Patel v. Zillow, Inc.
| Decision Date | 23 August 2017 |
| Docket Number | No. 17-CV-4008,17-CV-4008 |
| Parties | VIPUL P. PATEL, et al., Individually and on Behalf of All Others Similarly Situated, Plaintiffs, v. ZILLOW, INC. and ZILLOW GROUP, INC., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Hon. Amy J. St. Eve
AMY J. ST. EVE, District Court Judge:
Defendants Zillow, Inc. and Zillow Group, Inc. (collectively, "Zillow") have moved to dismiss the Class Action Complaint ("CAC") of Plaintiffs Vipul Patel; Bhasker Patel and Jyotsna Patel, as co-trustees of the Jyotsna Patel Living Trust; and Castle Bldrs.com, an Illinois corporation (collectively, "Plaintiffs"). For the following reasons, the Court grants Defendants' motion.
Zillow operates a website that publishes information about real estate, including "Zestimates"—"Zillow's estimated market value for . . . individual home[s]." (R. 1-1, CAC, Ex. 6; see also id. at ¶¶ 1, 9(a), 19.) Zillow arrives at a Zestimate through "a computer algorithm" based on a "proprietary formula." (Id. at ¶ 20.) The Zillow webpage information attached to the CAC indicates that a Zestimate "is calculated for about 100 million homes nationwide" and "is astarting point in determining a home's value and is not an official appraisal." (Id., Ex. 6.) Additionally, the webpage says that "[t]he Zestimate is automatically computed daily based on millions of public and user-submitted data points." (Id.) That public and user-submitted data includes information regarding "[l]ocation, lot size, square footage, number of bedrooms and bathrooms," "[p]roperty tax information, actual property taxes paid, exceptions to tax assessments," "[a]ctual sales prices over the time of the home itself and comparable recent sales of nearby homes." Zillow, Zestimate, https://www.zillow.com/zestimate (last visited Aug. 10, 2017) (hereinafter "Zestimate Webpage").2 Zillow's website includes information that Zestimates are not necessarily accurate. (Id., Ex. 6.) Indeed, the website reports their "median error rate of 5.6%, which means that half of the Zestimates in an area are closer than the error percentage and half are farther off." (Id.) The website also includes accuracy information broken down by major metropolitan areas. In Chicago, for example, the median error rate of Zestimates is 3.6%, 60.9% of Zestimates are within 5% of sale price, 79.4% are within 10% of sale price, and 90.4% are within 20% of sale price. (Id.; see also Zestimate Webpage.)
Plaintiffs allege that the Zestimates fall short of the Uniform Standards of Professional Appraisal Practices ("USPAP") because "there is no 'secret sauce' in the world of appraisal/valuation law," and "an appraiser would study a given property and determine whatcomparable properties are appropriate and, further, weed out the inappropriate properties in its valuation analysis." (R. 1-1 at ¶ 20.) Additionally, Plaintiffs claim, "the property owner would have the right to review the appraiser's work." (Id.) According to Plaintiffs, "Zillow does not allow any mechanism for Plaintiffs and/or the Class to cure and/or demand removal of their listing and/or the 'Zestimate.'" (Id. at ¶ 36.)
Zillow also publishes profiles about homes, which are at least sometimes accompanied by advertisements for real estate agents. (Id. at ¶¶ 35, 42, Exs. 1-5.) A profile may exhibit information about a home, including images of it, its age, square footage, and the number of bedrooms and bathrooms. (Id., Exs. 1-5.) A profile may also include a Zestimate, whether the home is on the market, and, if the home is for sale, the asking price. (Id., Exs. 1-5.)
Plaintiff Vipul Patel ("Vipul") owns property in Schaumburg, Illinois that is listed on Zillow. (Id. at ¶ 1, Ex. 1.) Zillow indicates that Vipul's property is on the market for $1.495 million and that the Zestimate for the home is $1,068,677. (Id., Ex. 1.) Plaintiffs Bhasker Patel and Jyotsna Patel (the "Trustee Plaintiffs") own two properties in Schaumburg and one property in Barrington, Illinois. (Id. at ¶ 2, Ex. 2-4.) One of the Trustee Plaintiffs' properties is listed as off the market and has a Zestimate of $567,292. (Id., Ex. 3.) Another of the properties is listed as on sale for $2.999 million with a Zestimate of $2,525,227. (Id., Ex. 2.) The final property is listed as on sale for $1.995 million with a Zestimate of $1,168,725. (Id., Ex. 4.) Plaintiff Castle Bldrs.com, Inc. owns property in Schaumburg as well. (Id. at ¶ 3.) It is listed as off the market with a Zestimate of $608,015. (Id., Ex. 5.) Plaintiffs bring this action on behalf of a class of "all current owners of real estate property located in Illinois whose property(ies) are listed on Zillow's website." (Id. at ¶ 7.)
In Count I of their complaint, Plaintiffs seek an injunction under the Illinois Real Estate Appraiser Licensing Act (IREALA), 225 ILCS 458/1 et seq. (See id. at ¶¶ 13-22.) Plaintiffs claim that Zestimates are "real estate appraisals" under IREALA, 225 ILCS 458/5-5, that Zillow is unlicensed to make. (Id. at ¶¶ 16, 19.) Plaintiffs claim they "will continue to suffer irreparable injury with the current 'Zestimate' placed by Zillow relative to their properties without the granting of an injunction to prohibit [Zillow's] conduct." (Id. at ¶ 21.)
In Count II, Plaintiffs seek an injunction, damages, and punitive damages for invasion of privacy. (Id. at ¶¶ 23-38.) Plaintiffs claim that Zillow has "unilaterally and willfully opted to disregard Plaintiffs' . . . right to seclusion by publicly disseminating appraisal/financial opinions relative to real property for the general public for review." (Id. at ¶ 29.) Additionally, Plaintiffs allege that Zillow violated Plaintiffs' right to seclusion by (1) "gathering financial information regarding their real estate asset's value without the express and advance consent of Plaintiffs," (2) compiling that information to create the Zestimate, (3) publicly disseminating the Zestimate without consent, and (4) refusing to allow Plaintiffs to opt out of the disclosure of the Zestimate. (Id. at ¶ 31.) Plaintiffs seek an injunction as well as damages due to a low Zestimate "driving away potential buyers," a low Zestimate "causing buyers to harass sellers with the admittedly incorrect information that not be published," a low Zestimate "adding unnecessary expense relative to the sale process" due to increased time taken to sell the property, a low Zestimate "forcing many sellers to hire brokers because of the confusion created by Zillow," and a low Zestimate in some cases "causing property owners to withdraw their selling for sale altogether due to their inability to sell the property." (Id. at ¶ 33.)
Plaintiffs allege that the CEO of Zillow Group, Spencer Rascoof, has "public[ly] bragged on Twitter that the 'Questions about the Zestimate are an opportunity [for real estate brokers whopay Zillow for seller leads] to get the appointment.'" (Id. at ¶ 35 ().) According to Plaintiffs, this means "Zillow has affirmatively and publicly embraced the fact that the confusing and inaccurate 'Zestimate' tool is nothing more than an improper marketing ploy for Zillow's premier agents to use in further invading the Plaintiffs' and the Class' right to seclusion." (Id.) Furthermore, Plaintiffs allege that Zillow has admitted that real estate brokers should "use the flawed 'Zestimate' as a way to establish a client/broker relationship with the confused Plaintiffs and Class" because real estate brokers can "explain[] how the 'Zestimate' is calculated and what its strength and weaknesses are [to] help[] prove that value add [by you the real estate broker] to your client [the property owner]." (Id. at ¶ 37 ().) This, Plaintiffs claim, means "Zillow has publicly admitted that not only was their invasion upon Plaintiffs' and the Class' seclusion intentional, but that their 'Zestimate' tool should be used to prey upon the Plaintiffs and the Class so as to force them to retain real estate brokers." (Id. at ¶ 38.)
In Count III, Plaintiffs seek an injunction, costs, and attorneys' fees under the Illinois Uniform Deceptive Trade Practices Act ("IDTPA"), 815 ILCS 510/3 et seq. based on Zillow (1) using the Zestimate tool which is likely to confuse the public, (2) failing to disclose to Plaintiffs that "there is a pre-existing business relationship between Zillow and the real estate agents listed on the webpage created for Plaintiffs' . . . property and/or that these real estate agents pay Zillow for 'seller leads' with Plaintiffs ," (3) failing to disclose that Zillow is "aware of the confusing and incorrect nature of the 'Zestimate,'" (4) failing to disclose that Zillow uses the Zestimate "as a marketing ploy for their Zillow premier agents to use as a lead to solicit unsuspecting Plaintiffs," (5) gathering, compiling, assessing, and disseminating Plaintiffs' financial information without consent, (6) refusing to remove listing or Zestimates uponPlaintiffs' objection, and (7) listing property and Zestimates without consent to "lure people to the website so that they can thereinafter be solicited by Zillow's premier real estate broker agents for services." (Id. at ¶ 42.)
Finally, Plaintiffs seek damages, costs, punitive damages, and attorneys' fees based on violation of the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 ILCS 505/2 based on the allegedly deceptive acts discussed above. (Id. at ¶¶ 45-52.)
Plaintiffs filed the current action on May 19, 2017 in Illinois state court. (Id.) Zillow filed a notice of removal on May 25, 2017.3 (R. 1.) Zillow then filed the present motion on June 13, 2017, which the Court grants.
"A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted." Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732,...
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