### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 18

- 2130
V IPUL B. P ATEL , et al

. , Plaintiffs

- Appellants ,

v.

Z ILLOW , I NC

. , and Z ILLOW G ROUP , I NC

. , Defendants

- Appellees

.

____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 17

- CV

- 4008

— Amy J. St. Eve , Judge

.

____________________
A RGUED O CTOBER 29, 2018

— D ECIDED F EBRUARY 8, 2019

____________________

Before B AUER , E ASTERBROOK , and S CUDDER , Circuit Judges

. E ASTERBROOK , Circuit Judge

. A Zestimate is an estimated value for real estate, available on the Zillow web site for about 100 million parcels. Zillow generates Zestimate s by applying a pr oprietary algorithm to public data, such as a buildi ng’s location, tax assessment, number of rooms, andthe recent selling prices for nearby parcels. But because Zillow does not inspect the building , it cannot adjust for the fact that any given parcel may be more a\ ractive and be\er2 No. 18

- 2130

maintained , raising it s likely selling price, or the reverse. Zillow states that its median error (comparing a Zestimate with a later transaction price) is less than 6%, though the Zestimate is off by more than 20% in about 15% of all sales. Zillow informs users that none of th e parcels has been inspected and th at Zestimates may be inaccurate, though Zillow touts them as useful starting points. Plaintiffs filed this suit after learning that the Zestimates for their parcels were below the amount s the y hoped to realize

. For exampl e, Vipul Patel listed his home with an asking price of $1.495 million and co ntends that the Zestimate of $1, 333,350 scared away potential buyers. Plaintiffs asked Zillow either to in crease the Ze stimates for their parcels or remove them from the database. When it declined to take either step, they filed this suit, under the diversity jurisdiction, invoking the Illinois Real Estate Appraiser Licensing Act, 225 ILCS 458/1 to 458/999

- 99 , which forbids the appraisal of real estate without a license , and the Ill inois Uniform Deceptive Trade Practices Act, 815 ILCS 510/1 to 510/7 , which forbids unfair or misleading trade practices. Plaintiffs contend that a Zestimate is an appraisal and not only unfair but also misleading because (plaintiffs as sert) it is inaccurate yet Zillow does not accommodate requests for change or re moval

. The suit began in state court and was removed to federal court under the diversity jurisdiction. The district court dismissed all of plaintiffs’ claims for failure to state a claim on which relief may be granted. See Fed. R. Civ. P. 12(b)(6). 2017 U.S. Dist. L EXIS 134785 (N.D. Ill. Aug. 23, 2017); 2018 U.S. Dist. L EXIS 76245 (N.D. Ill. May 7, 2018). The court’s first opinion dis misses the licensing claim with prejudice, and the secon d
ter minates all other claims.No. 18

- 2130 3

The district court’s comprehensive opinions make it unnecessary for us to write at length. We offer only a fewwords to supplement the district judge’s analysis and indicate which parts of it undergird our decision.
The licen sing claim failed in the district court for two principal reasons. Firs t, the judge concluded that an “ automated valuation model” differs from an “appraisal” as a ma\er of law under 225 ILCS 458/5

- 5(g). 2017 U.S. Dist. L EXIS 134785 at *11

– 15. Second, the judge held that plaintiffs lack a private right of action to enforce the appraisal statute. Id . at *15

– 26. We affirm for the second reason and need not consider the first. The licensing statute omits a private right of action. Instead it makes unlicensed a ppraisal a Class A misdemeanor (first offense) and a Class 4 felony for any repetition. 225 ILCS 458/5

- 5(a). An administrative agency may impose fines of up to $25,000 per unlicensed appraisal, see §458/1

- 10, 458/15

- 5(a), and issue cease

- and

- desist le\ers that can be enforced by injunctions, see §458/ 15

- 5 (d). Illinois courts create

a non

- statutory private right of action “only in cases where the statute would be ineffective, as a practical ma\er, unless such action were implied.” Me:ger v. DaRosa , 209 Il l. 2d 30, 39 (2004) (citation omi\ed). The district court found that the multiple means of enforcing the licensing act, and the stiff penalties for noncompliance, show that a private action is not necessary to make the statute effective. We concur.
As for the trade practices act, the district judge was right to observe that the statute deals with statements of fact , while Zestimates are opinions, which canonically are not actionable

. See, e.g., Sampen v. Dabrowski , 222 Ill. App. 3d 918, 924

– 25 (1st Dist. 1 991) (where a valuation is explicitly la-4 No. 18

- 2130

beled an estimate, there is no deception); Hartigan v. Maclean Hunter Publishing Corp ., 119 Ill. App. 3d 1049, 1059 (1st Dist. 1983) (“ If clearly labeled as an opinion a qualitative evaluation of worth is not a violation of the Act. The Act prohibits deception ra ther than error.” ). Plaintiffs want us to brush this rule aside because, they say, Zillow refuses to alter or remove Ze s timates on re quest. This does not make a Zestimate less an opinion, however. And pla intiffs are mistaken to think that the accuracy of an algorithmic appraisal systemcan be improved by changing or removing particular estimates. Suppose plaintiffs are right to think that the Zestimates for their properties are too low. Removing them from the database would skew the distribution, because all mistakes that favored property owners would remain, not offset by errors in the other direction. Potential buyers would be made worse off. Suppose instead that plaintiffs are wrong

— that they have overes timated the value of their properties, while the Zestimates are closer to the truth. Then removing them from the database would not just skew the distribution but also increase the average error of estimates. Potential buyers of plaintiffs’ properties woul d be deprived of valuable knowledge. Finally, suppose that plaintiffs are behaving strategically

— that they know the Zestimates to be accurate (or at least closer to the likely sales price than are plaintiffs’ asking prices). Then removing their parcels fro m the database, or “correcting” the Zestimates to match plaintiffs’ asking prices, would degrade the accuracy of the database as a whole without any offse\ing benefits to the real

- estate market. In general, the accuracy of algorithmic estimates cannot be improved by plucking some numbers out of the distribution or “improving” others in ways that depart from the al-No. 18

- 2130 5

gorithm’s output

. The process is more accurate, overall, when errors are not biased to favor sellers or buyers.
That Zillow sells ads to real est ate brokers does not affectthe statutory analysis. Having labeled Zestimates as estimates (something built into the word “Zestimate”), Zillow is outside the scope of the trade practices act. Almost all web sites, like almost all newspapers and magazines, try to finance their operations by selling ads. That they do so without telling customers exactly what pitches are being made to potential advertisers does not convert a declared estimate into an inaccurate statement of fact.
In addition to the trade pract ices a ct, plaintiffs invoke the Illinois Consumer Fraud and Deceptive Busine ss Practices Act, 815 ILCS 505/1 to 505/12 . The district court’s second opinion shows that this claim fails for essentially the same reasons as the trade practices a ct claim fails , and for the further reason that plaintiffs are not buyers of real estate . 2018 U.S. Dist. L EXIS 76245 at *20

– 26. The subject does not require additional discussion.
A FFIRMED