Compass Files Antitrust Suit Against CRMLS Over Listing Rules, 11 Days After the MLS Sued First

Compass filed an antitrust lawsuit Friday, Oct. 16, against California Regional Multiple Listing Service in the U.S. District Court for the Central District of California. The complaint targets CRMLS rules that fine agents for publicly marketing a home without submitting it to the MLS.

Compass is the largest residential brokerage in the country. CRMLS covers 22 California counties, including the Los Angeles, San Francisco Bay Area and San Diego markets.

The suit came 11 days after CRMLS sued Compass first, in federal court in New York.

What the rules do

Under CRMLS's citation policy, a Rule 7.9 violation carries a fine of 1 percent of the list price, with a $500 minimum and a $2,500 maximum. An agent who neither pays nor requests a review within 20 days can be suspended. Agents cited more than three times in a calendar year are referred to their local association, which can terminate their MLS services.

Compass says the rules require listings to be submitted to the shared database within one business day or the agent faces fines, suspension or expulsion. It calls that anticompetitive.

The company is asking the court to end the rules and award damages, which antitrust law triples.

Compass's argument

Compass says homeowners, not a trade organization, should decide how their property is marketed. Its new "See It First" strategy markets a home first to Compass agents, then as "coming soon" on the Compass website, before a wider launch. The company says this produces higher sale prices and more options for sellers.

CEO Robert Reffkin put the board angle in a LinkedIn post. "Every single member of CRMLS's Board of Directors is a direct competitor of Compass," he wrote, adding that "only the law and the homeowner should tell agents how to publicly market a home."

The complaint also says builders and developers of new homes are not held to the same restrictions. And Compass claims MLSs serving more than 350,000 agents in at least 12 states and Washington, D.C., do not fine agents for publicly marketing off-MLS listings at a client's lawful direction. Those figures are Compass's own.

CRMLS's argument

CRMLS reads the dispute differently. In its New York complaint, it alleges Compass wants to advertise homes publicly on its own platform while keeping those same listings out of the shared database. That would let Compass draw on competitors' listing data without contributing its own.

CRMLS CEO Art Carter said the lawsuit "does not change our commitment to protecting a fair, transparent and competitive real estate marketplace." He said the rules "support fair competition, preserve seller choice and ensure that no brokerage gains an unfair advantage by benefiting from the cooperative while withholding its own publicly marketed listings."

CRMLS's New York suit asks a judge to declare Rules 7.9 and 7.9.1 lawful under the Sherman Antitrust Act and California's Cartwright Act. It also seeks to bar Compass from pursuing antitrust claims over them.

CRMLS said in that filing that enforcement cases involving Compass listings have increased. It said 10 were still open when it sued, eight of them under appeal.

The fine-payment offer

Compass also announced it will pay CRMLS fines for agents at its company-owned brokerages: Compass, Coldwell Banker Realty and Sotheby's International Realty. The offer applies when the agent marketed a home outside CRMLS at a client's written direction.

To qualify, an agent must send Compass the fine notice and assign Compass the right to sue CRMLS over that fine. Compass said it will fold those claims into its lawsuit.

That structure turns every future citation against a Compass-affiliated agent into potential evidence and damages in the case.

How the fight got here

Compass sent CRMLS a demand letter on Sept. 8. CRMLS rejected it on Sept. 30. That same day, Reffkin told attendees at the Council of Multiple Listing Services' Open House conference that Compass planned to start suing MLSs in mid-October.

CRMLS filed its New York suit one day before the deadline Compass had set for the MLS to stop fining agents.

MLS data feeds sites such as Zillow and much of the rest of the home-search industry. The fight is over whether a brokerage can build a private pre-market network and still be required to feed the shared one on the shared one's timeline.

Everything in both complaints is an allegation at this stage. CRMLS had not responded to a request for comment on the Los Angeles filing when it was made.

The open questions are procedural and substantive. Courts in New York and Los Angeles will have to decide which case goes forward and where. Whichever judge reaches the merits will have to decide whether a rule requiring prompt MLS submission is a legitimate condition of a cooperative or an illegal restraint on sellers and their agents.