Compass seeks arbitration to end Realogy lawsuit
Real estate brokerage Compass wants to talk things out with Realogy, the largest U.S. residential brokerage, to bring their six-month legal war to an end.
SoftBank-backed Compass filed a motion on Nov. 25 asking a New York judge to stay the legal proceedings and force the two companies to seek arbitration. The filing said Realogy was using the lawsuit “as an instrument in a public relations campaign targeting Compass.”
The request is in response to a lawsuit filed by Realogy in July that claimed New York-based Compass engaged in illegal activities in a bid to edge out its competitors “at all costs” in order to gain market share. Realogy, headquartered in Madison, New Jersey, is the nation’s biggest brokerage measured by the dollar amount of real estate sold.
Compass was co-founded in 2012 by Ori Allon, who sold previous startups to Google and Twitter, and Robert Reffkin, who rose through the ranks of Goldman Sachs to become chief of staff to the investment bank’s president.
In July, Compass announced it had raised $370 million in its latest funding round that valued the company at $6.4 billion. Realogy, publicly traded on the New York Stock Exchange, has seen its market cap tumble from about $7 billion 2015 to about $1 billion this month.
The backing of Softbank, a Japanese conglomerate that was an early investor in tech superstars Uber and WeWorks, used to be a selling point for Compass. After the WeWorks implosion and the disappointing IPO of Uber, Compass has shunned comparisons.
“Over the past few weeks we have seen comparisons being drawn between Compass and WeWork simply because we share a single investor,” Chief Financial Officer Kristen Ankerbrandt wrote in an October email obtained and published by Bloomberg. “To be clear, our businesses are quite different – in terms of our business model, capital structure, customers, culture and investments.”
Representatives of Realogy declined to comment, and Compass did not respond to an email seeking comment.