US Supreme Court won't hear Zillow's bid to escape investor class action

The US Supreme Court declined to hear Zillow Group's appeal of a lower court decision allowing investors' 2021 lawsuit to proceed as a class action in federal court in Washington state. The suit alleges Zillow leaders made overly positive statements about the company's home-flipping division in the months before it shut down.

Zillow announced in November 2021 that it was permanently closing Zillow Offers after management said it could not accurately forecast future home prices. The company reported a $300 million write-down in losses during the previous quarter and announced layoffs affecting 25% of its workforce. Zillow denied securities fraud, saying it disclosed the risks of entering the business, which did not work out as hoped.

Zillow had argued the Supreme Court should resolve a split among federal appeals courts over how closely corrective disclosures must relate to earlier alleged misstatements for a class action to be certified. The 9th US Circuit Court of Appeals had upheld the decision allowing the case to proceed, saying the November 2021 disclosures revealed new information about Zillow's home-pricing struggles.