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Compass has indicated it wants to settle its antitrust lawsuit against the Real Estate Board of New York, which it accused last year of selectively enforcing a rule that prevents agents from working with clients from their previous brokerage if they jump ship.
The brokerage sent a letter to the District Court for the Southern District of New York seeking to settle its dispute with the state board outside of the courtroom, according to news reports Tuesday.
In the original March 2021 complaint, Compass claimed REBNY, New York’s largest real estate trade group, conspired with Douglas Elliman and the Corcoran Group — neither of which are named in the complaint — to impede competition, a violation of the Sherman Antitrust Act. Compass accused REBNY and the two brokerages of selectively enforcing Article II, Section 7 of the state board’s Universal Co-Brokerage Agreement Rules, blocking agents from switching brokerages.
In its complaint, Compass said the rule allows brokerages to trap property sellers with their original firm, even if they want to follow their original agent to a new brokerage if they switch companies.
“Compass believes the allegations in its Complaint, which survived a motion to dismiss and a motion for reconsideration, are well-supported and are being further supported as discovery progresses,” the letter states. “However, due to pro-competitive changes within the market regarding approaches to agent mobility and referral of listings, and the withdrawal of certain complaints under Article II, Section 7 filed before REBNY by other brokerages, Compass now believes Compass and REBNY should try to resolve their dispute regarding Article II, Section 7 outside of litigation.”
The brokerage said it believes the court should still dismiss the case as the discovery stage is not set to to finish for another two months and neither party has filed a motion for a summary judgement. It also claimed that REBNY would not be prejudiced by voluntary dismissal.
“While Compass hopes to resolve its disputes with REBNY outside of litigation, should there be a need to file the suit anew, the Parties will have the benefit of having already negotiated initial discovery parameters and resolved initial pleading disputes: no substantive issues on the merits have been litigated and REBNY has not sought affirmative relief in its affirmative defenses,” the letter reads.
REBNY has filed motions to dismiss the suit in March and July 2022. In its July motion, it claimed that Compass had no basis for its antitrust claims because it had failed to define the relevant market where it claimed competition was being hindered.
Those claims were dismissed by a U.S. District Court judge who found that Compass’s claims correctly alleged harm in the relevant market. Another judge in the Southern District of New York however granted REBNY a dismissal of Compass’s claim of tortious interference with its business prospects.
Compass has become well known for its aggressive recruitment strategies in recent years, which until a recent slowing of the market included large commission splits, signing bonuses and stock options.
REBNY and Compass both declined to comment on the update.