Eighteen months after being sued by Realogy, Compass is striking back, accusing its chief rival of unfair competition, defamation and flooding the market with false information.
In a new court filing, Compass said Realogy’s top executives conspired in a desperate campaign to impede its growth, which ultimately turned agents and homeowners into “collateral damage.”
“They have waged a war of disinformation by deliberately flooding the market with false information about Compass,” Compass said in a counterclaim to Realogy’s 2019 lawsuit. “And they have promoted anti-competitive and retributive conduct to impede the free movement of agents and employees.”
The two brokerages have been in legal tussles since 2015, but the biggest blow came in 2019, when Realogy hit Compass with a wide-ranging lawsuit alleging illicit business practices, “predatory” poaching and price-fixing.
At the time, Compass refuted the allegations and accused its competitor of using the courts to stifle competition. Compass later tried to compel arbitration on the grounds that it is a member of the Real Estate Board of New York, along with Realogy’s Corcoran Group brand. After a judge denied the motion, Compass said it intends to appeal the decision.
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In its counterclaim, Compass took a similar approach, arguing that Realogy’s strategy has been “complacency in the face of innovation.” Unable to compete, Relaogy has “sought to stop the bleeding by any means necessary—including lying, stealing and cheating,” the filing said.
With a market cap of $1.78 billion, Realogy’s stock has struggled in recent years. But the brokerage giant reported a record $1.9 billion in revenues during last year’s third quarter, up 20 percent year over year. It reported $145 million profits during the period.
Compass’ counterclaim accuses Ryan Gorman, president and CEO of Realogy Brokerage Group and Coldwell Banker Real Estate, of sending a “baseless email” to contacts in the real estate press, questioning Compass’ integrity and compliance with the law. It said “numerous” other Realogy brokerages have also tried to damage Compass’ reputation by spreading false claims about the compensation and support that Compass gives agents.
In a statement, Realogy denied Compass’ accusation and cited its rival’s “losing battle to hide Realogy’s claims away in arbitration.”
“Compass has now come up with fictional and meritless counterclaims to further camouflage its unlawful behavior,” it said. “We are pleased that the Court has allowed the case to proceed so that we can prove our claims, including this latest attempt to manufacture disinformation about the integrity of our company and our executives.”
As of last year, Compass had 18,000 agents and was the No. 3 brokerage in the country with $91.3 billion in 2019 sales, according to research firm Real Trends. (Realogy was No. 1 with $170.1 billion in sales.) Valued at $6.4 billion after a 2019 funding round, Compass filed confidentiality to go public earlier this month.
But since launching in 2012, Compass has roiled the industry by aggressively recruiting top agents and acquiring smaller firms. (Last week, REBNY fined Compass $250,000 for improperly going after its competitors’ exclusive listings.)
In its counterclaim, however, Compass said Realogy was to blame for “persistent intimidation” and “harassment” of agents who leave to join Compass. And it accused Realogy of refusing to release exclusive listings when an agent departs.
In one case, when a top-producing agent in Malibu left Coldwell Banker for Compass, Coldwell Banker’s regional president Jamie Duran sent a letter “maligning the departed agent,” the suit said. Duran urged Coldwell Banker agents to share the letter with the former agent’s clients. The complaint also cited examples of a Realogy employee threatening to “destroy” a former colleague’s office or make Compass “pay.”
In its counterclaim, Compass said Realogy’s focus on Compass “has bordered on obsession,” yet it hasn’t lifted its “sagging fortunes or reversed the exodus of its most successful employees and agents.”