Reply Brief — CoStar Group, Inc., et al., Petitioners v. Commercial Real Estate Exchange, Inc.

No. 25-667

In the

Supreme Court of the United States

COSTAR GROUP, INC.;

COSTAR REALTY INFORMATION, INC.,

Petitioners,

V.

COMMERCIAL REAL ESTATE EXCHANGE, INC.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REPLY BRIEF FOR PETITIONERS

ELYSE M. GREENWALD

LATHAM & WATKINS LLP

10250 Constellation

Boulevard

Suite 1100

Los Angeles, CA 90067

(424) 653-5500

MELISSA ARBUS SHERRY

Counsel of Record

NICHOLAS J. BOYLE

CHRISTINE C. SMITH

DEREK K. CHOI

LATHAM & WATKINS LLP

555 Eleventh Street, NW

Suite 1000

Washington, DC 20004

(202) 637-3386

melissa.sherry@lw.com

Counsel for Petitioners

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...................................... ii

INTRODUCTION .......................................................1

ARGUMENT ...............................................................2

I.

The Court Should Grant Certiorari On The

De Facto Exclusive-Dealing Question ................2

II.

The Court Should Grant Certiorari On The

Refusal-To-Deal Question ...................................8

III. The Questions Presented Are Important,

And This Case Is A Good Vehicle .....................11

CONCLUSION ..........................................................12

ii

TABLE OF AUTHORITIES

Page(s)

CASES

Bell Atlantic Corp. v. Twombly,

550 U.S. 544 (2007) ........................................11, 12

Cunningham v. Cornell University,

604 U.S. 693 (2025) ..............................................12

Eastman Kodak Co. v. Image Technical

Services, Inc.,

504 U.S. 451 (1992) ................................................4

Hicks v. PGA Tour, Inc.,

897 F.3d 1109 (9th Cir. 2018)................................6

New York v. Meta Platforms, Inc.,

66 F.4th 288 (D.C. Cir. 2023) ..............................10

Novell, Inc. v. Microsoft Corp.,

731 F.3d 1064 (10th Cir. 2013), cert.

denied, 572 U.S. 1096 (2014) ...............................10

Pacific Bell Telephone Co. v. linkLine

Communications, Inc.,

555 U.S. 438 (2009) ................................................9

Southeast Missouri Hospital v. C.R. Bard,

Inc.,

642 F.3d 608 (8th Cir. 2011)..................................4

Tampa Electric Co. v. Nashville Coal Co.,

365 U.S. 320 (1961) ................................................5

iii

TABLE OF AUTHORITIES—Continued

Page(s)

United Air Lines, Inc. v. Austin Travel

Corp.,

867 F.2d 737 (2d Cir. 1989) ...................................3

United States v. Dentsply International,

Inc.,

399 F.3d 181 (3d Cir. 2005), cert. denied,

546 U.S. 1089 (2006) ..............................................7

Verizon Communications Inc. v. Law Offices

of Curtis V. Trinko, LLP,

540 U.S. 398 (2004) ................................................1

ZF Meritor, LLC v. Eaton Corp.,

696 F.3d 254 (3d Cir. 2012), cert. denied,

569 U.S. 958 (2013) ................................................4

1

INTRODUCTION

The Ninth Circuit twice departed from its sister

circuits to dramatically expand antitrust liability.

First, the Ninth Circuit held that an antitrust

plaintiff can state a de facto exclusive-dealing claim

based on allegations that a handful of customers

misunderstood an expressly non-exclusive contract to

be exclusive in practice. Second, the Ninth Circuit

held that an antitrust plaintiff can evade Verizon

Communications Inc. v. Law Offices of Curtis V.

Trinko, LLP, 540 U.S. 398 (2004), by calling a refusalto-deal claim something else.

As a result,

technological innovators now may face sweeping

discovery based on allegations that cannot possibly

sustain an antitrust claim.

CREXi does not dispute that either holding would

conflict with decisions of numerous other circuits. It

does not dispute that both would be legally

indefensible. And it does not dispute that, if the

Ninth Circuit had adopted either holding, this Court’s

review would be warranted.

CREXi argues instead that the Ninth Circuit held

no such thing. CREXi’s view is that the exclusivedealing holding rests on contractual terms (not

customer confusion) and that this case is all about

access to brokers’ own websites (not CoStar’s

proprietary LoopLink tool). That’s not what the

decision says. Future plaintiffs will not read the

decision in that countertextual and counterfactual

way. Nor will district courts in the Ninth Circuit.

And amici ask this Court to grant review because

they, too, understand what the Ninth Circuit held. It

substantially and erroneously expanded antitrust

liability and watered down the pleading standard.

That is, the questions presented are presented.

2

CREXi’s abject failure to defend the decision on its

own terms could make this the rare case in which

summary reversal would be warranted. Either way,

the Court should grant review.

ARGUMENT

I. The Court Should Grant Certiorari On The

De Facto Exclusive-Dealing Question

The Ninth Circuit held that an exclusive-dealing

claim can survive a motion to dismiss based solely on

the allegation that a handful of customers interpreted

a concededly non-exclusive contract as exclusive.

CREXi does not dispute that, if the Ninth Circuit in

fact so held, its decision would conflict with those of

other circuits and create a new category of de facto

exclusive-dealing claims far beyond what the

Sherman Act could support. Unable to defend the

Ninth Circuit’s new legal rule, CREXi argues about

what the Ninth Circuit actually held. Once CREXi’s

strained interpretation is stripped away, it has

offered this Court no reason to deny certiorari.

A. There is no dispute that, if the Ninth Circuit

held as CoStar says it did, the decision below would

represent a dramatic expansion of de facto exclusive

dealing. But even before the Ninth Circuit came on

the scene, the circuits disagreed over the

circumstances under which such claims are

cognizable. Pet. 9-14. And this Court has never

addressed the viability or scope of such claims under

the Sherman Act. The Court’s guidance is needed.

1. The decision below recognized a novel type of

exclusive-dealing claim, dramatically expanding

defendants’ potential liability.

In the typical

exclusive-dealing case, the court considers whether

the contract language is expressly exclusive. But

3

some circuits have concluded that, even when the

contract is not expressly exclusive, a plaintiff can still

state an exclusive-dealing claim if the contract’s

economic incentives create exclusivity in practice.

This “de facto” exclusive-dealing theory can arise

either from economic incentives that foreclose

competition or contract terms that, while not

explicitly exclusive, evince a policy equivalent to an

exclusive contract. See Pet. 11.

The Ninth Circuit went further: it carved out a

third path for liability that depends only on a

customer’s subjective beliefs—not the contract’s text

or economic incentives.

As the Ninth Circuit

recognized, and as “CREXi [had] concede[d],” CoStar’s

agreements “‘expressly disavow[] any ownership in or

claim to [brokers’] data, agreeing that CoStar’s right

to use the data will be ‘non-exclusive.’” Pet. App. 21a22a. And as the Ninth Circuit admitted, “CREXi’s

allegations are different” than other de facto

exclusive-dealing cases, because “the contracts at

issue do not contain rebate or discount terms that

create de facto exclusivity.” Id. at 23a. No matter: it

was enough that CREXi alleged, and some customers

allegedly believed (rightly or wrongly), that the

contracts were exclusive.

That decision directly conflicts with the Second

Circuit’s holding that customers’ testimony regarding

their reluctance to contract with a defendant’s

competitors is not enough. See United Air Lines, Inc.

v. Austin Travel Corp., 867 F.2d 737, 742 (2d Cir.

1989). CREXi says (at 13-14) the Second Circuit

decision is different because it rests on the geographic

location of the customers. But a key point was that

the customers used competitors’ products “alongside”

the defendant’s products. United Air Lines, 867 F.2d

4

at 742. So too here: over 500 brokers used both

CREXi’s and CoStar’s products. 4-ER-633 (¶ 257).

Yet the Ninth Circuit still held CREXi stated an

exclusive-dealing claim.

2. More broadly, the circuits are confused about

when a de facto exclusive-dealing claim is cognizable.

Although CREXi claims uniformity and suggests any

differences are the mere application of “the same legal

framework to differing facts,” Opp. 17, the circuits

have taken divergent approaches to similar facts.

Take bundled discounts. The Eighth Circuit held

that “bundled” and “share-based discounts” cannot

support a theory of de facto exclusive dealing,

notwithstanding “‘economic realities’” that “deter[red]

[customers] from switching to other manufacturers.”

Se. Mo. Hosp. v. C.R. Bard, Inc., 642 F.3d 608, 613,

617 (8th Cir. 2011). By contrast, the Third Circuit

held that “bundled rebates and discounts” and

“market-share targets” can “operate as exclusive

dealing arrangements” precisely because of “‘actual

market realities.’” ZF Meritor, LLC v. Eaton Corp.,

696 F.3d 254, 282 (3d Cir. 2012) (quoting Eastman

Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451,

466 (1992)), cert. denied, 569 U.S. 958 (2013). That is

not the application of the same legal rule to different

facts—it is the application of different legal rules to

highly analogous facts.

CREXi’s response—that all courts of appeals

simply evaluate “the practical effect of the challenged

provisions and policies in light of the realities of the

relevant market”—says it all. Opp. 17. At such a high

level of generality, it is hard to see how any conflict

could arise. But the reality is there is no consistent

understanding of when de facto exclusive-dealing

claims are cognizable.

5

3. The confusion is understandable, since this

Court has not opined on the issue of “de facto”

exclusive dealing since Tampa Electric Co. v.

Nashville Coal Co., 365 U.S. 320 (1961). And that

case arose in the entirely different context of the

Clayton Act. This Court has never addressed whether

or when such a theory could be cognizable under the

Sherman Act. See Pet. 16-18; Former Antitrust

Officials and Antitrust Scholars Amici Br. 4-11.

Especially given the divergent results, this Court’s

guidance is needed.

B. CREXi’s primary response is not to defend the

decision below, but to recharacterize it. According to

CREXi, the Ninth Circuit’s “express holding” was that

“CoStar’s

contract

provisions,

not

mere

misunderstandings, support CREXi’s exclusive

dealing claim.” Opp. 18. That’s not what the court

held—expressly or otherwise. Properly understood,

the Ninth Circuit decision creates a legally

indefensible and dangerous precedent.

1. CREXi argues the Ninth Circuit found CoStar’s

contracts exclusive because the decision cited

allegations that “specific provisions of each contract

contradict the [contract’s] express promise of nonexclusivity.” Pet. App. 23a. Not at all.

That discussion is focused on what CREXi alleged.

Both sentences of the opinion setting out the relevant

contractual provisions begin by making clear the

Ninth Circuit was merely repeating CREXi’s

allegations. See id. at 24a (“CREXi alleges that, in

practice, the[] [terms] require brokers to exclusively

use CoStar’s services.”); id. (“CREXi alleges that the

terms . . . .”). Later too, the Ninth Circuit cited

CREXi’s allegation that, “in practice, [CoStar]

6

require[d] brokers to exclusively use CoStar’s

services.” Id.

The Ninth Circuit could not have done more

because it did not engage in any contractual

interpretation of its own. The court did not analyze

the text of particular contract terms, consider how the

different provisions operate together, or otherwise

determine whether those terms created exclusivity.

But these are all legal questions a court is wellequipped to answer at the motion-to-dismiss stage.

See Hicks v. PGA Tour, Inc., 897 F.3d 1109, 1118 (9th

Cir.

2018)

(courts

independently

construe

unambiguous contracts on a motion to dismiss). Nor

did the court consider whether the allegedly

contradictory contractual terms made the contract

ambiguous as to whether it was (or was not)

exclusive.* Indeed, the only actual holding about the

contractual language was that “[t]hese contractual

provisions are not expressly exclusive.” Pet. App. 24a.

The Ninth Circuit found CREXi’s allegations

plausible only because it had provided “specific

examples of brokers who underst[oo]d CoStar’s

contract terms to actually foreclose their ability to

work with CREXi.” Id. (emphasis omitted). Rather

than interpret the contract language, the Ninth

Circuit allowed CREXi to proceed to discovery based

*

There is no ambiguity. The terms prohibit brokers from

“us[ing] or reproduc[ing] any Content that is obtained from the

Service.” 2-ER-201–02 (emphasis added); see 2-ER-221–22. And

as the Ninth Circuit recognized, “Content” is defined as material

“contained on or provided through” CoStar’s platform. Pet. App.

24a. But of course brokers retain rights to their own data and

listings, a point which the contract makes explicit. 2-ER-199; 2ER-221; 2-ER-238.

7

entirely on three customers’ understandings as

parroted in CREXi’s pleading.

CREXi’s mantra that the Ninth Circuit just relied

on the “practical effect” of “contractual terms”

misreads the decision—and misunderstands what the

“practical effects” cases do. Contract interpretation is

not about practical effects; it is about what the

contract says. The Ninth Circuit is the first court to

ever allow a de facto exclusive-dealing claim to

proceed on this third rail.

2. Properly understood, the Ninth Circuit’s

decision creates two legally indefensible and

dangerous precedents.

First, by relying principally on how third-party

customers “understand” the contract terms, Pet. App.

24a—and not on contractual language or action by the

defendant itself—the Ninth Circuit failed to require a

showing the defendant actually “used” its alleged

monopoly power “‘to foreclose competition,’” United

States v. Dentsply Int’l, Inc., 399 F.3d 181, 191 (3d Cir.

2005) (emphasis added) (citation omitted). As amici

highlight, “prior to the opinion below, no court had

entertained such a broad conception of de facto

exclusive dealing divorced from express contractual

terms and the defendant’s conduct.”

Antitrust

Scholars Amici Br. 10. Absent plausible allegations

about either the contracts themselves or other

conduct by CoStar, the court of appeals should not

have simply accepted as sufficient some third-party

brokers’ alleged (mis)understandings of the terms.

Second, the Ninth Circuit appeared to accept that

a plaintiff need not show that the alleged

(mis)understanding was either reasonable or

widespread. On the pleaded facts, “many more” than

8

500 brokers thought CoStar’s terms were nonexclusive; three brokers believed otherwise. 4-ER633 (¶ 257); see 2-ER-179–83 (examples). But the

court of appeals apparently believed that a view held

by an exceedingly small percentage of customers was

enough for the claim to survive a motion to dismiss.

The upshot: a defendant can be subject to farreaching antitrust discovery based on the alleged

misimpressions of a single customer—no matter how

unreasonable the misunderstanding might be and

absent any allegations the defendant itself did

anything wrong. If taken seriously, that holding

would eviscerate the requirement that plaintiffs

plead substantial foreclosure in exclusive-dealing

cases—as the original panel opinion in this case

forthrightly admitted. Pet. 18-19.

This Court should grant certiorari and make clear

that de facto exclusive-dealing claims unmoored from

any exclusive contractual terms or anticompetitive

conduct by the defendant are not cognizable.

II. The Court Should Grant Certiorari On The

Refusal-To-Deal Question

CREXi does not dispute that, if its claim is about

access to CoStar’s products (i.e., a refusal to deal), it

cannot plead around Trinko. Opp. 21. Nor does it

dispute that, if the Ninth Circuit permitted it to do so,

that holding would conflict with decisions of the Tenth

and D.C. Circuits. Id. at 23, 26. CREXi instead

pretends this case is about something else. It is not.

A. CREXi repeatedly mischaracterizes its claim

as being about access to brokers’ “own websites,” not

CoStar’s products. Opp. 3-4, 26. But CREXi’s own

allegations show that is demonstrably false. CoStar

does not prevent CREXi from accessing brokers’ own

9

websites—websites over which it has no control.

What CREXi cannot access, and what it really wants,

is CoStar’s proprietary LoopLink tool. LoopLink is a

web tool brokers can use to embed CoStar’s LoopNet

database and proprietary data on their websites. As

CREXi itself alleges, LoopLink is a “widget” that

“display[s]” the “database functionality offered by

LoopNet” on a broker’s website. 4-ER-570–71 (¶¶ 39,

41); see 4-ER-572 (¶ 45) (“listings are on the [broker]

website via Looplink” (emphasis added)). Even on

CREXi’s telling, CoStar merely prevents CREXi from

accessing CoStar’s proprietary database, which some

brokers have embedded on their websites.

That distinction was front and center in the Ninth

Circuit. See CA9 Answering Br. 46-47; CA9 Oral

Argument at 12:25-13:12, 15:47-17:22, 25:30-31:15.

But rather than grapple with Trinko, the court

allowed CREXi to recharacterize what is plainly a

refusal-to-deal claim as something else merely

because “CREXi contend[ed]” that it was not alleging

a refusal-to-deal “theory of liability.” Pet. App. 21a

(emphasis added). The Ninth Circuit never explained

how CREXi’s characterization of its theory could

possibly be squared with its allegations seeking

access to CoStar’s LoopLink product.

B. CREXi does not seriously dispute that, if the

Ninth Circuit allowed it to plead around Trinko, that

decision would conflict with decisions of other circuits.

And so CREXi’s assertion (at 22-23) that all the

circuits are “consistent” in applying Trinko ignores

the Ninth. And the Ninth Circuit has a history of

skirting Trinko. More than 15 years ago, this Court

granted certiorari to correct the Ninth Circuit’s

failure to apply Trinko in Pacific Bell Telephone Co. v.

10

linkLine Communications, Inc., 555 U.S. 438 (2009).

See Pet. 25-26. It has done so again.

Other circuits have also allowed creative plaintiffs

to plead around Trinko. See Pet. 23-24. And district

courts have seized upon the Ninth Circuit’s disregard

of Trinko in this very case to deny motions to dismiss

for other refusal-to-deal claims. See Pet. 29-30

(collecting cases); Chamber of Progress Amicus Br. 16

(same).

The Tenth and D.C. Circuits, on the other hand,

have faithfully followed this Court’s case law. In the

Tenth Circuit, Trinko applies regardless of what “one

chooses to call” the challenged course of conduct.

Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1079

(10th Cir. 2013) (Gorsuch, J.), cert. denied, 572 U.S.

1096 (2014). Trinko’s refusal-to-deal doctrine, the

Tenth Circuit has explained, “is not so easily evaded”

just because a plaintiff “recast[s]” its allegations. Id.

Likewise, the D.C. Circuit has consistently applied

Trinko’s refusal-to-deal doctrine even when plaintiffs

attempt to circumvent it. For example, in New York

v. Meta Platforms, Inc., 66 F.4th 288 (D.C. Cir. 2023),

the plaintiffs argued that Facebook had forbidden app

developers from developing competing applications.

But as the plaintiffs’ actual allegations showed,

Facebook merely prohibited developers from “us[ing]

[the] Facebook Platform” to do so—a classic refusal-todeal claim that the D.C. Circuit treated as such. Id.

at 305 (citation omitted).

This Court should grant certiorari to resolve this

confusion and reinforce Trinko.

11

III. The Questions Presented Are Important,

And This Case Is A Good Vehicle

Without this Court’s intervention, the Ninth

Circuit’s holdings will water down the pleading

standard, encourage antitrust plaintiffs to seek

creative ways around this Court’s decisions, and

discourage innovation and ingenuity. Absent clear

legal rules enforced at the motion-to-dismiss stage,

businesses will be left wondering whether they must

share their latest technological developments with

competitors or face the risk of steep antitrust

discovery costs.

Diverting

resources

from

research

and

development to litigation and settlement costs for

unmeritorious antitrust cases will produce “fewer

products, slower improvements, and weaker

competition.” Chamber of Progress Amicus Br. 14.

And as amici point out, those risks are amplified by

an increasingly high-tech economy that relies on a

broad swath of commonplace internet technologies to

protect intellectual property from competitors—

including “access controls, APIs, software licenses,

and platform rules”—that may suddenly be unlawful

under the Ninth Circuit’s crabbed view of the refusalto-deal doctrine. Id.

CREXi’s primary response is to emphasize the

“pleading stage” posture of this case. Opp. 29-30. But

that is exactly why this Court’s intervention is

needed. As the Court has repeatedly explained,

antitrust discovery typically has an “extensive scope”

and is “unusually … cost[ly].” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 558-59 (2007). After the

parties have “litigate[d] through summary judgment

and trial,” as CREXi suggests (at 28-29), the Court

12

will not have an opportunity to clarify the motion-todismiss standard. And given the settlement pressure

for even unmeritorious cases, there is no guarantee

this Court will have another chance to review the

decision below. See Twombly, 550 U.S. at 558-59;

Cunningham v. Cornell Univ., 604 U.S. 693, 710

(2025) (Alito, J., concurring) (“[I]n modern civil

litigation, getting by a motion to dismiss is often the

whole ball game because of the cost of discovery.”).

This Court’s review is warranted and needed now.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

ELYSE M. GREENWALD

LATHAM & WATKINS LLP

10250 Constellation

Boulevard

Suite 1100

Los Angeles, CA 90067

(424) 653-5500

MELISSA ARBUS SHERRY

Counsel of Record

NICHOLAS J. BOYLE

CHRISTINE C. SMITH

DEREK K. CHOI

LATHAM & WATKINS LLP

555 Eleventh Street, NW

Suite 1000

Washington, DC 20004

(202) 637-3386

melissa.sherry@lw.com

Counsel for Petitioners

March 3, 2026