A New York judge has denied Compass’ motion to dismiss an explosive lawsuit accusing the brokerage of “predatory” poaching and other wrongdoing.
Realogy, the parent company to the Corcoran Group and Coldwell Banker, filed the wide-ranging suit last year, alleging its SoftBank-backed rival engaged in illicit business practices to gain market share “at all costs.”
In addition to its motion to dismiss, Compass sought arbitration on the grounds that it and Corcoran are members of the Real Estate Board of New York, which requires members to resolve disputes through mediation.
After hearing oral arguments via Skype on Friday, Judge Barry Ostrager denied Compass’ motion to dismiss the suit and compel arbitration. But he carved out an exception for Corcoran, giving Realogy the opportunity to clarify what allegations related to Corcoran will be litigated as opposed to resolved outside of court.
“Arguments advanced by [Compass] with respect to Corcoran could have been advanced against at least one other plaintiff and were not,” Ostrager said. “In the circumstances of this case, the issue of arbitrability is for the Court to determine as there is no unequivocal agreement by Corcoran to arbitrate the issues in this case.”
Both sides interpreted the ruling as a win.
In a statement, Realogy said: “Open and honest competition in our industry is something we take very seriously, and we are pleased that the New York Court today agreed that our stated claims against Compass are viable and should move forward.”
A Compass spokesperson said the brokerage “strongly believes” in the industry’s ability to settle disputes outside of court and maintained the position that Compass and other REBNY members are required to arbitrate disputes.
“The Court’s order today upheld those principles and, after Realogy files its amended complaint, Compass intends to enforce them again if needed,” the spokesperson said. “While we’re disappointed that the Court did not grant our motion to dismiss other claims, we’re steadfast in our assertion that these claims are without merit and look forward to demonstrating this fact regardless of the venue.”
Realogy hit Compass with a wide-ranging suit last summer, in which the conglomerate accused its rival of “predatory” poaching and collusion.
In an interim decision in February, which only took into account some of the allegations, the judge also denied Compass’ motion to dismiss. “This case appears to be the culmination of years of informal and formal disputes among the parties,” he wrote at the time, noting that the defendants “have not satisfied the burden” to justify a dismissal.