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In its supplemental statement of interest in the Nosalek suit filed on Monday, the Department of Justice (DOJ) didn’t just address its ongoing qualms with MLS Property Information Network’s (MLS PIN) settlement. In a footnote on the seventh page of the filing, the DOJ decided to offer some clarity on its current feelings about the National Association of Realtors’ (NAR) Clear Cooperation Policy (CCP).
Implemented in May 2020, under CCP, listing agents have 24 hours from when they begin marketing a property to list it on their local MLS. One month after the policy was implemented, the DOJ served NAR a second civil investigative demand (CID), following the first CID it issued in 2018 over NAR’s now defunct Participation Rule.
At the time of issuing its second CID, the DOJ stated that it believed that the policy “restricts home-seller choices and precludes competition from new listing services.”
However, based on its footnote, the DOJ appears to be reconsidering its feelings for CCP.
“Of note, industry participants have made public statements about the Division’s purported position on clear cooperation policies that are misleading and out of context,” the footnote reads. “The Division has not taken a position that such policies standing alone (i.e., without mandated MLS publication of offers of compensation or exceptions benefitting primarily large brokerages) are anticompetitive.”
Through this footnote, the DOJ is suggesting that it may no longer think that CCP creates anticompetitive restraints, now that the Participation Rule — which required listing brokers to make an offer of cooperative compensation in order to list a property in a Realtor affiliated MLS — has been repealed via NAR’s commission lawsuit settlement.
Reffkin and Pareja see risk on different sides of the issue
As the debate surrounding CCP has ramped up over the past year, both CCP critics and proponents have claimed that the DOJ will take action — both if the rule is repealed and if it is upheld.
Just last week, Inman News reported that Compass CEO Robert Reffkin told Inman on Tour Nashville attendees that the DOJ believes CCP “restricts homeseller choices” and “prevents competition from listing systems.”
Additionally, he claimed that the policy, which was intended as a ban on pocket listings, actually creates more pocket listings as all off-MLS listings must now be pocket listings.
On the other side of the debate is eXp Realty CEO Leo Pareja, who told investors and analysts listening to his firm’s Q4 2024 earnings call that those who don’t abide by CCP are “inviting a class-action lawsuit by sellers who get hurt in this very concentrated effort and maybe a visit from the DOJ.”
Despite both Reffkin and Pareja’s claims, in this footnote, the DOJ made it clear that as things currently stand, when viewed on its own, the DOJ doesn’t have strong feelings about CCP either way.
The real boogeyman: Plaintiff attorneys
However, while the DOJ may not be coming for those who uphold CCP or actively go against it, attorneys may. One of the most vocal and most notable attorneys threatening real estate industry players with legal action if they actively work to uphold CCP at NAR’s upcoming vote on the policy is Michael Ketchmark, the plaintiff’s attorney in the Sitzer/Burnett and Gibson commission lawsuits.
In a recent interview with Inman News, Ketchmark said that Realtor organizations need “to be aware of the fact that not only will our law firm and other attorneys be looking at [CCP], but the eyes of the world are upon them, and it’s time to do the right thing and let homeowners make decisions about their houses and not a bureaucratic organization.”
He added that anyone who is involved in upholding CCP will be subject to legal exposure.
“That should be in the forefront of the minds of the men and women who are going to be voting either later this week or next on that policy,” Ketchmark is quoted as saying in the article. “If they’re doing it for the wrong reasons, they’re going to be held accountable.”
While Ketchmark and his legal threats may convince some that upholding CCP is not the right choice, other lawyers see legal risks if agents don’t abide by CCP.
“With these office exclusives, agents are telling clients they can use the internal network to test the market, when in reality, what they are doing is tricking their own clients into this through misleading scripts, convincing them to agree to keep the house off the market so the broker could try and get a double commission,” said Douglas Miller, an attorney at Miller Law PLLC, who, like Ketchmark, represented plaintiffs in the commission lawsuits.
In a LinkedIn post sharing similar comments, Miller wrote that agents who recommend using a private listing network or office-exclusive strategy to sellers “should be fired immediately.”
Miller believes that agents who push sellers to use private listing networks are not doing their fiduciary duty.
“It is kind of hard to claim to be a fiduciary for your client when you completely dispense with the ideas of supply and demand by hiding a listing from all possible buyers,” Miller told HousingWire earlier this month. “Those who don’t want CCP are putting a restraint on trade. They’re trying to keep competitors out and they’re trying to make this some kind of a service that it’s not. This serves no one except the brokers that are doing this. And I consider it to be misleading.”
So while the DOJ doesn’t appear to really care whether or not you follow CCP, legal risks are still present, no matter what stance you take.
