The Real Deal New York

Elliman sues Steinberg, Compass over “scheme” to steal agents, contracts

Brokerage is latest to accuse Reffkin's firm of unlawful tactics

October 17, 2016 02:05PM
By Katherine Clarke

From left: Howard Lorber, Robert Reffkin and Leonard Steinberg

From left: Howard Lorber, Robert Reffkin and Leonard Steinberg

Douglas Elliman is suing Compass and its president Leonard Steinberg, alleging they waged an “unlawful scheme” to steal its brokers and meddle with its exclusive contracts.

Elliman accuses Steinberg and his colleague Herve Senequier, both ex-Elliman agents, of breaching non-solicit agreements by raiding the company’s talent pool, according to a new complaint filed Monday in New York State Supreme Court.

Steinberg and Senequier, who joined Compass in 2014, had allegedly pledged not to recruit from Elliman for 18 months in return for an unusually advantageous arrangement with Elliman, whereby they would receive their full commissions for deals they had worked on at the company that were yet to close at the time of their departure. Those commissions allegedly penciled out to over $3 million.

But Elliman claims the pair broke their word.

“While Compass claims to be an innovative new brokerage for New York City, its strategy relies on little more than inducing Steinberg and Senequier to breach their non-solicitation agreements with Douglas Elliman by recruiting Douglas Elliman agents en masse, capitalizing on Douglas Elliman’s successful training and development, stealing Douglas Elliman techniques and materials while passing them off as Compass’ own and inducing property owners to breach their exclusive brokerage contracts,” the complaint states.

The suit comes two weeks after Steinberg and Senequier filed their own suit against Elliman, claiming they were owed upwards of $500,000 in unpaid commissions from their time there.

“This baseless lawsuit is nothing more than a poor attempt to draw attention away from the real issue – that Leonard and Herve brought a recent lawsuit against Douglas Elliman for failure to pay monies clearly owed to them,” a Compass spokesperson told The Real Deal.
An Elliman spokesperson declined to comment and Steinberg said he would not comment on pending litigation.

Elliman claims Steinberg and Senequier targeted their former office at 26 West 17th Street, sending a “barrage” of texts, phone calls and emails to agents and administrative staff, asking them to meet with Compass CEO Robert Reffkin.

“The recruiting was orchestrated by Steinberg and Senequier but designed to look as though it was coming from others to conceal their involvement in the scheme,” the complaint states.

The tactics, the suit claims, took a toll. According to Elliman, 14 agents have resigned from that office since November 2015, when Steinberg and Senequier signed the non-solicit agreement . Another 40 agents jumped from the company’s other offices in Manhattan and Brooklyn. Recent defections include Toni Haber, Keith Copley, Michele Roderick, Jon Varnedoe and Dylan Hoffman.

Those agents who were managing exclusive relationships with property owners were allegedly urged to have the owners breach the arrangements and establish new deals with Compass.

Elliman also alleges that Compass infringed on its copyright by illegally disseminating the Wealth Report, a luxury real estate report put out together by Elliman and U.K.-based Knight Frank. In emails to clients, Compass allegedly passed the report off as its own, the lawsuit states.

Compass, which in August raised $75 million at a $1 billion-plus valuation, has faced similar lawsuits in the past.

Last year, the Corcoran Group sued the firm, alleging it “brazenly and intentionally” raided key Corcoran offices and used “unlawful methods” in a “coordinated, multi-front assault of unfair competition.” That suit was later settled.