REBNY fires back at Compass in lawsuit over recruiting

Trade group says brokerage’s growth undermines claim of being stymied

Compass' Robert Reffkin and REBNY's James Whelan. (Getty, Whelan via Anuja Shakya)
Compass' Robert Reffkin and REBNY's James Whelan. (Getty, Whelan via Anuja Shakya)

Sparks are flying in the legal feud between the Real Estate Board of New York and Compass.

REBNY filed a motion Tuesday to dismiss the brokerage’s federal lawsuit against it, saying Compass’ allegations lack credibility.

Compass sued in March, accusing the trade organization of conspiring with its biggest New York City rivals, the Corcoran Group and Douglas Elliman.

All three brokerages are REBNY members and subject to a REBNY policy that governs how New York agents share listings. Compass’ suit says its growth in New York City was stymied by changes in 2018 to the policy, known as the universal co-brokerage agreement.

Compass claims REBNY has applied the agreement in a “discriminatory manner” that limits its ability to recruit agents. REBNY fined Compass $250,000 in January for repeatedly violating its terms.

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For exclusive listings, the agreement bars agents from further contact with their clients if they leave the firm that has the exclusive. In court documents, REBNY argues that the UCBA applies to its members equally and does not prevent brokerages from retaining exclusive listings or from recruiting agents.

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“Stripped of its loose use of antitrust buzzwords, bluster, marketing puffery, and invective, [Compass’] complaint does not come close to alleging plausible claims,” wrote REBNY’s lawyer on the case, Claude Szyfer of Stroock.

James Whelan, president of REBNY, called Compass’ allegations “meritless.”

“Compass has grown rapidly despite its hollow claims of anti-competitive behavior and continues to successfully recruit agents,” he said in a statement.

The Real Deal’s annual rankings of the city’s brokerages reflect that growth. In 2018, Compass had 872 agents and closed just over $2 billion in sell-side deals in Manhattan. Last year the brokerage was the city’s top recruiter, finishing the year with 2,485 agents and more than $2.5 billion in sell-side deals closed in Manhattan — and $4 billion if Brooklyn and Queens are included.

Compass, which went public last month, has nearly 21,000 agents across 47 different U.S. markets. The company lost $212.4 million in the first quarter, despite revenue jumping, because expenses ballooned.

A spokesperson for Compass called REBNY’s motion to dismiss “without merit.”

“We intend to oppose it and move forward with our case,” the spokesperson said in an email.