The Real Deal New York

Corcoran drops attempt to enforce noncompetes against Compass

Brokerage switches attorney and tactic in suit against rival

June 24, 2015 06:01PM
By Tess Hofmann

From left: Robert Reffkin, Pam Liebman and Gene Martinez

From left: Robert Reffkin, Pam Liebman and Gene Martinez

The Corcoran Group switched up its legal team and appears to be changing tack in a suit accusing rival brokerage Compass of poaching its employees and raiding its talent pool of brokers.

On Monday, the brokerage gave up on its attempt to enforce noncompete agreements and nonsolicitation agreements with several former Corcoran employees, including Soho manager Gene Martinez, as well as brokers Debra Bondy, Claire McFeely, Patrick Brennan, and Maryanne Farrell. The brokerage will now only be seeking monetary damages. 

“Because Corcoran has obtained the emergent relief it required to avoid irreparable harm, there is no longer a need to burden the court with another application for injunctive relief,”  the new document, filed in New York State Supreme Court, reads. “Instead, this litigation can now proceed apace, with discovery and trial efficiently focused on the damages that Corcoran is due as a result of defendants’ wrongdoing.”

The filing is the first from Corcoran’s newly appointed legal team of Skadden Arps Slate Meagher & Flom attorneys, who are replacing a team of Dentons US attorneys. A notice regarding the switch was also filed Monday. The parties were scheduled to meet in court on Friday for a hearing on the preliminary injunction, after the date was pushed back several times.

In a statement Wednesday, Compass told The Real Deal that it was “pleased that eleven weeks after the Court rejected Corcoran’s request for a sweeping restraining order, Corcoran has wisely decided to withdraw its request for a preliminary injunction. This development is further proof that Compass has not engaged in any wrongdoing and that this lawsuit is nothing more than a misguided attempt by Corcoran to block independent contractors from choosing where to work.” The brokerage recently introduced a “key-person clause” in its contracts, which would allow clients and listings to follow agents who depart the firm.

While Corcoran maintains that its reason for dropping the request is that it already got the relief it was seeking in the form of an admission from Compass that the agreements exist, the only real concession to Corcoran appears to be that brokers who downloaded its files were forced to delete them.

When Corcoran initially sought a restraining order in May to keep Martinez from working at Compass, Justice Saliann Scarpulla of the New York Supreme Court said: “There is not a chance in hell that I would issue that [temporary restraining order.] I have no idea why you put it in.”

In a statement Wednesday, Corcoran said: “In light of Compass’ admissions and concessions regarding stolen Corcoran data and the enforceability of the  “no-compete” and “no-solicit” provision in Corcoran employment contracts,  Corcoran has withdrawn its application for a continuance of a preliminary injunction as it has won from Compass and the individual Defendants the relief it required to avoid irreparable harm.  We look forward to proceeding with discovery and trial to determine full extent of damages that did occur.”