Compass to Realogy: You can’t sue us

SoftBank-backed firm says rival must settle dispute through arbitration

Nov.November 27, 2019 02:47 PM
Compass CEO Robert Reffkin and Realogy CEO Ryan Schneider (Credit: Columbia and iStock)

Compass CEO Robert Reffkin and Realogy CEO Ryan Schneider (Credit: Columbia and iStock)

Five months after Realogy hit Compass with a bombshell lawsuit, the SoftBank-backed defendant is looking to resolve things outside of a courtroom.

In a Nov. 25 motion, Compass asked a New York judge to stay the legal proceedings and compel the two companies to seek arbitration.

The brokerage’s motion argues that the majority of Realogy’s accusations pertain to the Corcoran Group, its successful New York City-based subsidiary.

Because both Compass and Corcoran are members of the Real Estate Board of New York, it said, the two are bound by REBNY rules that require members to settle disputes via arbitration. Both are also bound by REBNY’s universal co-brokerage agreement, which carries the same mandate.

Compass further alleged that Realogy deliberately opted for a lawsuit over arbitration in order to try the case in the court of public opinion. In recent years, Realogy’s stock has plummeted amid competition for top agents from rivals including Compass.

“Plaintiffs have used this case … as an instrument in a public relations campaign targeting Compass,” the filing said. “Unfortunately, however, Plaintiffs here have presented the Court with a dog’s breakfast of a complaint.”

“They have sought to cobble together a variety of unrelated and isolated grievances, some of which bear little direct relation to Corcoran’s claims,” it added.

Compass declined to comment. Realogy did not respond to a request for comment.

Realogy’s lawsuit, filed in July, accused Compass of unfair and illegal business practices designed to beat rivals “at all costs.”

Compass called the suit an “act of desperation” by Realogy and it alleged that Realogy CEO Ryan Schneider attempted to sell the company to Compass — an assertion Realogy vehemently denied.

In a related motion this week, Compass asked the court to dismiss Realogy’s amended complaint, which was filed in September. In its motion, Compass called Realogy’s lawsuit “duplicative and unnecessary” because it essentially repackaged claims from prior lawsuits. (Citi Habitats and Corcoran sued Compass in 2014 and 2015, respectively. Both suits were settled in 2015.)

Compass’ motion accused Realogy of trying to stifle competition, particularly through “sweeping” covenants that try to freeze compensation for agents and employees. Compass said aggressive pricing actually benefits consumers and agents — except for Realogy and others that have “failed to keep pace with the market (and the times).”

It added: “Plaintiffs should not be permitted to use the judicial system to do what they cannot do through fair competition in the market.”

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