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FILED: NEW YORK COUNTY CLERK 02/06/2018 03:06 PM INDEX NO.

151148/2018
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 02/06/2018

SUPREME COURT OF THE STATE OF NEW YORK


COUNTY OF NEW YORK
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L.I. CITY VENTURES LLC, d/b/a MODERN Index No.

SPACES,
VERIFIED COMPLAINT
Plaintiff, ',

-against-

URBAN COMPASS, INC. d/b/a COMPASS,


and JESSICA MEIS,
'
Defendants.
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("Plaintiff"
Plaintiff L.I. City Ventures LLC, d/b/a Modern Spaces or "Modern Spaces"),

by its attorneys, Warshaw Burstein, LLP, alleges as and for its Verified Complaint against

defendants Urban Compass, Inc. d/b/a Compass ("Compass") and Jessica Meis ("Meis")

"Defendants"
(collectively, the "Defendants"), as follows:

NATURE OF THE ACTION

1. This case represents the latest in a long string of lawsuits against the real estate

startup Compass, whose main corporate strategy appears to willfully and unlawfully rely on

"poaching" Spaces'
undermining its competition by unlawfully Modern real estate agents while

Spaces'
simultaneously misappropriating Modern confidential and proprietary information to gain

an unfair advantage in a competitive market.

2. Accordingly, Modern Spaces seeks to recover compensatory and punitive damages

to compensate it for (a) business that has been improperly diverted to Defendants through their

Spaces'
unfair competition, (b) theft of trade secrets, (c) unlawful interference with Modern

exclusive listing agreements, and (d) damage to its public reputation and goodwill.

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THE PARTIES

3. Plaintiff Modern Spaces is a corporation duly organized and existing under the laws

of the State ofNew York, with a business address located at 47-42 Vernon Boulevard, Long Island

City, New York 11101.

4. Defendant Compass is a corporation organized under the laws of the State of

Delaware, with a principal place of business a 90 Fifth Avenue, 3rd Floor, New York, New York

10011 and which does business in New York County, New York.

5. Upon information and belief, Defendant Meis is an individual, residing the in the

State of New York.

JURISDICTION AND VENUE

6. Jurisdiction is proper pursuant to C.P.L.R. §§ 301 and 302(a) in that, among other

things, Defendants have all transacted business and committed tortious acts within the State of

New York.

7. Venue is proper pursuant to C.P.L.R. §§ 501 and 503 in that at least one of the

parties resides or has its principal place of business within New York County, New York.

FACTUAL ALLEGATIONS

Spaces'
aces'
A. Modern S Business

8. Modern Spaces is an independently-owned real estate brokerage firm that

specializes in residential and commercial sales and leasing, as well as project development and

marketing in New York City.

9. Founded and developed in Long Island City, Modern Spaces has invested in

community growth through participation in local events, fundraisers, and community service.

Since its launch in 2008, Modern Spaces has grown to capture a large percentage of the residential

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market share in Long Island City and has been credited with the transformation and growth of the

community.

10. Modern Spaces devotes, and has devoted, substantial time, energy and resources

into building a valuable brand and goodwill by nurturing relationships with clients, developers,

and property owners.

B. Jessica Meis's Association With Modern Spaces

11. Meis began her association with Modern Spaces as a real estate agent in November

2017, executing a formal Independent Contractor Relationship Agreement with Modern Spaces in

July 2017 (the "Agreement").

12. The Agreement is a valid and enforceable contract that imposed upon Meis certain

contractual obligations, including, without limitation, the obligation to adhere to the requirements

of New York Real Property Law Article 12-A.

13. The Agreement also required Meis to engage in fair and honest dealings, and to

comply with the laws of the New York Department of State, the Real Estate Board Of New York

("REBNY"), the RLS Universal Co-brokerage Agreement, and the REBNY Code of Ethics.

14. During her time with Modem Spaces, Meis was engaged as a real estate sales agent.

15. While working as a real estate sales agent for Modern Spaces, Meis was privy to

valuable, non-public information relating to clients, listings, business operations, strategies, assets

and the financial affairs of Modern Spaces. Significantly, this included non-public information

Spaces'
about Modern present and future projects and developments-highly confidential

information that is valuable to a competitor.

16. Meis also had access to highly confidential and proprietary information, including

Spaces'
Modern Customer Management System ("CMS") database, landlord listings, developer

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information, and leads generated by Modern Spaces. These client and owner lists contained

valuable, non-public information that was developed or compiled by Modern Spaces over years of

diligence, hard work, and considerable expense.

17. Modern Spaces maintains this confidential and proprietary information on a

password-protected database. Only authorized employees and licensed agents with login

credentials are able to access this database, and when an authorized user leaves Modern Spaces,

his or her login credentials are immediately disabled.

Spaces'
18. To further protect Modern valuable confidential and proprietary

information, the Agreement contained several provisions directly limiting Meis's access and use

of this information.

19. The Agreement set forth that all printed, written or computerized information

relating to the business of Modern Spaces, including, without limitation, open listings, exclusive

listings, co-exclusive listings, co-brokers listings, names, addresses and telephone numbers

pertaining to or in connection with any such listings, is deemed the confidential and proprietary

Information"
information of Modern Spaces (the "Proprietary Information").

20. The Agreement inter alia further provided that, upon termination of Meis's

association with Modern Spaces, she was (a) obligated to return all written materials, copies and

notes relating to the Proprietary Information, and (b) prohibited from utilizing or disclosing this

Proprietary Information to others without written permission from Modern Spaces.

21. In addition, the Agreement provided that Meis would not directly or indirectly

solicit any current or former employee, independent contractor, broker or salesperson of Modern

Spaces for employment at a competitor.

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C. Compass's Systemic Pattern of Exploitation and Unfair Competition

22. Meis terminated her affiliation with Modern Spaces on January 22, 2018, and

announced that she planned on working for Compass.

23. Upon information and belief, Defendants conspired to steal and/or unlawfully

Spaces'
appropriate Modern confidential information and Proprietary Information to compete

unfairly with Modern Spaces.

24. Upon information and belief, Compass and Meis misappropriated, copied, and

Spaces'
otherwise took Modern confidential information and Proprietary Information, in direct

breach of the Agreement.

25. In the days prior to Meis's resignation, she emailed to her personal account dozens

Spaces'
of files from Modern networks and CMS system including proprietary customer and

listing data, as well as internal company documents and forms.

26. Upon information and belief, the theft of competitor listings and unethical

competitors'
solicitation of real estate agents and employees is part of an organized and deliberate

"poach" competitors'
scheme by Compass to agents and employees and misappropriate their trade

secrets and confidential information.

27. In addition to inducing Meis to breach her Agreement with Modern Spaces, upon

Spaces'
information and belief, Compass blatantly misappropriated and stole Modern proprietary

materials, including marketing photographs. Consistent with Compass's disregard for fair and

Spaces'
ethical business practices, Compass has taken Modern listing photographs-paid for, and

owned Modern —


Spaces-and posted them on its website. A screenshot of Compass's
by, website,

Spaces' A."
showing Modern branded listing photographs, is annexed hereto as "Exhibit

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28. Upon information and belief, Compass provided Meis (and other Modern Spaces

agents) with step-by-step instructions to induce property owners to terminate their exclusive listing

agreements (the "Listing Agreements") with Modern Spaces and enter into separate agreements

with Compass to show and market those properties.

Spaces'
aces'
D. Defendants Unlawful Actions Has Harmed Modern S Business

29. Upon information and belief, Compass is intentionally targeting Modern Spaces

and its agents in its efforts to quickly break into the Queens real estate market. Rather than attempt

to engage in lawful competition, Compass has instead engaged and recruited several Modern

Spaces'
Spaces agents with the intention of stealing and otherwise misappropriating Modern

confidential information and Proprietary Information.

30. Upon information and belief, Compass has targeted Modern Spaces to gain an

unfair competitive advantage over Modern Spaces in the Queens real estate market.

31. These unlawful and unethical actions have caused (and are expected to cause)

clients to terminate their listings with Modern Spaces, causing damage to Modern Spaces.

32. The actions of Defendants have caused damage to Modern Spaces that will only

increase as Defendants (a) use the confidential information of Modern Spaces, including, without

limitation, the Proprietary Information, to undermine Modern Spaces, and (b) lure agents and

clients away from Modern Spaces.

FIRST CAUSE OF ACTION

(Breach of Contract - Violation of Non-Disclosure Provision by Meis)

33. Plaintiff repeats and realleges the allegations contained in the foregoing paragraphs

as if fully set forth herein.

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34. Meis was associated with Modern Spaces as an independent contractor pursuant to

the Agreement.

35. Modern Spaces has fulfilled all of its obligations to Meis under the Agreement.

36. As set forth above, Meis has breached material terms of the Agreement by, among

Spaces'
other things, misappropriating and disclosing Modern confidential information and

Proprietary Information and using it to unfairly compete with Modern Spaces.

37. In doing so, Meis also violated the New York State, Department of State rules,

which provide, in part:

A real estate salesperson shall, upon termination of his association


with a real estate broker, forthwith turn over to such broker any and
all listing information obtained during his association whether such
information was originally given to him by the broker or copied
from the records of such broker or acquired by the salesperson

during his association.

19 NYCRR § 175.14.

38. As a result of Meis's violation thereof, and her legal obligations under the

Agreement, Modern Spaces has suffered and will continue to suffer irreparable harm.

39. As a result of Meis's breach of the Agreement, Modern Spaces has suffered, and

will continue to suffer, damages, including the loss of commission fees, business opportunities,

damage to its goodwill and otherwise, in an amount to be determined at trial.

SECOND CAUSE OF ACTION

(Tortious Interference With Contract Against Compass-The— Agreement)

40. Plaintiff repeats and realleges the allegations contained in the foregoing paragraphs

as if fully set forth herein.

41. The Agreement is a valid and enforceable contract that exists between Modern

Spaces and Meis.

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42. Upon information and belief, Compass had knowledge of the Agreement, including

the details of the non-disclosure provision.

43. Meis has materially breached the Agreement by, among other things,

misappropriating and disclosing the confidential information and Proprietary Information and

using it to unfairly compete with Modern Spaces.

44. Compass had actual knowledge of the Agreement between Modern Spaces and

Meis.

45. Compass tortiously interfered in the contractual relationships between Modern

Spaces and Meis by, among other things, directing, encouraging and inducing her to breach her

contractual obligations to Modern Spaces.

46. As a result of Compass's tortious interference in the contractual relationships

between Modern Spaces and Meis, Modern Spaces has suffered, and will continue to suffer,

irreparable harm.

47. As a result of Compass's tortious interference, Modern Spaces has suffered

damages in an amount to be determined at trial.

48. Compass's actions were committed knowingly, willfully and in conscious disregard

Spaces'
of Modern rights. Accordingly, Modern Spaces is entitled to recover punitive damages in

an amount to be determined at trial.

THIRD CAUSE OF ACTION

(Tortious Interference With Contract Against —


Compass-The Listing Agreements)

49. Plaintiff repeats and realleges the allegations contained in the foregoing paragraphs

as if fully set forth herein.

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50. The Listing Agreements are valid contracts that exist between Modern Spaces and

property owners.

Spaces'
51. Upon information and belief, Compass had knowledge of Modern Listing

Agreements when it hired Meis, who had access to and had been showing the properties for

Modern Spaces.

52. Pursuant to Compass's written instructions, Meis induced the owners of the

properties to terminate Listing Agreements with Modern Spaces and enter into separate

agreements with Compass.

53. The actions of Compass have caused such owners to breach such Listing

Agreements with Modern Spaces.

54. The rules of the New York Department of State, Division of Licensing Services

provide that:

No real estate broker shall negotiate the sale, exchange or lease of

any property directly with an owner or lessor if he knows that such

owner, or lessor, has an existing written contract granting exclusive

authority in connection with such property with another broker.

19 NYCRR § 175.8.

Spaces'
55. Compass knowingly and intentionally interfered with Modern exclusive

listing contracts, in direct violation of 19 NYCRR § 175.8.

56. Compass's interference with the Listing Agreements has caused Modern Spaces to

suffer damages in an amount to be determined at trial.

57. Compass's actions were committed knowingly, willfully and in conscious disregard

Spaces'
of Modern rights. Accordingly, Modern Spaces is entitled to recover punitive damages in

an amount to be determined at trial.

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FOURTH CAUSE OF ACTION

(Unfair Competition Against All Defendants)

58. Plaintiff repeats and realleges the allegations contained in the foregoing paragraphs

as if fully set forth herein.

59. By virtue of her affiliation with Modern Spaces, Mies was placed in a position of

Spaces'
trust and had access to Modern valuable confidential information, Proprietary Information

and trade secrets relating to its business in Queens, New York.

Spaces'
60. This confidential and proprietary information is not known to Modern

competitors or to the public at large, and gives Modern Spaces a competitive advantage against

competitors.

61. Defendants have acted in bad faith and have engaged in unfair competition with

Spaces'
Modern Spaces by misappropriating and exploiting Modern confidential information,

including, without limitation the Proprietary Information, for their own benefit.

62. Thus, Compass - a relatively new player in the Long Island City real estate market

- now has access to the valuable customer and landlord listings that has taken Modern Spaces

years to compile, thereby gaining an unfair competitive advantage in the Queens real estate market.

Defendants' Spaces'
63. As a result of misappropriation of Modern confidential and

proprietary information, Modern Spaces has suffered and will continue to suffer irreparable harm

to its business reputation and goodwill for which Plaintiff has no adequate remedy at law.

Defendants' Spaces'
64. As a result of misappropriation of Modern trade secrets,

confidential information and Proprietary Information, Modern Spaces has suffered damages in an

amount to be determined at trial.

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FIFTH CAUSE OF ACTION

(Tortious Interference with Prospective Economic Relations Against All Defendants)

65. Plaintiff repeats and realleges the allegations contained in the foregoing paragraphs

as if fully set forth herein.

66. Modern Spaces has invested substantial time and resources in acquiring and

nurturing its client relationships and has a reasonable expectation of continuing to do business with

each of those clients.

67. Defendants tortiously interfered with the economic relationships between Modern

Spaces and its clients through unlawful means, including but not limited to unfair competition and

Spaces'
misappropriation of Modern trade secrets and confidential information.

68. As a direct and proximate result of Defendants tortious actions, Modern Spaces has

suffered and will continue to suffer irreparable harm to its business and goodwill for which

Plaintiff has not adequate remedy at law.

69. As a direct and proximate result of Defendants tortious actions, Modern Spaces has

suffered damages in an amount to be determined at trial.

WHEREFORE, Plaintiff demands judgment against Defendants as follows:

a. awarding Modern Spaces compensatory damages in an amount to be

determined at trial;

b. awarding Modern Spaces punitive damages in an amount to be determined

at trial;

Spaces'
c. enjoining Defendants from utilizing any of Modern confidential

and proprietary information;

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d. awarding Modern Spaces the costs and disbursements of this action,

attorneys'
together with fees; and

e. awarding Modern Spaces such other and further relief as this Court may

deem just and proper.

Dated: New York, New York

February 5, 2018

Yours,
WARSHA W RSTEIN, LLP

By: Mac A..I~ata


,,~A
/'ittpfneyy at'Plaintiff
i'' 11th
8 5 Fift
«F55 Avenue, FlOOr
~'a ~'
New York, NY 10017
Tel: 212-984-7740
Email: mlavaia@wbny.com

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VERIFICATION

STATE OF NEW YORK )


) ss.:
COUNTY OF NEW YORK )

ERIC BENAIM, being duly sworn, states:

1. I am the President and Founder of Modern Spaces, LLC, the named


plaintiff in this action. Modern Spaces, LLC is a corporation formed under the laws of the State
of New York.
2. I have read the foregoing Verified Complaint and know the contents

thereof, and the same is true to my own knowledge, except as to the matters therein stated to be
alleged upon information and belief, and as to those matters ve o be true.

ERIC BENAIM

Sworn to before me this


5*day of f , 2018

lic

u-o n.t-sis
Publio State of New Yodt
Notary
No.: OOLAOOF2OBO
Qualified ta Queene County
Conunlesion Euphee AprO 15, 2018

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