the question of whether the alleged conspiracy encompasses the MLSs, individual MLSs?

[00:49:03] Speaker 05:
So I think as we saw this afternoon,

[00:49:06] Speaker 05:
The issue of the non-party MLSs has always been they as proxies for NAR.

[00:49:14] Speaker 05:
They were the stalking horses for NAR.

[00:49:15] Speaker 05:
They're the members of NAR.

[00:49:16] Speaker 05:
They are carrying it out.

[00:49:18] Speaker 05:
There's nothing in the record that identifies particular MLSs.

[00:49:21] Speaker 05:
None of them were ever sued, and in particular,

[00:49:23] Speaker 05:
Rex chose to bring an antitrust conspiracy that alleged a nationwide antitrust conspiracy.

[00:49:29] Speaker 05:
Noor and Zillow on a nationwide basis were seeking to push Rex out.

[00:49:33] Speaker 05:
To the extent they wanted to have localized conspiracies, because all of these MLSs operate in particular geographic locations, it behooves them in the summary judgment record to identify the particular MLSs, the particular markets, to establish that Rex even has listings in those markets.

[00:49:50] Speaker 05:
Rex never operated nationally.

[00:49:52] Speaker 05:
And so this was from start to finish a nationwide conspiracy, which is why they only named NAR and Zillow.

[00:49:59] Speaker 05:
And the MLSs were always sort of like non-party agents or proxies and the like.

[00:50:04] Speaker 05:
And so the district court corrected, you know, I could go back to page 37 of the further, 27 of the further excerpts of record, their first sentence is, this is an agreement between NAR and Zillow.

[00:50:16] Speaker 05:
The district court was entitled to,

[00:50:17] Speaker 05:
adjudicate summary judgment based on the case that they brought, not now dealing with new theories that they're floating on appeal.

[00:50:25] Speaker 04:
When, in your view, does an optional rule cease to be optional?

[00:50:29] Speaker 04:
What kind of things would a court look to in making that assessment?

[00:50:33] Speaker 05:
Well, I mean, I think there are a lot of different ways in which an optional rule could de facto become

[00:50:41] Speaker 05:
And again, I think it's not quite presented here, but you can look at the adoption number, the percentages, the history of the proposal and the adoption.

[00:50:51] Speaker 05:
And there's a lot of cases like the Nareb case and others in which courts have wrestled with it.

[00:50:57] Speaker 05:
I just don't think that this is a case that tests upon whether or not this rule is optional.

[00:51:04] Speaker 05:
NARA has multiple categories of rules.

[00:51:07] Speaker 05:
NARA has mandatory rules.

[00:51:08] Speaker 05:
NARA has recommended rules.

[00:51:10] Speaker 05:
And then NARA has optional rules.

[00:51:12] Speaker 05:
Optional rules is just like, we're putting this out there for our members, do what they want.

[00:51:16] Speaker 05:
We're not even recommending that they adopt it, much less a mandatory rule.

[00:51:19] Speaker 05:
So this is the lowest category of moral suasion or any kind of suasion that NARA does.

[00:51:26] Speaker 05:
But again, the rule wasn't optional for Zillow.

[00:51:28] Speaker 05:
When Zillow wanted the IDX feeds for particular MLSs, it had to sign up for the rule and apply the rule in those jurisdictions.

[00:51:39] Speaker 05:
It doesn't seem to me that this is a case that tests any broad principle about when is an optional rule actually mandatory.

[00:51:48] Speaker 04:
Okay.

[00:51:48] Speaker 04:
I think we've exhausted our questions.

[00:51:50] Speaker 04:
Mr. Engel, thank you.

[00:51:51] Speaker 04:
Thank you, Your Honor.

[00:51:58] Speaker 02:
If I could just respond to a couple of points and then sum up.

[00:52:04] Speaker 02:
You just ask, when is an optional rule not optional?

[00:52:10] Speaker 02:
And then there was a discussion about the relationship of the MLSs to NAR.

[00:52:15] Speaker 02:
And again, it's our position that the MLSs are affiliates of NAR.

[00:52:20] Speaker 02:
The MLSs are a subset of NAR.

[00:52:24] Speaker 02:
NAR is comprised of members who compete and they use their trade organization and the MLS to promulgate rules and deploy those rules.

[00:52:35] Speaker 02:
to the MLSs.

[00:52:38] Speaker 02:
When is the rule not optional?

[00:52:40] Speaker 02:
It's not optional when the MLS adopts it, because at the point in time when the rule is adopted by the MLS, it becomes mandatory on the participants.

[00:52:49] Speaker 02:
Zillow became a participant because it wanted IDX feeds.

[00:52:54] Speaker 02:
Zillow

[00:52:56] Speaker 02:
The record is just crystal clear that Zillow did not act independently here.

[00:53:04] Speaker 02:
Zillow's actions, Zillow redesigned its website directly in response to the segregation rule.

[00:53:12] Speaker 02:
But for the segregation rule, Zillow would not have fundamentally changed the way it had been doing business for 15 years.

[00:53:21] Speaker 02:
On the issue of optionality,

[00:53:27] Speaker 02:
I think that it is very important that I emphasize that the issue is concerted action.

[00:53:36] Speaker 02:
If only one MLS had adopted the rule, there would still be concerted action here.

[00:53:42] Speaker 02:
The scope of the conspiracy might be different, but there would still be concerted action.

[00:53:49] Speaker 02:
And I do wish to echo the government's concern in this case.

[00:53:57] Speaker 02:
If the trial court's order stands, it will serve as a blueprint for and incentivize trade associations like the National Association of Realtors to circumvent the antitrust laws by promulgating anti-competitive rules, labeling them as optional, and working through proxies.

[00:54:19] Speaker 02:
And that is a, we believe, a compelling reason why

[00:54:26] Speaker 02:
this court should pay close attention to this case, closely examine the record.

[00:54:31] Speaker 02:
Again, our position is the scheme that we alleged here was segregation, not segregate, conceal, and demote, and we believe that the court should reverse.

[00:54:42] Speaker 02:
I do want to say one other thing in connection with the

[00:54:47] Speaker 02:
statements made by the government.

[00:54:49] Speaker 02:
We, of course, very much appreciate the government's position in this case.

[00:54:53] Speaker 02:
We don't think there is quite as clear a line between their theory two and theory three.

[00:54:59] Speaker 02:
We think that, again, the direct evidence here is the National Association of Realtors promulgated the rule.

[00:55:08] Speaker 02:
They deployed it to the MLSs, and Zillow agreed to adhere to the rule.

[00:55:13] Speaker 02:
And that is concerted action, that is a section one agreement, because the rule is anti-competitive on its face.

[00:55:22] Speaker 02:
I never had a chance to address the WCPA claim, but of course our position is that there was error there, and for that reason also, there should be.

[00:55:35] Speaker 02:
The case should be reversed, although on the WCPA claim, we're asking just for a new trial on damages.

[00:55:42] Speaker 04:
Thank you.

[00:55:42] Speaker 04:
Thank you very much.

[00:55:43] Speaker 04:
I wanna thank all counsel for their very helpful arguments in this case.

[00:55:48] Speaker 04:
This matter is submitted.

[00:55:49] Speaker 04:
That concludes our calendar for this morning.

[00:55:51] Speaker 04:
We'll stay adjourned until tomorrow.