Compass has gotten on the wrong side of one former agent for allegedly helping her team members steal her listings and their attendant commissions.
Heavily funded New York City-based real estate brokerage Compass is famous for snatching up top producers in markets across the country. But it seems the firm has gotten on the wrong side of one of those agents for allegedly helping her former team members steal her listings and their attendant commissions.
Jill Schwartz, team leader of the Jill Schwartz Group in the Washington D.C. area, on Monday filed a lawsuit against Compass and three former team members — Ray Ferrara, Alexandra Thomas Schwartz and Danielle Spira — alleging the team members unlawfully conspired to form their own team at Compass while breaking oral and written agreements with her and continuing to use her technology, tools, apps, website, customer base and leads.
At the same time, Schwartz alleged Compass failed to support her by not terminating the team members and by not assisting her in getting the commissions she believes she’s entitled to from listings she procured for the team.
“The Defendants acted in concert and as part of a coordinated plan, motivated by greed and self-interest, and in direct contravention of their duty of loyalty, and their duty to use their best efforts on behalf of Plaintiff,” wrote Schwartz’s attorneys in the complaint.
“Compass management in effect condoned the conduct of the Defendant team members and failed to assist Plaintiff in putting a stop to it. Motivated by its own greed and self-interest, Compass supported the Defendant team members rather than Plaintiff. Plaintiff provided Compass with detailed information as to the wrongdoing that the Defendant team members had committed.
“In addition, Plaintiff provided information and documentation that the Defendant team members were not completing their contracts correctly; and that the team members were listing themselves as agents in jurisdictions where they were not licensed. Compass ignored this information, and even used this as a (bogus) reason for Plaintiff to not get paid on the sale at [a listing in] Maryland.”
A Compass spokesperson told Inman Compass had fired Schwartz.
“This agent was asked to leave the company. Our focus remains on building a world-class experience for all of our agents,” the spokesperson said in an emailed statement.
The complaint asks for a jury trial and alleges civic conspiracy, breach of contract, unjust enrichment, misappropriation of trade secrets and violation of the Lanham Act, which protects trademarks.
Schwartz was with Compass from August 2016 to October 2018. She specialized in working with luxury properties and was one of 35 founding members nationwide of Compass’ Sports and Entertainment Division, which caters to athletes and celebrities. Her website boasts “over 200 million in listings and sales.”
She is now an agent at Keller Williams Capital Properties in Bethesda, according to Maryland’s Department of Labor, Licensing and Regulation.
Ferrara, Thomas Schwartz and Spira joined Compass’ Jill Schwartz Group as team members in 2017, according to the complaint.
As part of joining the team, they agreed to work on Schwartz’s behalf; to use her custom digital intellectual property assets, including branded marketing material; to include her name as the team leader on all contracts; and to owe her a duty of loyalty, the complaint said.
In exchange, Schwartz provided the team members with an office to work in, customer leads, tools to be successful (including spending thousands of dollars on integrating the team’s custom website with Compass and spending $500 per month on Instagram to promote the defendants as well as paying for digital and print marketing and search engine optimization) and would share commissions based on a set fee schedule, ranging from 50%-50% to 75%-25% determined from the prior year’s volume, according to the complaint.
But sometime in 2018, Schwartz alleges that the team members — “apparently unhappy or unwilling to share their commissions with Plaintiff” — entered into buyer agency agreements and sales contracts without placing her name on the contracts, intentionally withheld signed contracts from her and entered into listing agreements directly with real estate developers with whom Schwartz had pre-existing agreements.
Then on or around August 27, 2018, Thomas Schwartz allegedly downloaded without authorization Schwartz’s proprietary database containing information about clients, prospective clients, builders, contractors, and “other persons critical to the successful operation of the Plaintiff’s business, and was owned solely by the Plaintiff and the Jill Schwartz Group,” the complaint said.
“[T]his confidential and proprietary database continues to be used by each of the Defendants, and resides within the Compass information technology network as of the date of this Complaint.”
A few days later, Thomas Schwartz informed Schwartz that the three defendant team members would be creating their own team.
“In forming a new team and shutting out the Plaintiff, the Defendant team members fully intended to steal and overtake Plaintiff’s business,” the complaint states. Schwartz subsequently asked that Compass terminate the team members, “explaining that it was impossible to disassociate the perception of the Defendant team members from the Plaintiff.”
“Plaintiff maintains that the highest ethical integrity was essential to Compass culture (as well as Plaintiff’s brand), and that the Defendants violated and dismissed those values,” the complaint said.
“Plaintiff was shocked to eventually learn that Compass had no intention of terminating the Defendant team members. More shocking, Compass aided and supported the Defendant team members in their decision to leave Plaintiff and form their own team.”
“In the real estate business, it is totally unheard of to allow a team to oust their team leader yet still remain a team at the same brokerage. Compass did not have the technology or the internal procedures in place to support the dismantling of the group,” the complaint added.
Schwartz alleges Compass owes her commissions on nine properties ranging in value between $835,000 to more than $5 million.
“The [independent contractor agreement] provided that Compass would be paid a commission of 15 percent of all sales (which would be separate and apart from all monies that were due to agents). Compass owed a duty to protect Plaintiff’s interest in her fees and commission,” the complaint said.
Schwartz’s attorneys describe an example in which a developer was to meet with Schwartz and Compass’ broker “to clarify the confusion that Defendants had created by emailing Plaintiff’s clients.” But the Compass broker cancelled the meeting, called the developer and “decided that the Defendant team members could be the listing agents.”
“Thus, Compass management supported the Defendant team members in their theft of the listings from Plaintiff,” the complaint said.
“The Defendant team members, with the support of Compass, used Plaintiff’s prior record of success, integrity, and awards in obtaining these listings. In addition, the Defendant team members stole Plaintiff’s identity, unique brand, and award-winning transaction volume to increase their profit,” the complaint added.
Schwartz took a leave of absence from Compass on October 24, 2018, according to the complaint.
“The Jill Schwartz Group was cast into complete havoc in the midst of the prime Fall Real Estate Market as a direct consequence of the actions of the Defendant team members. The Defendants created complete chaos for Plaintiff, Plaintiff’s clients, Compass agents, Compass staff and Compass management,” the complaint said.
“Plaintiff has sustained a catastrophic destruction of her livelihood in the time since she left Compass,” the complaint added.
Schwartz’s attorneys ask the court for an injunction to prevent the defendants from using her trade secrets and her trademark, the Jill Schwartz Group.
“The manner in which the Defendant team members are marketing themselves to the public is likely to cause confusion among members of the public,” the complaint said.
“Specifically, it would be very easy for real estate consumers, builders, contractors as well as other real estate professionals to confuse the new team (comprised of Ferrara, Spira and especially, Alexandra Thomas Schwartz) with the old team – The Jill Schwartz Group.
“On information and belief, the Defendant team members intend to use the same or similar words, symbols and marketing materials as were used by the Jill Schwartz Group.”
The complaint demands the defendants pay Schwartz “jointly and severally, in excess of Five Hundred Thousand ($500,000) Dollars compensatory damages, punitive damages, costs, and any other damages this Court deems just and proper.”
Her attorneys allege that, as a result of defendants’ actions, Schwartz has lost business and past and future income.
“In addition, Plaintiff has suffered stress, anxiety, embarrassment, anger, shame, vilification, exposure, and scandal. Moreover, Plaintiff has been hampered in the conduct of her business and personal affairs and she was otherwise damaged,” they wrote.
Schwartz, Ferrara, Spira, and Thomas Schwartz did not respond to requests for comment.
Editor’s note: This story has been updated with a comment from Compass.