Compass has asked a New York state federal court to drop its antitrust lawsuit against the Real Estate Board of New York.
According to a letter filed by Compass on Friday to the Southern New York District Court, the brokerage wishes to settle the dispute with the state board organization outside of the courtroom.
“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. However, due to procompetitive 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 letter stated.
The brokerage said that the dismissal of the suit is still appropriate at the current stage of litigation, as discovery is not scheduled to finish for another two months and neither party has filed a motion for summary judgement.
Compass also asked that the court dismiss the suit without prejudice, giving the brokerage the option to sue again if anti-competitive behavior continues. However, it said that it does not plan to file another complaint.
In addition, Compass claimed that REBNY would not be prejudiced by the voluntary dismissal — even with the possibility of the suit being refiled — as both the Supreme Court and Second Circuit have found that “starting a litigation all over again does not constitute legal prejudice.”
“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 stated.
In the initial complaint, filed in March 2021, Compass claimed that the state board conspired to impede competition between brokerages, violating the state’s Donnelly Act and the Sherman Antitrust Act. According to the complaint, REBNY and co-conspirators The Corcoran Group and Douglas Elliman LLC (both of whom are not named in the suit as defendants) selectively enforced Article II, Section 7 of the REBNY Universal Co-Brokerage Agreement Rules, deliberately blocking agents from changing brokerages.
In the complaint, Compass stated that the rule allows brokerages to trap home sellers with the firm, even if they want to follow their original agent to their new brokerage.
REBNY filed motions to dismiss the suit in March and July 2022. In the July motion, REBNY claimed that Compass could not allege antitrust claims because it had failed to define its relevant market in which competition was hindered and did not meet the standard to plead antitrust injury.
These claims were dismissed, as a U.S. District Court judge found that Compass’ complaint correctly alleges harm in the relevant market, which is companies that provide brokerage services.
However, a Second Circuit Court judge in the Southern District of New York granted in March REBNY’s dismissal motion against Compass’ claim of tortious interference with its business prospects.
In 2021, Compass was the No. 1 brokerage in the country by sales volume, recording $251 billion in volume, according to the 2022 RealTrends 500 Rankings. The firm famously used large commission splits and signing bonuses to entice agents to join the firm. As the housing market has cooled over the past six months, the firm has stopped these programs.
Compass did not wish to comment on the lawsuit and requests for comment from REBNY had not been returned at the time of publication.