Court Dumps Lawsuit Against Zillow Over Its Inaccurate 'Zestimates'

Legal Issues

from the conclusory-arguments-are-empty-arguments dept

Earlier this year, real estate litigator and aggrieved homeowner Barbara Andersen sued Zillow for providing a lower “Zestimate” than she believed her house was worth. She alleged Zillow violated Illinois state law by portraying its estimates as appraisals, even though it lacked the proper licensing to perform appraisals. Andersen sought an injunction blocking Zillow from posting information about her home (even publicly-available information) and offering a “Zestimate” on its selling price.

Andersen has just had her case tossed, although she’s now representing others in a proposed class action against Zillow. At some point between February and earlier this week, Andersen’s case was moved to a federal court and she’s now listed on the bottom of court documents (as counsel of record), rather than up top as a plaintiff.

The new lead plaintiffs are three Patels disputing Zestimates of their multi-million dollar properties. (This rearranging of plaintiffs and lawyers [and lawyers who were also plaintiffs] is unsettling, especially for those of us who learned what we know of the real estate business via repeated viewings of “Glengarry Glen Ross.”)

The Patels (and “others similarly situated”) aren’t happy with Zillow. The Patels (collectively) have multiple properties on the market, all listed at prices considerably higher than Zillow’s Zestimates. They claim, as Andersen did, that Zillow violates state law by offering something homebuyers might believe is an appraisal. A variety of interconnected laws results in the Patels attempting to coax a federal court into killing Zillow’s estimates. As Eric Goldman summarizes, the Patels have gone down on strikes.

An Illinois putative class action was brought against Zillow over the zestimate on three grounds: (1) the zestimate was an unlicensed appraisal, (2) the house profile and zestimate constituted an intrusion into seclusion, and (3) Zillow’s practices violate state consumer protection laws. Zillow wins on a 12(b)(6) motion to dismiss.

Unlicensed Appraisal: The applicable licensure statute expressly excludes “the procurement of an automated valuation model.” Furthermore, the law doesn’t support private causes of action.

Privacy Invasion. There’s no intrusion when the zestimate is based on public data sources. The plaintiffs also don’t explain how the intrusion is “offensive” or plead the required “anguish and suffering.”

Consumer Protection Laws. The court says the zestimates are not false, misleading or confusing

Goldman also points out no serious person is likely to confuse a Zestimate with an appraisal… at least not if they expect to be taken seriously. Courts in cases dug up by Goldman have called Zillow Zestimates everything from “inherently unreliable” to “incapable of accurate” valuations. One judge concluded “internet searches are insufficient evidence of property value,” spreading the besmirchment to Zillow’s competitors and pre-trial Googlers.

Zillow pled a First Amendment defense for its publication of lousy Zestimates and other public data. The court [PDF] doesn’t make any attempt to address this pleading as it finds plenty it doesn’t like about the state law claims.

Zillow argues that the First Amendment requires dismissal of all of Plaintiffs’ claims. (R. 18, Mem. Supp. Mot. Dismiss, 3.) Additionally, Zillow contends that First Amendment concerns aside, Plaintiffs fail to plead the required elements of their claims. (Id. at 9.) While Zillow makes persuasive arguments with respect to the First Amendment, the Court need not and should not rule on them conclusively because Plaintiffs’ claims fail under Illinois statutory law.

As the court points out, Zestimates are nothing more than “nonactionable statements of opinion” — statements that result from no intrusion in personal privacy (because publicly-available info is used) nor violation of real estate regulations in Illinois.

All claims have been dismissed without prejudice, meaning real estate litigator (and litigant) Barbara Andersen is welcome to try again. But she — like the Patels she now represents — will need to find a better angle than alleged state law violations to take another run at estimates they all subjectively feel are on the low end.

Filed Under: barbara andersen, class action, illinois, lawsuit, zestimates
Companies: zillow