Coldwell Banker Sues Former Executives Who Form Competing Brokerage, Take Staff, Clients, and Trade Secrets

On January 18, 2008, Coldwell Banker Residential Brokerage filed a federal lawsuit in Maryland against three former key employees and newly-formed competitor Car-Tay, Inc., an affiliate of GMAC Real Estate. The complaint alleges that the former employees, two of whom had been high-level executives, conspired to form the competing brokerage in violation of their employment agreements, the federal Computer Fraud and Abuse Act, and state law.

Coldwell Banker claims that the former employees began actively, but covertly, planning, staffing, and building the competing venture more than one year before their departure. Key evidence cited in the complaint includes an extensive trail of emails purportedly sent and received by the defendants while still employed by Coldwell Banker. In the emails, the defendants openly discuss solicitation of Coldwell Banker salespersons, tips for persuading Coldwell Banker clients to move their listings to GMAC, how to access Coldwell Banker’s highly-guarded commercial document database, and how to copy data from Coldwell Banker computers. This “scheme,” the complaint says, was a targeted effort “to eviscerate [Coldwell Banker’s] ability to compete with GMAC.”

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