Zillow Faces Shareholder Lawsuit Over Folded House Flipping Effort

A real estate sign advertising a home "Under Contract" is pictured in Vienna, Virginia, outside of Washington, on Oct. 20, 2014. Larry Downing/Reuters

Real estate company Zillow faces a federal lawsuit claiming the company misled investors, leading to financial losses as it ended its house flipping program.

The lawsuit was filed Tuesday in the U.S. District Court for the Western District of Washington at Seattle. The case is the first federal filing, joining two Boston-area firms in legal actions against the company.