The Real Deal New York

Saunders & Associates accuses Compass of stealing data from its listings database

Startup firm hit with restraining order

December 07, 2015 04:50PM
By E.B. Solomont

Andrew SaundersMegSalemRobertReffkinOriAllon

From left: Andrew Saunders, Meg Salem, Robert Reffkin and Ori Allon

A federal judge granted Hamptons brokerage Saunders & Associates a restraining order against rival firm Compass on Monday, after Saunders accused its competitor of stealing thousands of listings from its password-protected database.

In a complaint filed Monday, Saunders alleged that former top-producing agent Meg Salem – who moved along with her team to Compass last month – used another employee’s login credentials to access Saunders’ database, and subsequently copied 11,600 active and inactive listings and other confidential data.

“It’s not okay to steal information,” Andrew Saunders, CEO of Saunders & Associates, told The Real Deal on Monday, after Judge Leonard Wexler from the U.S. District Court’s Eastern District issued an injunction. “This is the third time in the last year Compass has been involved in situations where courts have ordered the return of stolen data,” he said, referring to earlier suits, two of which have since been settled. “This certainly ought to give pause to their investors, and should catch the attention of the Attorney General to look at what’s going on here.”

A Compass spokesperson told TRD on Monday that the firm “denies the allegations levied against it.”

“Saunders’ rush to sue its former agent prior to any attempts to resolve its allegations directly appears to be an attempt to chill any further agent departures at all costs,” the spokesperson added.

Compass, which has raised $123 million from investors, is expanding at a rapid clip, irking competitors along the way as it recruits top-producing agents from rival firms.

In Saunders’ complaint, the brokerage said Salem, a top-producing agent who earned $1.2 million in commission payments at Saunders last year, resigned “abruptly” during a seven-minute conversation with Andrew Saunders on Nov. 3. The suit names Salem, teammates Vanessa Bogan and Jesse Spooner, as well as marketing administrator Jessica Grainger-Rozzi.

Two weeks after the resignation, the suit states, Andrew Saunders learned his firm’s listing database was breached when marketing associate Anna Alexopoulos – who was on vacation in the Carolinas – received an alert on her phone that someone logged into the database using her credentials. The cloud-based database contains confidential information such as end dates for exclusive listings, home security codes, locations of hidden door keys, owner contact information and other data.

In its complaint, Saunders & Associates said an investigation revealed that the logins were made from an IP address associated with Salem and Grainger-Rozzi. In all, there were three breaches, the lawsuit claims, on Nov. 2, Nov. 3 and Nov. 17.

In an attempt to cover up the login, Salem deleted the emails sent from Alexopoulos’ account, Saunders claims in its lawsuit.

“Armed with the collective intelligence of thousands of pirated listings,” Saunders’ complaint argues, Compass is “now poised to unfairly compete with Saunders in a highly competitive marketplace and to profit from their audacious data breach.”

It’s not the first time Saunders and Compass have gone head-to-head. In April, rumors swirled that the startup was in talks to buy Saunders & Associates, a 170-person firm founded by Andrew Saunders in 2008.

Saunders staunchly denied his firm was for sale, but told TRD at the time that a Compass representative had called to ask him questions about how the local multiple listings system worked.

Compass planted a flag in Bridgehampton in September, and quickly opened a second office in East Hampton. It subsequently hired Ed Petrie, a top agent at Sotheby’s International Realty, and Ed Reale, a top manager in the Hamptons for Brown Harris Stevens. Since launching in Manhattan in 2013, the firm – valued at $800 million – has opened offices in Brooklyn, Washington, D.C., Boston, Miami, the Hamptons and Los Angeles.

Last month, Brown Harris sued Reale for allegedly violating a noncompete when he joined Compass.

In its suit, Saunders said it was seeking monetary damages to be determined at trial.

In 2014, Citi Habitats sued Compass, accusing agents of accessing its proprietary listing system. Corcoran Group also sued, alleging former managers and agents violated their non-compete agreements. Both suits were settled in August.

But Saunders’ suit points to the pressure on Compass “to sustain its frenetic pace” of growth.

“Rather than attempt to engage in lawful competition, though,” the suit states, “Compass has embarked on a campaign to poach competitors’ agents and employees and misappropriate… confidential, proprietary and trade secret information.”