Compass Manager Sued by Coldwell Banker

Lawsuit Alleges Former Employee Stole “Trade Secrets”

The chance to sell multimillion-dollar Montecito mansions like this Freehaven Drive estate fuels competition for real estate companies like Compass, currently in a suit with Coldwell Banker over estate agents.

Real estate broker Coldwell Banker Residential Brokerage is suing John Nisbet, former manager of its Montecito and Santa Barbara branch, for allegedly stealing company “trade secrets” it says his new employer, Montecito’s luxury real estate platform Compass, used to poach top agents. Coldwell seeks restitution, damages, and attorney’s fees.

In the days before Nisbet’s resignation, the lawsuit filed January 11 charges, he emailed himself a document containing the commissions, rankings, and past four years’ earnings of over 60 Montecito real estate agents. One day before he resigned, the lawsuit claims he emailed himself Coldwell’s Santa Barbara “market share report,” regarding “which [Coldwell] offices are the most successful and have the top-producing sales associates.”

Additionally, court filings allege Nisbet texted Compass CEO Robert Reffkin pictures and contact information of his former employer’s strongest agents with the message, “This is the top tier of agents we want.” The lawsuit further contends that since Nisbet resigned, Reffkin solicited over 25 Coldwell employees — at least one of whom took a job at Compass.

In response, Compass denied having used the information, which Nisbet says he sent only to prove his qualifications for the job. The company contends forensic evidence shows the emails weren’t forwarded. “[Coldwell] is unable to win in the market, so [Coldwell] has taken its fight to the courtroom by bringing a ‘specious action as a preemptive strike for anticompetitive purposes,’” stated a document filed in court.

Last month, Judge Thomas Anderle denied Coldwell’s preliminary injunction that would have forced Compass to return the documents and prevented Compass from hiring any more Coldwell agents. As first reported in Pacific Coast Business Times, the judge called the “trade secrets” readily ascertainable to Coldwell’s competitors and cited California’s laws in favor of employee mobility.

“Coldwell Banker’s attempt to stifle competition by ​blocking its agents from leaving to join Compass was soundly rejected by the court,” said a Compass spokesperson. “The judge who denied Coldwell Banker’s preliminary injunction and lifted the earlier temporary restraining order, called their efforts ‘draconian.’ Furthermore, the judge stated that ‘[Coldwell Banker] provides no basis for the court to find that any of the information at issue constitutes protectable trade secrets.’”

“The case is far from over. The court recognized our right to seek restitution and compensatory damages for the conduct alleged in the complaint, and we will continue to pursue these legal remedies vigorously,” said a spokesperson from Coldwell Banker.

Since it was founded in 2013, Compass has been sued three times. In 2014, New York real estate giant NRT took the company to court, claiming Compass hacked a database to steal trade secrets from NRT’s subsidiary Citi Habitats. In 2015, NRT offshoot Concoran Group sued again, alleging Compass accessed confidential data and poached top agents. Both cases were settled and ended in Compass returning information.

The same year, Hamptons real estate broker Saunders & Associates won a restraining order against Compass after an ex-employee who moved to Compass stole 11,600 listings and confidential information.

Representing Coldwell are attorneys Eric Amdursky, Hayley Reynolds, and Ryan Rutledge of O’Melveny & Meyers. Nisbet’s attorney is Michael Shipley of Kirkland & Ellis. The case returns to court on April 29.


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