Real Estate

Realogy suing Compass for unfair business practices, illegal schemes

Accuses real estate brokerage of scheming to damage, eliminate competition

Realogy Holdings, the nation’s largest real estate brokerage, filed a bombshell lawsuit Wednesday against its SoftBank-backed rival, Compass, accusing it of unfair business practices and illegal schemes.

The impassioned complaint filed in New York Supreme Court alleges that Compass engages in illegal activities in a bid to edge out its competitors “at all costs” in order to gain market share.

“To reach its desired ends, Compass steals from, tortiously interferes with, and disparages its competitors,” the complaint states. “Compass' very business model is founded on misappropriating, by whatever means necessary, the assets, confidential business information, trade secrets, contracts, talent, and strategies of its competitors.”

Specifically, Realogy alleges that Compass poaches employees and agents from its competition by grossly overpaying them, leveraging more than $1 billion from investors to make up for the losses incurred by this practice.

It also accuses the brokerage of luring employees from its competitors, encouraging them to breach their non-competes and divulge confidential information learned in their previous jobs.

It even goes so far as to claim that Compass infiltrates the computer systems of its competitors to gain access to proprietary information, which it then uses to poach staff.

It further alleges that CEO Robert Reffkin solicited Realogy to enter into an illegal price-fixing agreement that would have the two companies agree to limit compensation and compete on brand rather than price, an offer Realogy said it refused.

Realogy is not the first to take Compass to court, as a number of other companies, including Zillow, have accused Compass of poaching and data theft.

For its part, Compass accused its competitors of using the courts to suppress competition.

“At Compass we focus on providing the best possible experience for our employees, agents and their clients. Instead of building a better future for the real estate industry, our competitors are using the court system to stifle competition, but these efforts have been unsuccessful,” a Compass spokesperson told HousingWire. “Compass will continue on its mission to meaningfully improve the real estate industry and help everyone find their place in the world.”

Realogy would likely contest the assertion that Compass is seeking to improve the real estate industry, as the company calls Compass’ practices “as brazen as they are unlawful” in the complaint.

“Its conduct has damaged – and unless Compass is stopped, will continue to damage – the real estate industry by suffocating competition through improper means, to the detriment of its competitors, agents, and consumers as well,” it states.

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