Coldwell Banker Faces Poaching Accusations in Court

Companies wrangling workers from their competitors’ grasp is nothing new. In fact, it happens all the time. The employment and recruiting market is valued at $4.4 billion statewide, according to IBISWorld data.

But the manner in which Coldwell Banker reportedly recruited workers resulted in a lawsuit.

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Update 5/20/24: In February 2024, a California state judge issued a directed verdict for Coldwell Banker’s Orange County division in a case where a rival real estate company, First Team Real Estate, accused it of poaching employees and stealing trade secrets. After six weeks of hearing evidence, though, Superior Court Judge Sheila Recio was not persuaded by First Team’s case (Source: Law 360).

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First Team Real Estate alleges that Coldwell Banker management improperly groomed and employed 80 real estate agents from its Newport Beach, Huntington Beach and Mission Viejo offices along with four of their top managers.

“The allegations are that they were encouraging current employees of their competitor to do things that would later lead them to be able to take certain listings,” said Micah Nash, a business litigator at the Delahunty & Edelman LLP.

A jury trial began last week on January 18 with Civil Panel Judge Sheila Recio presiding. The lawsuit was filed in 2018 in Orange County Superior Court.

The impact of COVID-19 is probably the primary reason for the delay, according to Nash.

“Starting in March of 2020, most courts completely shut down in person proceedings and that lasted off and on for a couple of years. It put cases into a huge backlog,” he said.

Coldwell Banker Allegedly Stole Trade Secrets

First Team’s complaint alleges that Coldwell Banker stole trade secrets and confidential information, such as recruitment and marketing plans.

“Usually it’s fine to recruit your competitors’ employees to try and get them to come work with you,” Nash said in an interview. “The problems arise if they bring with them confidential information that they only know because they work for your competitor, and you attempt to then get them to share that information and trade on it.”

First Team Real Estate, which is seeking unspecified monetary damages, also sued three former managers whom they accuse of violating job contracts by improperly recruiting First Team employees. However, the three managers, Debbie Lewandowski, Farshid Karamzadeh and Alan Kleindienst, counter sued alleging that provisions in the agreement were unlawful because they prevent job mobility.

Although there is no law against solicitation, many companies include such language in employment agreements, which prevents them from soliciting colleagues after they leave for a specified period of time.

“There’s nothing in the law preventing solicitation of former colleagues without a contract in place on that subject,” Nash told OrangeCountyLawyers.com.

As previously reported in the Orange County Register, one of the managers, Ms. Lewandowski, plotted her move from First Team Real Estate potentially months in advance before she resigned in 2015 so that she could allegedly court employees with gifts, such as tickets to Disneyland.

The lawsuit also accused Coldwell Banker Southern California division of naming their alleged practice of wooing talent from competing real estate brokerage firms Project Normandy.

“It’s not surprising and it’s done right all the time,” Nash added. “Obviously, the plaintiff feels like the defendant did it in a way that was over the line. That’s for the court and jury to decide.”