Supreme Court Allows Zillow Investor Lawsuit to Proceed
The U.S. Supreme Court declined to hear an appeal from Zillow Group, allowing a class action lawsuit over its failed home-flipping venture to move forward.
The Supreme Court of the United States declined on Monday to hear an appeal from Zillow Group, clearing the way for a 2021 investor class action lawsuit to proceed in a Washington state federal court. The lawsuit alleges the real estate platform misled investors about the viability of Zillow Offers, its now-defunct home-flipping venture.
Zillow shut down the division in November 2021 after admitting it could not accurately forecast home prices. The collapse resulted in $300 million in losses, the layoff of 25% of the company's staff, and a sharp decline in stock value. Zillow has denied securities fraud, maintaining that the company disclosed all risks associated with the business decision.
The 9th U.S. Circuit Court of Appeals previously ruled that Zillow's late 2021 disclosures indicated that earlier statements may have obscured the failure of its pricing model. While Zillow sought Supreme Court intervention to resolve a split among appellate courts regarding corrective disclosures, the high court's refusal to act leaves the company vulnerable to the litigation. The U.S. Chamber of Commerce criticized the lower court's ruling, arguing it deviates from precedent and exposes American businesses to costly securities class-action lawsuits.
