Real Estate

Compass Files Countersuit Against Realogy

The 77-page complaint says the modernization of the real estate industry poses an ‘existential threat’ to Realogy.

Roughly 18 months after Realogy initially sued rival brokerage Compass, the latter is hitting back with a counter lawsuit, alleging that Realogy is “unable to compete with Compass in the marketplace,” and “its affiliated entities instead have sought to stop the bleeding by any means necessary — including lying, stealing, and cheating.”

The 77-page complaint, which was filed Thursday in New York State Supreme Court says the modernization of the real estate industry poses an “existential threat” to Realogy, the nation’s largest real estate holding company.

“Proven unable to compete with Compass in the marketplace, Realogy and its affiliated entities instead have sought to stop the bleeding by any means necessary — including lying, stealing, and cheating,” the complaint read. “They have waged a war of disinformation by deliberately flooding the market with false information about Compass.”

“And they have promoted anti-competitive and retributive conduct to impede the free movement of agents and employees, leaving countless independent contractor agents and employees—as well as Realogy’s own homeowner customers — to suffer as the collateral damage.”

Compass accuses Realogy of being complacent in the face of industry innovation, specifically saying that complacency has diminished Realgogy’s market share and stock price. Realogy is coming off the heels of a record-setting quarter for the company, but its share price struggled in 2019 and the early days of the pandemic.

The complaint continues to accuse Realogy of harassing agents who left affiliated brokerages for Compass, as well as outright stealing confidential information.

“While Realogy’s focus on Compass has bordered on obsession, it has not lifted Realogy’s sagging fortunes or reversed the exodus of its most successful employees and agents to Compass and other competitors,” the complaint reads.

“But Realogy’s scheme shows no sign of abating and its efforts to maliciously harm Compass only appear to be intensifying, leaving Compass with no choice but to say enough is enough,” the complaint continues. “The time has come for Realogy to be held accountable.”

The complaint also accuses Realogy of treating Compass differently than other brokerages by refusing to release exclusive listings associated with an agent departing for Compass and forbidding homeowners from contacting those agents.

Compass itself has run into some trouble in the past over sharing listings and was recently hit with a $250,000 fine by The Real Estate Board of New York over violating the trade group’s co-listings agreement, according to a report from The Real Deal.

The complaint specifically calls M. Ryan Gorman, the CEO of Coldwell Banker Real Estate, the leader of Realogy’s anti-Compass efforts, pointing to an internal memo from Gorman that blasted Compass.

Gorman has, in the past, been vocal about Compass’ recruiting efforts. He previously compared Compass’ recruitment of agents and efforts to gain market share in competing marketplaces to “shoplifting,” at Inman Connect Las Vegas in 2019.

Realogy initially sued Compass in July 2019, accusing the brokerage of “unfair business practices and illegal schemes to gain market share at all costs.” The complaint specifically accused Compass of stealing from, interfering with and disparaging its competitors.

The original lawsuit said Compass offers compensation packages to competitor’s employees and agents that are so inflated that Compass is sure to operate at a loss, all in its quest to gain market share.

In December, a judge denied Compass’ motion to compel the two sides into arbitration.

A Compass source said the company filed the countersuit to stand up for agents, and against Realogy’s anti-agent behavior. Compass declined to comment on the record for the story.

A spokesperson for Realogy, in a statement, called the lawsuit “fictional and meritless.”

“After a yearlong 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,” the statement reads. “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.”

“Realogy will always stand up for ethics and for open, honest, and fair competition in the industry,” the statement continues. “Our decision to fight for a level playing field is an extension of our commitment to compete vigorously — but ethically — across our brands and businesses.”

Email Patrick Kearns

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