Zillow seeks dismissal of class action lawsuit over RESPA, citing lack of evidence

Zillow and other defendants have submitted a formal request to a federal judge to throw out a combined class-action lawsuit, refuting claims that the real estate listing company operates a scheme to guide homebuyers to related lenders and inflate agent commissions.

Zillow lodged the request on February 20 in a U.S. district court based in Seattle, highlighting that the plaintiff’s lengthy amended complaint fails to credibly establish how the company’s tools adversely affected consumers financially. The legal team representing Zillow mentioned that the plaintiff’s complaint lacks substance, being conspicuously filled with extra content, and shows various shortcomings.

This move to dismiss the case is the latest legal action in the consolidated Taylor v. Zillow lawsuit, which lists Zillow Group Inc., Real Brokerage, GK Properties, and others as defendants.

The core of the lawsuit revolves around two main arguments. First, the plaintiffs contend that Zillow’s “Contact Agent” button misleads buyers into thinking they are contacting the property’s listing agent directly. Instead, they end up with buyer-side agents participating in Zillow Flex, a Zillow program. As these agents compensate Zillow with a portion of their subsequent sale commission, the plaintiffs claim the agents are less likely to negotiate fees, potentially leading to inflated home prices.

Zillow strongly refuted this argument, asserting it is built upon speculative reasoning without factual backing. The company pointed out that listing agent information is prominently displayed on the property pages, which should lead any reasonable consumer to realize that the agent contacting them is not the listing agent.

The legal team representing Zillow also made it clear that users have to agree to terms stating they may be connected with a partner agent and that Zillow may receive payment for facilitating this connection.

The other significant accusation targets Zillow’s lending offshoot, Zillow Home Loans (ZHL). Plaintiffs claim that Zillow violates the Real Estate Settlement Procedures Act (RESPA) by motivating Zillow Flex agents to direct buyers towards ZHL for mortgage preapproval letters.

Zillow rejected this accusation, asserting that their preapproval letters are free and nonbinding, thus not qualifying as “settlement services” under RESPA. To support this stance, Zillow mentioned that one plaintiff received a ZHL preapproval letter but ended up using a different lender to finance the home purchase.

In addition to contesting the foundational theories of the plaintiff’s case, Zillow’s legal team argued that several claims exceed the relevant statutes of limitations. Citing the one-year limitation period for RESPA and three years for common law claims, the defendants argue that some of the plaintiffs are barred from seeking damages.

Zillow has formally asked the court to dismiss the class action lawsuit with prejudice.