The Real Deal New York

Compass urges judge to dismiss Elliman lawsuit

Motion claims non-solicit agreement was bunk

November 18, 2016 05:45PM
By Kathryn Brenzel

From left: Herve Senequier, Howard Lorber and Leonard Steinberg

From left: Herve Senequier, Howard Lorber and Leonard Steinberg

Compass urged a state Supreme Court judge on Thursday to throw out Douglas Elliman’s lawsuit against the brokerage, claiming that it isn’t bound by non-solicitation agreements.

Elliman sued Compass and its president Leonard Steinberg in October, accusing him and his colleague Herve Senequier of wrongfully luring brokers to Compass. The lawsuit alleges that both ex-Elliman brokers signed non-compete agreements barring them recruiting from Elliman for 18-months, in exchange for receiving the commissions on their deals that hadn’t yet closed when they left the firm. Instead, according to the lawsuit, the brokers stole “agents en masse.”

The lawsuit followed just a few days after another filed by Steinberg and Senequier against Elliman, which claimed that they weren’t paid for these deals.

In its latest motion, Compass argues it can compete for Elliman’s brokers who are “at-will independent contractors” who can leave the firm at any time. Plus, Steinberg and Senequier also assert that Elliman doesn’t provide any evidence that they actively solicited brokers to join Compass. The motion also alleges that the non-solicitation agreement doesn’t meet the three-part test established by state law for such measures. Such an agreement must be the minimum required to protect “the legitimate interest of the employer,” must not “impose undue hardship on the employee” and must not injure the public.

“This lawsuit is a transparent attempt by Douglas Elliman to accomplish through litigation what it cannot accomplish through open and fair competition,” the motion states. “At most, the Complaint alleges that Compass (not Steinberg or Senequier) actively recruited Douglas Elliman agents, but there is nothing wrong with that.”

A spokesperson from Douglas Elliman declined to comment on the motion, saying that the firm doesn’t comment on pending litigation.

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