Some Thoughts on Move & NAR v. Zillow & Samuelson


The judge in the non-compete-disguised-as-a-trade-secrets case between Move & NAR v. Zillow & Errol Samuelson has issued a preliminary injunction that looks like a big win for REALTORS and REALTOR-lookalikes. Inman News has the story, and the actual order itself (PDF).

As a an interested bystander, the whole thing is sort of sad. Wish my friends would stop fighting and find ways to coexist. But hey, it’s easy for me to play John Lennon and Imagine a world like that. I’m certain it feels way different for the principals involved.

Some further thoughts and questions follow, as the order was heavily redacted. I assume the reason was to protect the very trade secrets that Move & NAR claim Zillow stole/attempting to steal from them. Nonetheless, there’s quite a lot in the order. We discuss them, after the jump.

[Disclosure: I have a business relationship with Trulia, who is obviously a competitor to both Move and Zillow.]

Some New Facts Come to Light

I’m assuming these are the facts, as the judge (Hon. Barbara Linde) put them in the order. Since there is no jury here, she is the fact finder and what she concludes then becomes fact as far as the rest of us are concerned.

Even through redacting, here are some new things I’ve learned (all from the section entitled Findings of Fact):

  • Errol sent Zillow a term sheet on January 11, 2014. The negotiations were done by February 19, 2014.
  • March 3-4 seem to be critical dates. Errol did a couple of things that the court frowned on. I mean, read the court’s own words:

16. On March 3-4, 2014, using deception, Mr. Samuelson improperly used Move’s business license and caused Move employees and Bell telephone to switch his Move phone number from Move to him personally.

17. On March 4, 2014, Samuelson erased the memory from his Move-issued iPad and iPhone, and took steps to erase data from his Move-issued Apple computer. The court draws negative inference from defendant’s handling of electronic information prior to and after his resignation, especially because Mr. Samuelson consulted with an employment litigation attorney in Seattle on february 19 and 25, 2014.

18. On March 3-4, 2014, at a time that Mr. Samuelson knew he would resign from Move and join Zillow, Mr. Samuelson received additional information on several confidential and sensitive strategies being pursued by Move and NAR. Mr. Samuelson obtained some of this information in response to communications he initiated.

19. Late in the afternoon on March 4, 2014, after Mr. Samuelson had decided to resign from Move, he rekindles a conversation with NAR about secret strategies for a NAR initiative. Because Mr. Samuelson did not disclose his intention to resign, NAR, RIN, and Move all entrusted Samuelson with additional trade secret information.

Those feel like pretty strong language from a judge to me. I mean, words like “deception” and “negative inference” are bad juju in a legal order.

  • The judge found that Errol was effectively working for Zillow in February of 2014, saying he helped them prepare things like a “call down list for multiple listing services” and prepare talking points.

As a bystander, I honestly don’t understand why Errol didn’t just resign immediately on February 19th, take a long well-deserved cruise around the world, and then started at Zillow after a few weeks. That might have avoided this entire mess. I’m sure there are reasons, but I’m not privy to them.

A passage that is particularly nasty eyebrow-raising legalese is this one:

33. Samuelson’s testimony initially suggested that he would be improverished such that he wouldn’t be able to afford his house if the court issued an injunction prohibiting from working. A much fuller picture has emerged about Samuelson’s financials, calling the accuracy and completeness of his initial testimony into question.

That’s… harsh. Quite possibly unfair, even. But that’s what the judge wrote.

In any event, the findings of fact almost entirely favor Move & NAR. So the judge issued the preliminary injunction, but as is usually the case when such an order is issued, she writes this:

Move and NAR have a substantial likelihood of success on claims for threatened misappropriation of trade secret information.



In any event, the consequences are — as best as I can tell through the redaction — quite nasty for Errol and Zillow.

Apart from the general “don’t steal trade secrets” injunction, the judge specifically prohibits Errol from:

  • Discussions or efforts pertaining to top level domains (the whole dot-MLS or dot-REALTOR project?).
  • Efforts to sell leads or develop or market products that gather and sell leads
  • Developing products that create websites for real estate agents
  • Developing CRM tools
  • Purchasing or obtaining leads from third parties (???)
  • Discussing the distribution or sale of leads to agents, brokers, or franchisors
  • Strategic planning regarding advertising on Zillow’s website
  • Discussions of advertising strategy
  • Discussions of Move’s budget, ad spend, or industry relations strategy (!!!)
  • Efforts to acquire or develop a syndicator of listing data (!!!)
  • Efforts to interrupt the flow back to Listhub of leads generated by listings syndicated by Listhub
  • Efforts to obtain access to leads generated by Listhub listings
  • Any negotiations between Zillow and Listhub
  • Discussions of strategy or public messaging regarding Listhub
  • Efforts to obtain direct listing feeds from MLS, brokers, franchises, and Associations
  • Trying to prevent or influence MLS, brokers, franchises, and Associations sending listings to Listhub
  • Trying to get MLS, brokers, franchises, and Associations to use someone other than Listhub for syndication
  • Doing anything with rentals
  • Doing anything with international listings
  • Doing anything with commercial real estate listings
  • Providing information on homeownership and maintenance on Zillow’s website
  • Discussing NAR’s plans for public advocacy on

Holy crap. With this list of prohibitions, it isn’t even clear that Errol could attend an industry conference without a lawyer standing over his shoulder at all times. The list looks pretty much like Errol’s job description. He can’t even be involved with Zillow’s website design or product development? No rentals? No international listings? Sheesh.

I’m going to assume that Zillow and Errol’s lawyers aren’t going to just take this lying down. I assume they’ll appeal it or do something to minimize the impact. As it stands right now, though, Errol’s got some free time coming his way. Yeah, the judge really put the screws on him.

The Root Cause

Here’s the thing. I like Errol. Always have, really do, and likely always will — unless he starts to hate me for writing posts like this one. I like Zillow. Always have, really do, and likely always will. They’re good, smart people, who just want to improve things for consumers and the industry and their shareholders. I like Move. I like NAR. I like everyone involved in this drama. The whole thing is unfortunate.

So… what’s the deal? What’s causing all this?

The answer: Listhub.

The root cause of this drama, and so much drama in the L.B.C. industry, is that Listhub is owned by Move.

I wrote this back in 2010:

One thing to consider, however, is that in execution, it is highly unlikely that this will be driven solely by Move.  Even if there is widespread agreement that it would be a good idea for brokers and agents to know what they’re getting into when they send a listing to a website, there is not yet any sort of agreement as to what constitutes what level of trustworthiness.

And this is not the sort of thing that one company, no matter how well-meaning, could impose on the industry.  That goes doubly so for Move, who stands to benefit significantly from the establishment of such syndication standards.

And over the years, I’ve warned that Zillow and Trulia simply cannot tolerate having their most important pipeline of data be owned by their main competitor. All of the “industry relations” work that Zillow and Trulia do — not to mention the smaller players as well — is motivated by the need not to rely on their biggest competitor for their listings data.

The consequences have been far-reaching indeed. MLSs fear Zillow, thinking that it will become the national MLS and replace them one day — no matter how many times Zillowites from Spencer to Jay Thompson tell them that Zillow has absolutely no intention of becoming an MLS. No, they have every intention of not relying on Listhub for their data, because it’s owned by Move.

Look at the list of prohibitions by Judge Linde. She specifically singles out Listhub at least a half-dozen times and specifically mentions “efforts to circumvent Listhub”. Well, of course there’s an effort to circumvent Listhub. Wouldn’t you, if you were Zillow?

The solution, then, is for Listhub to no longer be owned by Move or anybody who is a major website operator. Normally, that would be NAR who should own Listhub, except that NAR’s operating agreement and recent developments (including this lawsuit) makes it clear that NAR is far too closely affiliated with a major website operator. For starters, I’d imagine Zillow and Errol (once he’s back from his court-mandated exile) would have an easy time sitting down with NAR-owned Listhub.

Three possibilities come to mind then.

  1. RESO — Comprised mostly of MLS, vendors, and a few brokerage representatives, RESO might be a natural owner of Listhub. Of course, they don’t have the money to buy Listhub, so financing will need to be arranged.
  2. Brokers (Project Upstream) — Another possibility is that brokers who are planning on some sort of national data play (Project Upstream, or something like it) might pool enough cash together to buy Listhub.
  3. Public — Finally, Listhub could be spun off as its own publicly traded company, fully independent of Move. (Alternatively, Move could sell Listhub to a private equity fund of some sort whose only concern is return on investment, not industrial meddling.)

One of these has to take ownership and control over Listhub if we’re to have industry peace. This isn’t the solution, of course. It’s merely the beginning of a possible exploration of a solution. But the whole process would be far less tainted by competitive pressures between major national companies.

Because Move and NAR didn’t “win” anything here. Not a single unique user is headed to because of this court order. Move’s revenues haven’t increased a dollar because Errol can’t work at Zillow for a while. Sure, they got the preliminary injunction and perhaps there are real super-secret trade secrets at stake here that would completely change’s fortunes… but that’s really unlikely.

As in most lawsuits, there are no winners, and everybody loses. In this case, if the order stands as is, the industry has lost as well. Errol Samuelson is a talented, smart, knowledgeable guy who could do much to help not just Zillow but the industry as a whole navigate these turbulent waters. He could help come up with the next generation agent tools to help them service consumers better — which then forces others to improve their offerings, and the industry as a whole improves through competition. He could help broker a peace deal that everyone could live with and change the complexion of the industry.

It’s a giant waste for that guy to be sitting on the couch for a year, or more.

Is it possible for the combatants to use this order as the occasion to bury the hatchet, let bygones be bygones, and figure out a way for everyone to get along even while competing? I hope so. Even if that takes bold ideas like spinning off Listhub, that spirit of co-opetition is the only way we can lemonade out of lemons.



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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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