Zillow fires back against Compass’s claims of ‘irreparable harm’

Zillow is not buying Compass’s claims that its listing standards policy has or ever will cause “irreparable harm” to the nation’s top brokerage by sales volume.

On Monday, the listing portal giant filed two letters in response to Compass’s motion for a preliminary injunction and its motion for expedited discovery. 

The responses come just a week after the Robert Reffkin-helmed brokerage filed its suit against Zillow, claiming that the portal has colluded with Redfin and eXp Realty on its listing standards policy. Compass claims Zillow enacted the policy to maintain an alleged monopoly over home searches. 

In a letter to Judge Jeannette A. Vargas, Beau Buffier of Wilson Sonsini Goodrich & Rosati — Zillow’s lead counsel — expressed his client’s opposition to Compass’s request for expedited discovery. He asked the court to either deny the request or wait until Zillow has filed its opposition to Compass’s motion for a preliminary injunction, enjoining it from enacting its listing standards policy. 

Matter of urgency?

Zillow claims that because Compass waited nearly three months to file the suit and is proposing a three-month schedule for resolving the dispute, no emergency exists.

Additionally, Zillow argues that by waiting this long, Compass cannot claim that it faces “irreparable harm.” Zillow’s policy went into full effect on Monday and will remain in effect unless the court grants Compass’s preliminary injunction.

“Compass’s claimed irreparable injury and need for urgent relief ring hollow when Compass waited nearly three months to bring suit and is willing to wait three more months before any hearing on its motion,” the letter states. 

According to Zillow, the injuries that Compass allege “are either compensable through damages (if Compass prevails) or are too speculative to support a preliminary injunction.” The letter also argues that Compass fails to articulate why discovery is needed to avoid “irreparable harm” or decide its motion for preliminary injunction. 

“Nowhere does the Discovery Motion articulate why any evidence is necessary to decide the PI Motion or avoid irreparable harm,” the letter states. “This is not a situation, for example, where evidence may be lost.”

In addition to these claims, Zillow also argues that “Compass has failed to “plausibly allege antitrust standing, a proper relevant market, or market power, among other deficiencies.”

“At its core, Compass complains that Zillow has a duty to carry Compass for-sale listings that Zillow does not want to carry, a highly disfavored and inactionable theory. Dressing up that claim in the purported mantle of conspiracy does not help, because Compass has not adequately or plausibly alleged any anticompetitive agreement.” the letter states.

Buffier and Zillow also argue that a victory by Compass in this suit will “impair competition rather than promote it.”

“Compass’s lawsuit seeks to reverse the technological transformation — pioneered by Zillow and others — that has allowed home sale listings to be available for free to anyone on the Internet,” the letter states.

“Compass would erect new barriers for buyers by making listings exclusive to each broker — resulting in reduced transparency, less market liquidity, and a more frustrating and less efficient experience for buyers and sellers. Compass seeks to unravel this innovation and transparency for buyers and sellers in favor of Compass’s own gain.”

Legal process timeline

If the court allows discovery to occur, Buffier and Zillow propose to narrow its scope.

Under this narrowed discovery suggestion, the court would limit Compass to just five employees and two document requests. These include communications between Zillow and Redfin or eXp Realty about Zillow’s listing standards, Compass’s three-phase marketing strategy and/or pre-MLS or off-MLS marketing strategies.

In addition to this letter, Compass and Zillow filed a joint letter that addresses seven questions Vargas wanted answered before Tuesday’s conference. That meeting will focus on the discussion over Compass’s motion for a preliminary injunction. 

In the letter, Zillow reiterated its position that discovery is not needed, claiming that discovery in an antitrust case can be very expensive. As such, Zillow feels discovery should be limited unless the court feels it is absolutely necessary, and it asked the court for reciprocal discovery rights if Compass’s motion for expedited discovery is granted. 

Compass envisions between six and eight weeks for discovery to support its motion for a preliminary injunction. It said that if this process is delayed, it would suffer a great deal of harm. The proposed discovery would include document production, depositions and expert testimony.

In contrast, Zillow believes its suggested discovery period could be completed in a few weeks. Additionally, Zillow questioned Compass’s introduction of requests for expert testimony and depositions, which were not included in its initial motion for expedited discovery. 

Compass is also calling for a five-day hearing after discovery concludes to present testimony on its claims of irreparable harm and an alleged antitrust conspiracy. Zillow disagrees with this and instead proposes that the court decide on Compass’s motion for preliminary injunction after Zillow files its opposition brief. 

According to the letter, Zillow will file its opposition to Compass’s preliminary injunction motion by July 18. Compass will file its reply by Aug. 1 if the court denies its motion for discovery.

Additionally, Zillow is planning on filing a motion to dismiss the suit by Aug. 22, or 14 days after the court rules on the preliminary injunction motion. Compass indicated that it intends to file an amended complaint if any or all of its claims are dismissed.