Just one day after Compass claimed Realogy explored the possibility of selling itself, Realogy punched back, saying in an internal email that the explosive allegations are “not true” and are instead an attempt to “inspire sensational news coverage.”
The email, which Realogy CEO Ryan Schneider sent to employees and agents Saturday, also doubles down on the company’s allegations in a lawsuit that it filed against Compass in July. In the suit, Realogy accuses Compass of engaging in a variety of unfair business practices and of attempting to, essentially, build a monopoly.
Schneider echoed those claims in his email Saturday, arguing that Realogy filed the suit “because of Compass’s illegal and unfair business practices” and that the company believes in “standing up for ourselves and fighting for open, honest and fair competition in the industry.”
“We stand by the allegations in our complaint,” Schneider ultimately concluded in the email, which Realogy disclosed to investors Monday via an 8-K filing with the U.S. Securities and Exchange Commission.
More combatively still, Schneider also fired back at a statement Compass issued Friday claiming that Realogy once floated the idea of selling itself.
“Not surprising to us, they issued a media statement designed to inspire sensational news coverage about Realogy that is simply not true,” Schneider wrote, adding later that “we want to be clear with you that we have never had discussions to sell or merge Realogy with Compass.”
The statement from Compass that Schneider was referencing went out late Friday afternoon. Compass issued the statement in conjunction with a motion to dismiss Realogy’s lawsuit. The statement specifically claimed that Schneider brought up the idea of selling Realogy in a meeting, that he discussed the potential premium his board would have wanted in the event of such a sale, and that he also suggested entering into a joint venture with Compass.
It was not immediately clear when such a meeting might have taken place or who would have been in attendance. Inman on Friday requested additional information from Compass about the alleged meeting, but had not yet received a response as of late Sunday night.
In its motion asking a judge to dismiss the original July lawsuit, Compass also described Realogy’s complaint as an “act of desperation” brought on by “rapidly eroding market share and a plummeting stock price.”
And should the case not be dismissed, Compass threatened to countersue Realogy. Compass’ statement Friday revealed that a potential countersuit “would be based on” the alleged meeting in which it says Schneider discussed selling Realogy.
The bitter respective broadsides from Realogy and Compass over the last several days come at a time of intense competition and disruption in the real estate industry. In Realogy’s case, it operates highly recognizable brands such as Coldwell Banker and Century 21, but just last week also embarked on major structural changes amid a sinking stock price.
Meanwhile, Compass has raised $1.5 billion since its founding in 2013 and is now valued at $6.4 billion, but has also been repeatedly sued over business practices that rivals say are unfair and improper.
A judge will now have to determine whether to kill Realogy’s lawsuit or let it continue. Whatever happens, however, the bad blood between Realogy and Compass seems unlikely to disappear any time soon.
Finally, you can read the full text of Schneider’s Saturday email to employees and Realogy agents below:
On July 10, 2019, we filed a lawsuit because of Compass’s illegal and unfair business practices. We did not make that decision lightly and did so with the full support of our Board of Directors. We believed then – as we do now – that it was 100 percent the right thing to do in standing up for ourselves and fighting for open, honest and fair competition in the industry.
On Friday night, as we expected, Compass filed a motion to dismiss our lawsuit. Not surprising to us, they issued a media statement designed to inspire sensational news coverage about Realogy that is simply not true. Compass’s misleading statement was clearly designed to create distraction for Realogy employees, agents and franchisees on which they could later try to capitalize. While we generally do not comment on pending litigation outside the company or even within the company, we want to be clear with you that we have never had discussions to sell or merge Realogy with Compass.
The reality is that Compass is trying to distract the media and the industry from the core issue of its illegal and unfair business practices, which are part of our lawsuit against them. Most recently, a judge in New Jersey ruled that Compass, in connection with the hiring of a Realogy employee, was complicit in improperly accepting Realogy’s confidential information from that employee, and Compass created a ‘dummy job’ to circumvent his non compete provisions. The judge issued a preliminary injunction against Compass and the former employee.
We stand by the allegations in our complaint. But most importantly, I ask that you not allow Compass’s misleading and intentionally provocative statements to distract you from what you are doing to support our agents and our franchisees every day.