D.C. Circuit Reverses Lower Court’s Decision To “Set Aside” Civil Investigative Demand
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  • D.C. Circuit Reverses Lower Court’s Decision To “Set Aside” Civil Investigative Demand


    On April 5, 2024, the United States Court of Appeals for the District of Columbia Circuit reversed the district court’s decision to “set aside” a civil investigative demand (“CID”) issued by the Antitrust Division of the U.S. Department of Justice (“DOJ”) to the National Association of Realtors (“NAR”), a real estate trade association. The majority found that the issuance of the CID was not barred by the parties’ prior settlement agreement regarding different allegations. National Association of Realtors v. United States, No.23-5065, 2024 WL 1471170 (D.C. Cir. Apr. 5, 2024).

    In 2018, DOJ opened a civil investigation and issued two CIDs regarding multiple NAR policies, including NAR’s “Participation Rule” and “Clear Cooperation Policy.” In November 2020, the parties ultimately agreed to enter a Proposed Consent Judgment that specifically addressed four NAR policies but did not address the Participation Rule or Clear Cooperation Policy. As part of the agreement, DOJ issued a letter to NAR to say that it “has closed its investigation into [NAR’s] Clear Cooperation Policy and Participation Rule” and that “NAR will have no obligation to respond to” the two previously issued CIDs. The letter continued that “[n]o inference should be drawn, however, from the Division’s decision to close its investigation into these rules, policies or practices not addressed by the consent decree.” Id. at *3.

    In July 2021, DOJ exercised its option to withdraw the Proposed Consent Judgment. Five days later, DOJ issued a new CID requesting information from NAR on its Participation Rule and Clear Cooperation Policy. NAR subsequently petitioned the district court to set aside this new CID and “argu[ed] that its issuance contravened the parties binding settlement agreement, which included DOJ’s promise in the November 2020 closing letter to close its investigation of the Participation Rule and the Clear Cooperation Policy.” Id. at *3.

    The D.C. Circuit disagreed with NAR and found that the letter issued by DOJ to NAR did not bar DOJ from reopening the investigation and issuing a new CID with respect to those two practices following DOJ’s withdrawal of the Proposed Consent Judgment. The D.C. Circuit relied on three canons of interpretations in reaching this conclusion:

    • Plain Language. The letter’s plain language stating the DOJ “has closed” its investigation “does not guarantee that the investigation would stay closed forever.” at *5. 
    • “No-Inference” Clause. The letter contained no express or implied agreement that DOJ would “refrain from either opening a new investigation or reopening its closed investigation, which might entail issuing new CIDs related to NAR’s policies.” To the contrary, the no-inference clause “explicitly disclaim[ed] any intent to include unstated terms,” such as one that would prohibit the reopening of the investigation. at *5.
    • Unmistakability Principle. The unmistakability principle requires that the court “not interpret a contract to cede a sovereign right of the United States unless the government waives the right unmistakably.” at *5. And DOJ did not unmistakably waive the right to reopen the investigation.

    The dissent argued, however, that the issue was not whether DOJ could reopen its investigation but whether it could immediately reopen the investigation “seconds later” (i.e., DOJ’s issuance of a new CID five days after DOJ withdrew the Proposed Consent Judgment). Id. at *15. The majority disagreed with the dissent’s timeline and declined to address whether “immediate reopening” by DOJ would have constituted breach of the agreement because eight months had elapsed since the parties entered into the original settlement agreement. Id. at *9. Nonetheless, the dissent strongly disagreed and concluded with a stark warning: “if you ever find yourself negotiating with” DOJ, “Buyer Beware.”  Id. at *15.

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