A former Compass agent has filed another lawsuit against the brokerage alleging fraud over its agent compensation practices.
On May 23, San Jose, California-based Mindy Ni filed a complaint alleging Compass “willfully and intentionally misled” her as to the terms of her independent contractor agreement with the brokerage for the purpose of recruiting her and having her join the Compass stock option program.
The complaint also alleges that Compass failed to pay Ni $46,348 in commissions in the sales of two properties. According to licensing records, Ni is now an agent at NRT West, which does business under the Coldwell Banker brand of Compass rival Realogy, now known as Anywhere.
According to the complaint, Ni signed an independent contractor agreement with Compass on May 24, 2019. On March 17, 2021, two of Ni’s former clients filed an ethics complaint against her with the Santa Clara County Association Of Realtors alleging breach of fiduciary duty, concealment of pertinent facts, and failure to provide competent services.
Although Ni sought assistance from her Compass broker and legal counsel was listed among the services Compass allegedly offered Ni as part of its recruiting package, Ni nonetheless “had to engage her own counsel to defend herself, and incurred substantial legal fees,” the complaint states.
Moreover, the complaint alleges that a Compass recruiter told Ni she would be able to buy Compass stock at a deep discount, but she was instead given stock options.
“Plaintiff has no stock trading experience or expertise, and was mislead and induced to give up her hard-earned commission,” the complaint continues.
“Plaintiff did not, as she was led to believe, receive shares of Compass stock in exchange for said commission, but instead was given a ‘stock option grant,’ an option, not a share, to purchase shares of Compass stock at a per share price.
“Later when Plaintiff sought to exercise the option, instead of directly receiving common stock converted from preferred stock, she was force [sic] to pay yet more cash, for the common stock at the market price. In essence, [she] was required to pay twice for the stock that normal PRE-IPO investors or employees would have to pay for only once.”
The complaint alleges that Compass deducted $307,927 from her commissions for stock options, but she ultimately only ended up netting $63,410.79 when she exercised the underlying options and sold the stock, amounting to a net loss of $244,516.21.
The complaint alleges fraud, conversion, unfair business practices, and breach of contract and seeks damages of at least $250,000.
Compass is also currently fighting a separate suit filed by California agents Lisa and Todd Sheppard last year. On June 2, Compass had the suit, which seeks class-action status, removed from the state’s Sonoma County Superior Court to the federal U.S. District Court for the Northern District of California.
In their complaint, the Sheppards, who are currently with Realogy’s Sotheby’s International Realty, said their 2018 contract with Compass included a 90/10 commission split, a signing bonus, a marketing budget, and office space. However, the Sheppards said the one-and-a-half-page contract didn’t mention several major deductions that came from their split.
The duo said Compass deducted marketing and other expenses from their split and engaged in price-fixing. When their team earned a commission of less than 5 percent for a home sale, Compass made another deduction, which the duo said is “unique and unprecedented in the real estate profession.”
Furthermore, the Sheppards said Compass misled agents to believe their agent-equity plan would include access to common stock. “Compass failed to disclose to plaintiffs and class members that they would receive an inferior level of stock, not the company’s shares of common stock,” the complaint read.
Asked for comment on the Ni and Sheppard cases, a Compass spokesperson told Inman, “In each case, the former agents had an agreement with the company. All we are doing is asking them to abide by it, and we think that will become clear as the cases progress.”
Compass declined to comment on why the company decided to move the Sheppard case to a federal district court.
Ni and the Sheppards aren’t the only California-based agents to make similar claims against Compass. In January 2021, former Compass agent Greg Maffei filed a class-action suit against the company for allegedly unduly deducting expenses, engaging in price-fixing, misleading agents about its equity program, and “exercising a level of control” appropriate for W-2 employees, not independent contractors.
That case settled and was dismissed in May 2021.
Editor’s note: This story includes previous reporting from Inman reporter Marian McPherson.
Email Andrea V. Brambila.
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