A sextet of multifamily brokers who defected from Eastdil last month to rival Newmark say their former employer’s lawsuit is an effort to quell competition and enforce illegal noncompetes.
Earlier this month, Eastdil Secured sued California brokers Geoff Boler, Lee Redmond, Jonathan Merhaut, Justin Shepherd, Eugene Chong and Blake Matsuda — claiming they stole trade secrets on their way out the door.
Eastdil sought a temporary restraining order preventing the brokers from discussing the company’s business while the case was ongoing. Orange County judge Jonathan Fish on Friday denied the request, saying Eastdil failed to prove it would suffer any significant harm during the course of the litigation.
A week after Eastdil filed the suit, the brokers fired back with an anti-SLAPP motion, arguing the lawsuit and a separate arbitration Eastdil seeks to, in effect, put a permanent gag order on the Newmark brokers discussing its business.
“Given that Eastdil is a direct competitor, this is a noncompete by any definition,” their attorneys wrote in their motion. “Eastdil’s heavy-handed approach invites an obvious question: What information is Eastdil so afraid that its clients and employees might learn?”
Boler, for instance, filed an affidavit claiming that after leaving Eastdil, the company told him not to talk to any of its clients for 45 days without approval, even though it’s industry practice for brokers to continue servicing deals they were working on as they transition between firms.
Boler’s attorneys told Eastdil that these actions amounted to the brokerage enforcing a noncompete, which is illegal under California law.
But as with most disputes in CRE brokerage, this one appears to come down to money.
Boler said that after he left, he spent time with Eastdil discussing commission splits on current and future deals. Eastdil, he said, wanted 50 percent on speculative deals that might close years in the future.
“Eastdil’s position seemed unfair, but I was hopeful that it was only a starting point,” he wrote, saying he countered with what he thought was a more reasonable split structure. “Under my proposal, Eastdil would still get the vast majority of the money but our brokers – who were doing most or all the work – would not be forced to continue work on transactions for free.”
Boler said his former employer refused to negotiate and then turned aggressive.
“Eastdil let me know it was suing me a week later.”
A spokesperson for Eastdil said the company is disappointed that the judge denied its request for a restraining order, “especially given most of the defendants admitted they took Eastdil Secured’s documents and information and one defendant admitted to deleting numerous materials on the eve of his departure.”
“The evidence before the court clearly demonstrated these individuals engaged in serious misconduct and violated their contractual obligations,” the spokesperson said. “We expect the arbitrator, who ultimately will decide this matter, to satisfactorily address this wrongful conduct.”