Zillow “Zestimate” Class Action Lawsuit Dismissed with Prejudice by Federal Judge

On May 7, 2018, United States District Court Judge Amy J. St. Eve dismissed a class action lawsuit against Zillow, Inc. for a second time. In the suit, a group of Chicago-area homeowners alleged that Zillow was engaged in illegal practices because the estimates – “Zestimates” – Zillow posts with for-sale listings essentially act like an appraisal of exact market value. Under Illinois law, only licensed appraisers can issue an appraisal, an activity that requires state licensure and compliance with professional standards. Last August, Judge St. Eve dismissed the Plaintiffs’ initial complaint, holding that Zillow labels the estimates clearly as estimates and includes on its site information that details the ways in which its estimates can be inaccurate.

Plaintiffs nevertheless filed an amended complaint in October, focusing their allegations on violations of the Illinois Uniform Deceptive Trade Practices Act (“IDTPA”) and Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”). In their amended complaint, Plaintiffs alleged that Zillow engaged in deceptive trade practices by, among other things, concealing that Zestimates are not actual market values for properties and by “refusing to delete or correct” said Zestimates when notified of inaccuracies. Plaintiffs also alleged Zillow violated the IFCA by engaging in a scheme to impair sellers relative to the sales of their own homes, thus also harming potential purchasers of the properties.

The federal district court found, however, that Zillow’s marketing is unlikely to promote confusion about the Zestimate figures, nor do they amount to a “bait and switch” to induce homeowners to list their properties with Zillow-recommended real estate brokers. Judge St. Eve observed that Zillow’s Zestimate tool, even if the allegations were viewed in a manner most favorable to Plaintiffs’ position, does not promote confusion with any other entity’s products or services. Similarly, Plaintiffs also failed to show that Zillow’s Zestimates lure unsuspecting consumers to transact a more expensive product. Accordingly, the court ruled that Zillow’s actions, as alleged in this complaint, do not violate the IDTPA.

Judge St. Eve also dismissed the Plaintiffs’ claims that Zillow violated the IFCA. The court concluded that Plaintiffs were unable to allege that buyers were harmed in any sort of consumer activity and all harms asserted pertained to the sellers’ incidental costs rather than those of any potential buyers. Plaintiffs also failed to establish that they were deceived by any of Zillow’s omissions or representations. Plaintiff’s own allegations detailing the alleged Zillow scheme was cited as evidence that Plaintiffs, themselves, were not deceived, thus defeating the claims.

Judge St. Eve’s Order dismissing the complaint “with prejudice” means that Plaintiffs cannot attempt to file an additional amended complaint as they had done previously. Barring reversal on appeal, the court’s recent ruling likely puts an end to this matter.

A copy of the Court’s Order can be found here. For more information, contact Franklin Law Group.

Disclaimer: The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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