Compass co-founder Robert Reffkin cannot seek damages from Avi Dorfman, a tech entrepreneur who claims to be one of the co-founders of the brokerage, a New York County Supreme Court judge has ruled.
Dorfman sued Reffkin in 2014, claiming he used the concept behind a joint venture they worked on together in 2012 to set up a competing business later known as Compass. Reffkin then allegedly forced him out of the company, now valued at more than $1 billion.
In counterclaims, Reffkin had alleged that Dorfman was improperly presenting himself as instrumental in the company’s early fundraising success and had used the Compass name in order to secure his two most recent positions, at Hailo, a taxi flagging app, and Quid, a data analytics company. Dorfman also incorrectly calls himself a co-founder of Compass on his LinkedIn page, despite having never been an employee of Compass, Reffkin alleged.
Dorfman’s use of Compass’ name was particularly damaging to the brokerage’s image because of Dorfman’s previous professional failures, Reffkin alleged in court papers.
But a judge ruled this month that Reffkin’s counterclaims do not hold up, saying Reffkin “failed to allege any injury or damages from Dorfman’s claims of being a co-founder.”
Dorfman’s suit against Reffkin is still pending.
“Last week the State Appeals Court significantly limited Dorfman’s claims against Compass and we look forward to a full dismissal of this matter,” a Compass spokesperson said. “This frivolous action was brought only after the Compass had raised over $70 million in capital, nearly two years after Dorfman alleges he was wronged.”
Dorfman’s attorney did not immediately respond to a request for comment.
In his suit, Dorfman alleges he met with Reffkin in 2012 to raise funds for a venture known as RentJolt. Instead, Reffkin allegedly suggested they join forces and offered to buy RentJolt. In exchange for his contributions to the new venture, Dorfman says Reffkin offered him a 2.5 percent stake in Compass plus a base salary of $80,000, but later reneged on his commitment to buy RentJolt and took his trade secrets and ran with them.
Reffkin countered that Dorfman had never been an employee of Compass and was not involved in its creation.
Compass reached unicorn status last month after raising $75 million in a Series D round, bringing its valuation to just over $1 billion. It’s received $210 million in venture capital funding since launching three years ago, and on paper is the most valuable residential brokerage in the country. In July, The Real Deal dived into the business model and questioned some of the firm’s assumptions and cherry-picked numbers.