allowing free "For Sale By Owner" ads doesn't imply no agents will be involved

Picket Fence Preview, Inc. v. Zillow, Inc., 2023 WL 4852971, No. 22-2066-cv (2d Cir. Jul. 31, 2023)

District court opinion discussed (second) here.  The district court dismissed Picket Fence’s false advertising/unfair competition claims against Zillow under the Vermont Consumer Protection Act and Lanham Act, and the court of appeals affirmed.

Picket Fence is a For-Sale-By-Owner (FSBO) “publication business” that permits private homeowners to list available properties directly to potential buyers in exchange for a fee. Zillow provides an “online portal” for the advertisement of property and realtor services to “the general public.”

Unlike Picket Fence, however, Zillow advertises that it permits FSBO property listings on its website for free. Picket Fence alleged that these claims were false. The problem was that, after a seller would post a FSBO listing, Zillow would allegedly “divert potential buyers to its paying Premier Agents” by “stripp[ing] out all contact information” for a FSBO listing’s owner or by posting the FSBO owner’s contact information beneath an advertisement for a Premier Agent’s services, inducing potential buyers into paying additional charges. This contradicted the FSBO promise because a FSBO advertisement was allegedly “one that allows a person to advertise their property so that potential buyers can see the advertisement and contact the owner/seller directly without the use of a third party intermediary.” By making Premier Agents a part of the transaction, Picket Fence alleged, Zillow was falsely advertising that it permitted FSBO listings for free.

The deception was allegedly that a FSBO seller would perceive a “guarantee that, in addition to listing their property for free on Zillow’s website, no real estate agent could represent a potential buyer or be involved in any part of the potential transaction,” and therefore chose Zillow over Picket Fence. [You can tell how this is going to go by the description of the claim.]

The basic problem: “Zillow’s advertisement would not mislead a consumer who was interpreting the message reasonably. Zillow simply advertises that FSBO sellers can post for free, and that is true.” It made no additional representations that Premier Agents would not be involved in FSBO transactions, nor that FSBO buyers would not incur transaction costs. The complaint even alleged that sometimes buyers of FSBO properties have agents, which made Picket Fence’s interpretation unreasonable.

A predatory pricing claim also failed, as did an argument that FSBO ads must contain no agent/intermediary involvement. This was an implicit falsity argument, and the allegations in support of the consumer deception element were:

Picket Fence had former Zillow For Sale By Owner customers complain about the deception on Zillow and specifically said had they known the truth about how Zillow operated its website and their For-Sale-By-Owner advertisements, they would have chosen to advertise with Picket Fence. Picket Fence is aware that For-Sale-By-Owners would ch[o]ose a free advertisement ... since they assumed a free advertisement [ ] would be a cheaper alternative.

But these were conclusory allegations without supporting detail, and anyway there wasn’t even implied falsity, since Zillow wasn’t alleged to have required the use of an agent by FSBO sellers.