Zillow Believes Compass Acquisitions Could Impact Lawsuit

Zillow believes Compass‘s recent acquisition of Anywhere Real Estate could impact Compass’s lawsuit against Zillow over its listing access standards policy.

In a letter addressed to Judge Jeanette A. Vargas, who is overseeing the lawsuit in U.S. District Court in New York City, Zillow asks for permission to request the supplemental discovery of materials related to Compass’s acquisition of Anywhere.

Zillow and Compass are currently engaged in an expedited discovery phase related to Compass’s motion for a preliminary injunction, in which it claims that if Zillow continues to enforce its policy, it will suffer irreparable harm.

Announced in early April, Zillow’s listing access standards policy bans listings from its site if they have been publicly advertised for more than one business day before being input into the MLS and made available for display on IDX and VOW websites. 

Compass files suit

In late June, just before the policy was set to go into effect, Compass filed its lawsuit in which it claims Zillow is breaking Federal antitrust laws by enacting this policy. 

“To protect its market dominance, Zillow has retaliated against competitive threats by enacting an exclusionary policy,” Compass argued in its lawsuit.

The policy has the potential to have an outsized impact on Compass, as the brokerage has become a strong proponent of private listings through its three-phased marketing strategy. 

In a letter addressed to Judge Vargas filed on Wednesday, the parties state that they have reached an impasse and are unable to reach an agreement about Zillow’s request. 

Zillow requests more docs and another deposition with CEO Robert Reffkin

In the letter, Zillow tells Judge Vargas that it is specifically asking for permission to serve “narrow expedited Requests for Production on Compass relating to the [acquisition] and to conduct a supplemental 2-hour deposition” with Compass CEO Robert Reffkin that would focus on the Anywhere acquisition. 

Zillow is requesting access to documents that include representations and warranties Compass made to Anywhere, disclosures about financial risks or stock value, communications between the firms about Zillow’s listing access standards, Compass’s three-phase marketing strategy and this lawsuit. Additionally, Zillow would like to see financial forecasts tied to the merger. 

According to Zillow, this information is relevant to Compass’s claims of “irreparable harm,” which it makes in its motion for a preliminary injunction, as Zillow feels that on the surface, the deal shows that Compass is financially strong and not facing irreparable harm due to Zillow’s listing access standards. Zillow feels these documents could potentially reveal that Compass told Anywhere a different story about the impact of Zillow’s policy or the company’s financial health. 

A ‘wide-ranging sideshow’

Compass is pushing back on these requests claiming that it is a “wide-ranging sideshow of an unrelated transaction.

“The information that Zillow demands is neither relevant to the Court’s consideration of Compass’s preliminary injunction motion nor proportional to the expedited discovery phase in this phase of the case,” the letter states.

Additionally, Compass claims that the requests are too broad and burdensome, as they will require large-scale searches of emails, phones, and custodial files. Compass also notes that Zillow has already deposed Reffkin for four hours, during which time it could have asked about potential acquisition deals, but it did not. 

In mid-September Compass was granted its request to compel the deposition of Zillow co-founder Lloyd Frink.

According to Compass, Frink possesses “unique and important information that no other witness can provide,” however Zillow argued that Compass had failed to demonstrate that deposing Frink would “elicit unique information pertinent to [Plaintiff’s] motion for a preliminary injunction.” Ultimately, Judge Vargas sided with Compass.

“Upon review of the parties’ submissions, the Court finds that Plaintiff has adequately established Mr. Frink possesses unique and personal knowledge relevant to the pending preliminary injunction motion,” the ruling states.

As with the request to depose Frink, Judge Vargas will issue a ruling on Zillow’s request.