Ross v. Wacksman Alleges Zillow's $100 Million Redfin Deal Illegally Split the Rental Listings Market
James Ross, a stockholder of Zillow Group, Inc., has filed a derivative lawsuit against the company's directors and officers, accusing them of breaching their fiduciary duties through anticompetitive agreements with Redfin, a key competitor in the multifamily rental Internet Listing Service (ILS) market. The complaint, filed on July 14, 2026, alleges that these agreements resulted in substantial financial damage to Zillow due to regulatory challenges and market devaluation.
According to the complaint, Zillow entered into a Partnership Agreement and Content License Agreement with Redfin on February 6, 2025. The deals included a $100 million payment to Redfin, effectively removing it as an independent competitor in the ILS segment for up to nine years. The arrangement purportedly violated Section 1 of the Sherman Act and Section 7 of the Clayton Act by reducing competition and increasing market concentration, leading regulatory bodies such as the Federal Trade Commission (FTC) to file antitrust actions against Zillow. The complaint alleges, "Zillow's attempt to shut down its competition could drive up costs for advertisers and leave renters with fewer options when searching for a new apartment" (¶74, Attorney General Letitia James).
Zillow's 2025 revenue from its Rentals segment was $630 million, constituting 24% of its total revenues (¶39). Furthermore, the value of personally held stock sold by Zillow fiduciaries near stock price highs is noted to be $87 million. Notable figures include Jun Choo's total compensation of $9.6 million in 2025.
The complaint indicates that Zillow's executive team engaged in insider trading by selling shares while in possession of material non-public information about the legal risks they were facing. This insider activity allegedly allowed several executives, including CEO Jeremy Wacksman who sold shares totaling $3,355,748.77, to mitigate losses from the significant drop in Zillow’s stock value, which decreased over 15% in mid-May 2026 after a federal court denied a motion to dismiss the FTC's complaint against Zillow. The complaint also claims that "material misrepresentations and omissions were committed knowingly, recklessly, and for the purpose and effect of artificially inflating the price of the Company’s securities" (¶103). The allegations remain unproven as the case proceeds.
Counsel of record for James Ross in the matter is Townsend Legal, PLLC.
Mechanism Alleged: Anticompetitive Agreements
The complaint in James Ross, derivatively on behalf of Zillow Group, Inc., v. Jeremy Wacksman, et al. alleges that Zillow's board of directors and executive officers breached their fiduciary duties by approving agreements with Redfin that are purportedly anticompetitive. The arrangements, specifically a Partnership Agreement and a Content License Agreement, entailed Zillow paying Redfin $100 million to transition its multifamily rental advertising business to Zillow. The complaint asserts that these agreements effectively removed Redfin as a competitive entity for a duration of nine years.
The lawsuit outlines that Zillow's arrangements with Redfin have contributed to a highly concentrated market, with alleged adverse effects including higher prices and less favorable terms for advertisers. These claims are situated within a broader context of legal action, with the Federal Trade Commission and several state attorneys general having filed antitrust complaints against Zillow, emphasizing the potential regulatory consequences of such agreements.
The Money
The complaint alleges that Zillow's agreements with Redfin included substantial financial undertakings, fundamentally altering competitive dynamics in the multifamily rental Internet Listing Service (ILS) market. This includes a $100 million payment made by Zillow to Redfin under the Partnership Agreement to terminate Redfin's multifamily advertising operations. Additionally, a Content License Agreement mandated Zillow to make a $75 million minimum payment in the first year for per-lead advertising. Another notable transaction was Redfin's acquisition of RentPath for $608 million in 2021, highlighting competitive pressures in the industry. The complaint contends these payments not only burdened Zillow but also facilitated an anticompetitive environment by effectively eliminating Redfin as a competitor.
Alongside these substantial payments, the complaint alleges significant insider trading activities by Zillow's Individual Defendants. Specifically, it claims that they collectively sold $87,500,924.43 in Zillow stock while in possession of material non-public information regarding the antitrust risks and regulatory challenges facing the company. Notably, Lloyd D. Frink and Richard N. Barton are highlighted for their sizable insider sales, amounting to $31,205,542.12 and $29,835,795.87, respectively, as part of this pattern of conduct.
This insider trading array also comprises significant figures such as Jeremy Hofmann with $6,740,801.85, Gordon Stephenson with $1,267,890.91, Claire Cormier Thielke with $816,157.39, and Erik Blachford with $323,425.12 in proceeds from insider sales (¶87). The complaint emphasizes that such insider trading activities occurred before public disclosure of the antitrust litigation risks, thus underscoring fiduciary breaches by these individuals.
The timing of these financial maneuvers is critical. Following the denial of Zillow's motion to dismiss by the FTC in May 2026, Zillow's Class A stock experienced a sharp decline, falling from $44.83 to $37.86. This resulted in a loss in market capitalization valued at approximately $1.6 billion. The stockholder plaintiff claims these developments underscore the fiduciary breaches by the Individual Defendants and the financial instability introduced by their actions. Further reported were expenses amounting to $505 million in Q4 2025, surpassing outlook due to legal expenses (¶82).
The impact persisted, as by July 10, 2026, Zillow's Class A and Class C stock prices dropped further to $32.00 and $32.19, respectively, showcasing continued valuation challenges (¶84).
Parties and Roles
In the derivative action filed by plaintiff James Ross, he acts on behalf of Zillow Group, Inc., alleging breaches of fiduciary duty by its directors and officers. Ross, a stockholder of Zillow, contends that the leadership knowingly engaged in anticompetitive practices to the detriment of the company.
The individual defendants include Zillow's CEO Jeremy Wacksman and Richard N. Barton, both of whom hold significant influence as part of Zillow's board and executive leadership. Other directors implicated include Erik Blachford, Amy C. Bohutinsky, Jun Choo, Lloyd D. Frink, J. William Gurley, Jay C. Hoag, Jeremy Hofmann, Gregory B. Maffei, Gordon Stephenson, Claire Cormier Thielke, and April Underwood. The complaint points to these individuals collectively for approving the agreements that are allegedly in violation of antitrust laws.
Zillow Group, Inc., a corporation based in Washington, is named as the nominal defendant. Although the company itself is not accused of misconduct, it is the entity on behalf of which Ross seeks to address the claimed breaches of fiduciary duties that have purportedly caused Zillow substantial financial and reputational harm. The complaint states that the individual defendants' actions have exposed Zillow to significant legal risks and liabilities.
Redfin Corporation, identified as a competitor in the multifamily rental Internet Listing Service market, was involved in the contested agreements with Zillow that are central to this lawsuit. The agreements with Redfin are claimed to eliminate it as an independent competitor, which is a primary point of contention in the antitrust allegations. CoStar Group, Inc., another competitor in the same market, is mentioned in the context of the market's competitive landscape.
These allegations remain unproven, and the court has not yet addressed these specific charges or the defendants' responses. Townsend Legal, PLLC represents Ross in this matter.
Claims I: Breach of Fiduciary Duty
The plaintiff alleges that the Individual Defendants consciously ignored their obligations to conduct proper oversight, reflecting a deliberate neglect of their fiduciary duties. As articulated in the allegations, the defendants not only demonstrated a reckless disregard for their responsibilities, but they also knowingly engaged in conduct with the potential to harm the company. The filing underscores that the defendants' actions were characterized by a "knowing violation of duties, absence of good faith, and reckless disregard."
The challenge posited by the complaint centers on the Individual Defendants' lack of transparency and adherence to the fiduciary standards expected of them by Zillow’s shareholders. It argues that the agreements harmed Zillow by resulting in antitrust scrutiny and litigation, ultimately reducing the company's market value. These actions, as posited by the plaintiff, fell significantly short of the fiduciary obligations owed to the shareholders.
These allegations of breach form a central theme in the derivative action, seeking to hold the Individual Defendants accountable for decisions that allegedly consolidated the market to Zillow's detriment. As asserted in the filing, these alleged breaches of fiduciary duty have already exposed Zillow to "substantial harm, including money damages and reputational damage." Such claims highlight the high standard of conduct expected from corporate officers and directors.
Claims II: Misleading Disclosures and Insider Trading
The complaint asserts that Zillow’s 2024 Form 10-K contained false and misleading statements regarding the company’s antitrust risks and regulatory exposure. This alleged lack of transparency is claimed to have misled investors about the potential impact of the agreements with Redfin on Zillow's operations, and thereby artificially inflated the company’s stock prices. According to the filing, the Individual Defendants, who are board directors and executive officers of Zillow, were aware of these misrepresentations and omissions, which were purportedly "committed knowingly, recklessly, and for the purpose and effect of artificially inflating the price of the Company’s securities."
The lawsuit further alleges that while aware of material non-public information about the antitrust risks associated with the Zillow-Redfin agreements, the Individual Defendants engaged in insider trading. Specifically, notable sales of Zillow stock are detailed in the filing, citing figures such as Lloyd D. Frink’s $31,205,542.12 in proceeds from insider sales, Richard N. Barton’s $29,835,795.87, and Jun Choo’s $13,578,076.15. Jeremy Hofmann and Gordon Stephenson are also noted to have engaged in insider trading with sales calculating to $6,740,801.85 and $1,267,890.91, respectively. These actions allegedly occurred before the litigation risks were publicly disclosed and before Zillow's stock price dropped significantly on May 14, 2026, following the denial of Zillow's motion to dismiss the Federal Trade Commission’s antitrust action. The filing contends that these stock transactions demonstrate a breach of fiduciary duties of loyalty and good faith by the defendants.
In sum, the complaint charges that the Individual Defendants breached their fiduciary duties by engaging in transactions that leveraged undisclosed risks, thereby allowing them to benefit financially while concealing Zillow's true legal and financial exposure from investors. "The Company’s Code of Conduct," it notes, "prohibited insider trading and required accurate public disclosures," which the defendants allegedly violated, impacting shareholder value and market integrity. These allegations seek to hold defendants accountable for both misleading disclosures and trading on insider information, prompting calls for corporate governance reforms and the disgorgement of ill-gotten gains.
Distinctive Allegations
The Verified Stockholder Derivative Complaint claims that Zillow’s business agreements with Redfin amounted to significant antitrust violations. Specifically, the Federal Trade Commission (FTC) initiated a lawsuit against Zillow, which included a clear finding from the court that the agreements in question were anticompetitive. The complaint references a court ruling against Zillow that denied the company's motion to dismiss, with the court determining that the agreements "clearly anti-competitive" in nature.
The FTC's allegations highlighted that Zillow's agreements with Redfin strategically eliminated a key competitor from the rental Internet Listing Service (ILS) market. Daniel Guarnera, Director at the FTC Bureau of Competition, stated, "Paying off a competitor to stop competing against you is a violation of federal antitrust laws." This characterization underscored the seriousness with which regulatory bodies were approaching the agreements between Zillow and Redfin, identifying them as deliberately designed to suppress competition and monopolize the market.
The plaintiff in the derivative action contends that these rulings and statements from the FTC corroborate the allegations that Zillow’s leadership, through their approval of the Redfin agreements, breached their fiduciary duties. These duties included a responsibility to adhere to antitrust laws and regulations while ensuring transparent and honest corporate governance practices. The complaint alleges that the defendants' conduct resulted in substantially damaging Zillow's market reputation and financial health.
These unproven allegations point to a broader legal context where marketplace competition is rigorously protected. The antitrust actions and statements by both the FTC and state attorneys general amplify the stakes for Zillow and its leadership, suggesting potential repercussions not only in terms of monetary damages but also in the form of mandated structural changes to restore competitive balance in the affected markets.
These allegations have not been proven, and the defendants have not yet responded to the complaint.
David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.
Questions about this topic: david@newmanbrunk.com