On Monday, the U.S. Supreme Court declined to hear Zillow Group’s bid to dismiss a class-action lawsuit accusing the company of misleading investors about its home-reselling business.
The court rejected the Seattle-based real estate platform’s appeal of a lower court ruling that allowed a 2021 lawsuit to proceed in federal court in Washington state.
At the center of the legal dispute is the question of what legal defenses publicly traded companies accused of providing investors with false information can use. The case is classified as a “price maintenance” case: the plaintiffs allege that the company made misleading statements to prevent its share price from falling, rather than to actively drive it up.
Zillow shares fell in November 2021 after the company announced the permanent closure of Zillow Offers, its home-resale division. The company’s leadership acknowledged that it could not accurately forecast future home prices. The company recorded a $300 million write-down in the previous quarter and announced plans to lay off 25% of its employees.
Investors filed a lawsuit in federal court, alleging that statements made by Zillow’s then-CEO and other company executives in the months before the division was shut down painted an overly optimistic picture of its performance.