Recent lawsuits highlight the risks related to the departure of key employees and agents from brokerage firms. In two recent cases, Douglas Elliman of Westchester, LLC v. Theiss (No. 58059/2015, 2017 WL 3159223 (N.Y. Sup. Ct., Westchester Cty., June 20, 2017)) and Douglas Elliman, LLC v. Steinberg (2017 Slip Op 31047 (N.Y. Sup. Ct., New York Cty., May 16, 2017), several important issues are addressed of which all brokerage firms, as well as managers and licensed salespersons, should be aware. Both cases involved former employees and agents of a brokerage firm being sued for soliciting and/or recruiting other employees and agents to leave the former firms and to join their new firms. Each of these cases also involved allegations that these former agents and employees misappropriated confidential and proprietary information belonging to their prior firms.
The Cases: The Facts and Circumstances Surrounding the Departure
In Douglas Elliman of Westchester, LLC v. Theiss, the jury awarded the plaintiff brokerage firm $4.75 million in damages. In this case, the manager of the firm allegedly solicited salespeople and encouraged them to leave Douglas Elliman and move to the competitor firm, William Raveis Real Estate. As reported by the National Association of REALTORS® (“NAR”) in a press release, the competitor attempted to recruit sales agents from the firm previously and “[a]llegedly, the Competitor asked the Manager to reman with the Employer for a period before moving to the Competitor so that she could recruit salespeople and also bring listings to the competitor.” The Manager eventually moved to the competitor firm and eleven sales agents also moved to the new firm. It was additionally alleged that the manager copied and misappropriated confidential information belonging to the prior firm.
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