Stock forecasts, search engine rankings, editorial reviews, Zestimates. What do they have in common?

They’re all constitutionally protected as free speech, Zillow argued in a memorandum responding to a class-action lawsuit in Illinois challenging its online home valuations.

The legal analysis accompanied a motion to dismiss the suit, which alleges that Zillow’s Illinois Zestimates are illegal appraisals and violate consumer protection laws. Zillow has maintained that the charges are “without merit” and the court filing reveals the basis of its legal defense: The First Amendment, which covers the Zestimate “just like a newspaper editorial about the value of new public works project,” the company said.

 

Plaintiffs drafting a response to the motion

In mid-May, a family of Illinois home builders sued Zillow over Zestimates that appear on the site’s property details pages for properties they own. The plaintiffs’ attorney, Barbara Anderson, told Inman at the time that the Zestimate could cause injury to a homeowner by arousing unjustified skepticism in prospective home buyers over a property’s price.

Anderson had previously sued Zillow Group over her own home’s Zestimate. But she dropped that case and filed the new one after receiving “overwhelming demand” to challenge the legality of Zestimates on behalf of all homeowners whose properties are listed on Zillow, she told Inman.


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The complaint asked a judge to order Zillow to take down Zestimates for all Illinois homeowners and pay damages and attorneys’ fees. Since the complaint was filed, attorneys David Novoselsky and Charles Jeffrey Thut have also signed on to represent the homebuilders, along with Anderson.

Anderson said she’s drafting a response to the motion.

“I really don’t want to comment to the press on pleadings pending before the court,” she said. “The ultimate decision maker is obviously the judge.”

‘Opinion of value’

In the memorandum, Zillow Group elaborates that its home valuation is an opinion of value and is clearly represented as such. The company acknowledges that licensed appraisers can “have diminished First Amendment protection” but that Zillow Group is not acting as one.

It contends that publishing profiles with home facts — which it says come from public records, users or listing data — without a homeowner’s permission and refusing to remove them is above board because the “creation and dissemination of information are speech within the meaning of the First Amendment.”

The plaintiffs “advance an absurd reading” of state appraiser law “that would make any person who shares an ‘opinion of value’ about a piece of real estate … subject to the criminal penalties,” the filing said.

Moreover, state appraisal law doesn’t provide for a private right of action and only covers appraisals conducted to support real estate financings, the filing said.

The law doesn’t apply to Zillow because it doesn’t represent itself as an appraiser and “a Zestimate home valuation by its terms cannot be used for real estate financings,” it said.

It also notes that the law expressly excludes “the procurement of an automate valuation model [AVM],” and that the Zestimate is an AVM. 

As for the plaintiffs’ claim that the Zestimate intrudes upon a person’s “right to seclusion,” it “most clearly fails because Zillow did not use any ‘private facts’ in its Zestimates, such as family problems, romantic interests, sex lives, the contents of a person’s email or banking information,” Zillow Group said.

Zillow Group also contended that Zestimates don’t violate state laws protecting consumers from fraud and deceptive trade practices because, among other reasons,  “consumers will understand and not be deceived by Zestimates” and will realize that the real estate agent ads that appear on Zillow property pages are “obviously ads.”

The collection and dissemination of information without a homeowner’s consent is “the exercise of Zillow’s freedom to speak about real estate,” Zillow Group says.

It also said the plaintiffs failed to plead an actual injury, instead only claiming “hypothetical injuries that might occur in the future.”

“The Zestimate has proven itself to be a sought-after and valuable free tool for consumers,” Zillow spokesperson Emily Heffter told Inman. “It is the most accurate computerized home value estimate anywhere and serves as an important data point for millions of homeowners, buyers and sellers every day.

“We always say that it’s an estimate, not an appraisal, and sellers should work with an agent to determine the best listing price for their particular home.”