Zillow sues Compass for poaching tech talent, allegedly stealing trade secrets

Suit claims Compass took shortcuts to avoid building technology
By E.B. Solomont | April 19, 2019 08:00PM

Zillow CEO Richard Barton and Compass CEO Robert Reffkin (Credit: Zillow, Compass, iStock)

Zillow Group slammed Compass with two lawsuits late Friday, alleging the $4.4 billion SoftBank-backed brokerage hired three top technology staffers in violation of their non-competes as it staffed up its nascent tech hub in Seattle. The lawsuits also claim that Compass actively sought to obtain proprietary information from Zillow to avoid building its own technology.

The suits — one filed in federal court and the other in Washington state court — also name Robert Chen, Zillow’s former head of artificial intelligence; Michael Hania, an enterprise sales executive; and Chester Millisock Jr., a software engineer.

“Compass actively recruited these employees in order to avoid the costs associated with open and honest competition and to obtain Zillow’s confidential and proprietary information,” court documents allege.

In the suits, Zillow said all three of its former employees violated 12-month non-competes with Zillow. They are accused of taking proprietary information from Zillow in the days before they left the company, copying confidential customer lists, financial information, sales data and technical information on thumb drives and to DropBox.

Compass, which is spending billions on an end-to-end platform and recently acquired CRM Contactually, denied that it had done anything improper with the hiring of the Zillow employees.

“You cannot break a non-compete by leaving to go to a company that does not compete with you,” a spokesperson said in a statement to The Real Deal. “With hundreds of engineers and hundreds of sales people, it’s unfortunate that losing three individual contributors would result in using scare tactics to intimidate current employees from leaving. Compass has never asked and would never accept any trade secrets. A number of years ago Compass abolished non-competes for anyone that we hired as we believe that people should work at Compass because they want to, not because they are forced to.”

Zillow, which has a market cap of $7.37 billion, said it supports healthy competition to drive innovation, but argued that Compass’s practices are “something different.”

“They are unlawful, and because we have a responsibility to protect our intellectual property, we are taking action,” the company said.

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