Saunders Sues Compass, Claiming Listings Were Hacked

Compass, one of the newest brokerages in the Hamptons, is getting sued by another East End competitor.

On December 6, federal judge Leonard Wexler issued a temporary restraining order against Compass and some employees after rival firm Saunders & Associates accused them of hacking into its password-protected database and stealing thousands of listings.

The suit also specifically names Meg Salem, who had been a top-producing broker at Saunders, earning $1.2 million in 2014, according to the suit. Last month, during a seven-minute meeting she arranged with Andrew Saunders, the founder and CEO of the brokerage, she “abruptly” resigned to work at Compass, the suit states, taking her team with her. Vanessa Bogan and Jesse Spooner, as well as marketing administrator Jessica Grainger-Rozzi, who had resigned from Saunders in July, joined Ms. Salem at Compass. All of them are named in the complaint.

The suit states that two weeks following the departure of Ms. Salem, Ms. Bogan and Mr. Spooner, the “Meg Salem Team,” apparently using stolen login credentials, hacked into Saunders’s password-protected system and copied more than 11,600 listings and associated confidential information over the course of three days, November 2, 3 and 17.

The breach was discovered by Saunders employee Anna Alexopoulos on November 17 while she was on vacation in the Carolinas, according to the complaint. She told her colleague that someone had hacked into the Saunders’s database using her personal logon credentials.

“Meg left on November 3, but we learned a couple weeks later that she was part of an elaborate scheme that involved hacking into our system,” with access to “all of our intelligence,” Mr. Saunders said on Tuesday, December 8. “That’s the fundamental value of our company, and she stole it.”

The temporary restraining order requires the Meg Salem team to preserve the data taken and to cooperate with a forensic review of any phones, tablets and computers that may have been used during the breach.

Compass denies the accusations. “Instead of discussing the claim with Compass or Ms. Salem, Saunders rushed to court to file a temporary restraining order (TRO) in an apparent attempt to create a story in the press and chill any further agent departures,” a spokesperson for Compass said in an email statement.

“Compass policy does not permit our agents to engage in any of the activities alleged in the suit, and consequently did not object to the Saunders TRO hearing, as it aligns with existing company policy,” the statement continued.

“This is not the first time this has happened, this is the third time it’s happened this year,” Mr. Saunders said, alluding to previous lawsuits Compass has been embroiled in. “That reality should give tremendous pause to its investors, and I think should catch the attention of the attorney general. It’s certainly a habitual thing.”

In fact, this is the second lawsuit in as many months filed against Compass, which has raised $125 million in capital since launching in 2013.

Last month, Brown Harris Stevens sued former employee Ed Reale, a little more than a month after he left the firm for Compass, alleging that he had violated a non-compete agreement. That suit also accuses the young real estate firm of “unlawfully ‘poaching’ competitors’ employees.”

In addition, earlier this year Corcoran sued the firm for poaching its talent, and in 2014, CitiHabitats sued, accusing Compass agents of accessing its proprietary listing system. Both suits were settled.

“Saunders’ suggestion that there is an apparent pattern of legal action against Compass has merit only in that there is a pattern of brokerages seeking to stifle the free will and independence of agents and employees and rushing to create publicity stunts by strategically using the courts,” said the statement from Compass. The brokerage also emphasized that no information had been downloaded by Compass, or saved in any of its systems.

Saunders is seeking monetary damages in an amount to be determined at trial.