REX - Real Estate Exchange Inc v. Zillow Inc

CourtDistrict Court, W.D. Washington
DecidedApril 22, 2022
Docket2:21-cv-00312
StatusUnknown

This text of REX - Real Estate Exchange Inc v. Zillow Inc (REX - Real Estate Exchange Inc v. Zillow Inc) is published on Counsel Stack Legal Research, covering District Court, W.D. Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
REX - Real Estate Exchange Inc v. Zillow Inc, (W.D. Wash. 2022).

Opinion

1 2 3 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 4 AT SEATTLE 5 REX – REAL ESTATE EXCHANGE, INC., 6 Plaintiff, 7 v. 8 C21-312 TSZ ZILLOW, INC.; ZILLOW GROUP, 9 INC.; ZILLOW HOMES, INC.; ORDER ZILLOW LISTING SERVICES, INC.; 10 TRULIA, LLC; and THE NATIONAL ASSOCIATION OF REALTORS, 11 Defendants. 12 THIS MATTER comes before the Court on the motion to dismiss, docket no. 115, 13 filed by Counterclaim-Defendant REX – Real Estate Exchange, Inc. (“REX”). Having 14 reviewed all papers filed in support of, and in opposition to, the motion, the Court enters 15 the following Order. 16 Background 17 On January 27, 2022, the National Association of REALTORS® (“NAR”) filed its 18 responsive pleading, docket no. 114. In its responsive pleading, NAR raises a 19 counterclaim against REX for false advertising in violation of the Lanham Act, 15 U.S.C. 20 § 1125(a). Countercl. at ¶¶ 68–75 (docket no. 114). NAR alleges that REX has made 21 numerous “false and misleading statements of fact in commercial advertisements about 22 1 REX’s products, services and commercial activities.” Id. at ¶ 69. NAR challenges a 2 number of statements posted on REX’s website, www.rexhomes.com, concerning 3 whether REX’s clients pay buyer-agent commission fees and whether REX’s technology

4 is innovative, as well as statements alleging that NAR has enacted anticompetitive 5 policies that artificially inflate fees in real estate transactions. See id. at ¶¶ 7–50. NAR 6 alleges that REX’s statements have harmed NAR’s goodwill and reputation with its own 7 members and consumers. Id. at ¶ 63. REX now moves to dismiss NAR’s counterclaim 8 on grounds that NAR: (i) lacks Article III standing, (ii) lacks statutory standing under the

9 Lanham Act, and (iii) cannot use the Lanham Act to chill REX’s constitutional right to 10 challenge conduct it believes harms consumers. See generally Mot. to Dismiss (docket 11 no. 115). 12 Discussion 13 1. Article III Standing

14 “[L]ack of Article III standing requires dismissal for lack of subject matter 15 jurisdiction under Federal Rule of Civil Procedure 12(b)(1).” Maya v. Centex Corp., 658 16 F.3d 1060, 1067 (9th Cir. 2011). In its motion to dismiss NAR’s counterclaim, REX 17 presents a facial, rather than a factual, jurisdictional challenge. A facial attack asserts 18 that the allegations of the pleading are insufficient on their face to invoke federal

19 jurisdiction. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1038 (9th Cir. 2004). 20 With respect to a facial challenge under Rule 12(b)(1), a plaintiff is entitled to the same 21 safeguards that apply to a Rule 12(b)(6) motion to dismiss for failure to state a claim. See 22 Friends of Roeding Park v. City of Fresno, 848 F. Supp. 2d 1152, 1159 (E.D. Cal. 2012). 1 The allegations of the complaint are presumed to be true, id., and the Court may not 2 consider matters outside the pleading without converting the motion into one for 3 summary judgment, see White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000).

4 To bring suit in federal court, a plaintiff must have suffered sufficient injury to 5 satisfy the “case or controversy” requirement of Article III of the United States 6 Constitution. Bennett v. Spear, 520 U.S. 154, 162 (1997). Three elements are required to 7 establish the “irreducible constitutional minimum of standing.” Lujan v. Defs. of 8 Wildlife, 504 U.S. 555, 560 (1992).

9 First, the plaintiff must have suffered an “injury in fact”—an invasion of a legally protected interest which is (a) concrete and particularized and 10 (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of— 11 the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before 12 the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. 13 Id. at 560–61 (internal citations and quotations omitted). A plaintiff must clearly allege 14 facts demonstrating every element of standing. Spokeo, Inc. v. Robins, 578 U.S. 330, 338 15 (2016). “At the pleading stage, general factual allegations of injury resulting from the 16 defendant’s conduct may suffice, for on a motion to dismiss we presume that general 17 allegations embrace those specific facts that are necessary to support the claim.” Lujan, 18 504 U.S. at 561 (internal citations and quotations omitted). 19 An organization can bring suit in federal court under two theories of standing: 20 (i) by suing on its own behalf, or (ii) by suing on behalf of its members. In this case, 21 NAR brings the counterclaim on its own behalf. See Countercl. at ¶ 53 (claiming that 22 1 NAR has been harmed by REX’s allegedly false advertisements). Like any individual, to 2 sue on its own behalf, an organization must demonstrate that it suffered an injury in fact. 3 La Asociación de Trabajadores de Lake Forest v. City of Lake Forest, 624 F.3d 1083,

4 1088 (9th Cir. 2010). “An organization suing on its own behalf can establish an injury 5 when it suffered ‘both a diversion of its resources and a frustration of its mission.’” Id. 6 (quoting Fair Hous. of Marin v. Combs, 285 F.3d 899, 905 (9th Cir. 2002)).1 REX 7 contends that NAR’s counterclaim must be dismissed because NAR did not plead 8 sufficient facts to establish that it suffered an injury in fact. NAR does not dispute that it

9 failed to plead facts demonstrating a frustration of its organizational mission and a 10 diversion of its resources. Rather, NAR argues that it pleaded sufficient facts to establish 11 that it suffered a reputational injury. In TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 12 (2021), the Supreme Court explained that “various intangible harms,” such as 13 reputational harm, can qualify as concrete injuries for standing purposes. Id. at 2204; see

14 also Meese v. Keene, 481 U.S. 465, 479 n.14 (1987) (“[T]he risk of this reputational 15 harm, as we have held earlier in this opinion, is sufficient to establish appellee’s standing 16 to litigate the claim on the merits.”). 17 NAR cites Walker v. City of Lakewood, 272 F.3d 1114 (9th Cir. 2001), and 18 Presbyterian Church (U.S.A.) v. United States, 870 F.2d 518 (9th Cir. 1989), for the

19 proposition that an organization’s allegations of reputational injury, standing alone, are 20 21 1 See also Smith v. Pac. Props. & Dev. Corp., 358 F.3d 1097, 1105 (9th Cir. 2004); Am. Diabetes Ass’n v. U.S. Dep’t of the Army, 938 F.3d 1147, 1154 (9th Cir. 2019); Rodriguez v. City of San Jose, 930 F.3d 22 1123, 1134 (9th Cir. 2019). 1 sufficient to establish injury in fact. These cases, however, do not support NAR’s 2 argument. Unlike in Walker, in which the organization was not paid for its services for 3 several months, was the subject of a performance complaint to a third party, lost staff

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