The National Association of REALTORS® (NAR) today filed its petition to the Supreme Court in a long-running, contentious dispute with the Department of Justice (DOJ) over an ostensibly shuttered investigation into various NAR policies, asking the highest court in the land to step in in and block the inquiry, which currently threatens to force even more policy changes or penalties on an already reeling industry.
In a 25-page brief, NAR called a D.C. Circuit Court decision handed down in April that allowed law enforcement to reopen the investigation an “overreach,” asking the Supreme Court to intervene based on “on issues of critical legal and economic significance.”
“The D.C. Circuit’s divided decision is both exceptionally wrong and exceptionally important,” NAR wrote. “(T)he majority’s position permitted DOJ to evade its contractual obligations based solely on its preference to do so—a result that no other litigant could obtain and no other court would permit.”
Whether or not the Supreme Court chooses to take up the case has tremendous implications for real estate, and NAR specifically, as the organization still faces multiple legal challenges. The highest court chooses only a few dozen cases a year out of thousands of petitions, focusing on those which pose novel legal questions or have urgent, national significance.
NAR is hoping the justices see the lower court’s decision in this light, and disallows the DOJ from continuing its inquiry, which it publicly agreed to “close” back in 2020. When the DOJ reopened the investigation months later, NAR sued, with a district court judge agreeing that the DOJ could not unilaterally restart its investigation—though that decision was subsequently overturned by an appeals court.
In a statement, an NAR spokesperson characterized the petition, which it previously indicated it would file, is about fighting for members.
“Appealing to the Supreme Court to hear this important case and overturn the DC Circuit’s decision is important to NAR as we work on behalf of our members to fight to hold the Department of Justice to the terms of its agreement,” the spokesperson said.
Meanwhile, NAR’s settlement agreement in private class-action litigation mostly repealed policies scrutinized by the investigation, although NAR notes in the petition that the Clear Cooperation policy, still targeted by the DOJ, has not been altered (yet).
“(T)he government enters into contracts in a vast range of contexts, from settlements in civil and criminal enforcement matters to agreements with state and local governments implementing federal programs, in which contracting partners rely on the government to keep its word,” NAR wrote in its petition. “A rule that the government receives special treatment permitting it to easily escape its contractual commitments would create profound instability, along with basic unfairness.”
Similar arguments made to the D.C. Circuit did not convince two judges on the three-judge panel that heard the case, as Judge Florence Pan and Judge Karen Henderson agreed that the DOJ had made no commitment that it would keep its investigation closed, or refrain from opening an identical one at a later date.
“Put simply, the fact that DOJ ‘closed its investigation’ does not guarantee that the investigation would stay closed forever,” Pan said. “The words ‘close’ and ‘reopen’ are unambiguously compatible.”
But in its petition to the Supreme Court, NAR relies heavily on the dissent of Judge Justin Walker, who excoriated the majority’s reasoning in his dissent and compared the DOJ to comic strip mischief-maker Dennis the Menace.
“Imagine a parent says, ‘Close the door when you leave for school.’ In that case, even if DOJ’s literalist reading works in the abstract, it fails to capture the command’s true meaning,” Walker wrote. “Perhaps Dennis the Menace would close the door and then immediately reopen it before he runs toward the school bus and mockingly calls back, ‘You didn’t say to keep it closed!’ But an obedient child would not.”
NAR references Walker ten separate times in its petition, claiming there was no specific precedent for the kind of close-reopen maneuver that the DOJ was allowed to make by the majority.
“Without intervention from this Court, the position adopted by the panel majority will expose businesses and private citizens to perpetual uncertainty regarding the government’s commitments or representations when settling investigations—particularly in the wake of changes in control of the Executive Branch,” NAR wrote.
Matter of law
The likely long-shot bid to have the Supreme Court end the inquiry amounts to only a small portion of NAR’s wrangling with regulators, who have intervened in numerous cases filed by private entities. The DOJ previously agreed to pause some of its investigation while the Supreme Court considers NAR’s petition, but has continued to show interest in real estate policy and practice in the meantime.
A law professor recently told RISMedia her writings on the NAR settlement and buyer contracts drew significant interest from DOJ lawyers, and the DOJ also appears to be considering an intervention in the settlement approval process.
But the recent track record for real estate power players in Supreme Court petitions is not great. Back in early 2023, NAR unsuccessfully sought to have the Supreme Court take up a lawsuit from a pocket-listing company that accused NAR of antitrust violations (that lawsuit eventually ended in settlement).
Separately, HomeServices of America sought Supreme Court intervention in a key facet of the Burnett case, which could have potentially overturned that verdict.
A key issue in the DOJ investigation is the transition between presidential administrations, with the decision to close the original inquiry being made under former president Donald Trump, and the choice to reopen it made under current president Joe Biden.
During oral arguments in the D.C. Circuit last December, Walker guessed that NAR had been hoping that Trump would win in 2020, which would ensure the investigation stayed closed.
In its Supreme Court brief, NAR criticizes the DOJ for allegedly trying to “diminish” the contractual language and terminology used in its letter, based on the fact that it was a previous administration that had struck the agreement.
“Although a new administration is free to change the government’s policies, it is not free to repudiate the government’s contracts,” NAR wrote. “The Government may well have changed its mind about the desirability of its agreement with NAR, but ‘wise or not, a deal is a deal.’”
Editor’s note: this story was updated at 2:55 p.m. eastern time with a statement from NAR.
