After reviews that departing staff of REX Actual Property had been allowed to maintain their laptops as “severance” and that one worker wiped potential proof from her laptop computer, Zillow has requested a federal courtroom to order the low cost brokerage to show over a listing of the 250 or so staff who’ve left REX since January 2021 and to state whether or not they had been allowed to maintain REX-issued laptops.
Individually, the Nationwide Affiliation of Realtors has requested the courtroom to pressure REX’s insurer, PIUS Restricted, to show over inside paperwork associated to PIUS’s analysis of REX and the funding that PIUS secured for REX earlier this 12 months.
REX sued NAR and Zillow in March 2021, alleging antitrust violations for an NAR rule that prompted Zillow to separate non-MLS listings from MLS listings on its web site, together with listings from REX. When reviews indicated that REX was closing store in Could, REX blamed NAR and Zillow for the loss of life of REX’s enterprise mannequin.
Based in 2015, REX started as a self-described disrupter that employed salaried brokers, charged homesellers a 2-percent itemizing price, had a coverage of by no means paying outdoors purchaser’s brokers and eschewed MLSs, at least initially.
On Friday, Zillow filed a movement to compel REX to “[i]dentify all staff (by identify, final place/job title held whereas employed at REX, and final day of employment at REX) who’ve left REX, together with any staff whose employment was involuntarily terminated, since January 2021 and state whether or not such staff had been permitted to retain any REX-issued laptops.”
Previous to submitting the movement, Zillow grew to become conscious of a Could 8 Glassdoor assessment left by a former REX worker who wrote, “Once you lay folks off, don’t inform them that their laptop computer is their severance.”
Based on Zillow’s submitting, REX additionally admitted {that a} former worker, Angela Prepare dinner, had “wiped her laptop computer after she was let go” from the corporate, regardless of the courtroom designating her a doc custodian within the case. That and REX’s alleged relinquishment of its laptops point out that REX might not be assembly its obligations to protect paperwork, in keeping with Zillow.
“Given REX’s allegations that its enterprise faltered and failed because of actions taken by Zillow and NAR, the knowledge contained on the laptops of its former staff, which can make clear, amongst different issues, different causes for REX’s failings completely unrelated to Zillow or NAR, is just not solely related however doubtlessly vital to Zillow’s defenses,” Zillow’s attorneys wrote.
“If former REX staff … have taken with them or destroyed data related to the events’ claims or defenses that REX has not in any other case preserved, Zillow is entitled to know,” they added.
“This data must be available to REX, and any burden or expense of offering this data is small compared to the relative significance of those points to the litigation.”
In an emailed assertion, Nationwide Affiliation of Realtors spokesperson Wes Shaw advised Inman: “NAR shares Zillow’s issues. REX’s actions elevate severe questions on whether or not it complied with its obligations to protect paperwork which can be related to the case.”
REX didn’t reply to requests for remark, however in a July 1 response to Zillow’s request for the record of staff, REX objected to the request “as being imprecise, overly broad, and unduly burdensome insofar because it seeks data on ‘all staff . . . who’ve left REX.’”
REX additionally stated it had already supplied data relating to the laptops of staff doubtlessly related to the case.
“REX has let about 250 staff go since January 2021 attributable to Zillow’s and NAR’s anticompetitive conduct,” REX’s attorneys wrote.
“The overwhelming majority of these staff had been salaried brokers and non-managerial staff, whose employment at REX had no or at most de minimis relevance to the problems concerned on this case. Accordingly, this interrogatory is looking for data not related to any occasion’s declare or protection neither is it proportionate to the wants of this case.”
In a separate submitting, NAR filed a movement to compel PIUS to adjust to a subpoena for paperwork within the case.
PIUS is an insurance coverage company that insures loans from institutional traders to high-growth tech firms based mostly on an in-depth evaluation of an organization’s know-how and mental property portfolio, in keeping with the company. PIUS underwrote a $10 million personal placement bond for REX in a deal introduced in March.
“Within the underlying go well with, REX claims it was harmed by a purported conspiracy between NAR and Zillow,” NAR’s attorneys wrote.
“However there is no such thing as a such a conspiracy and REX failed as a result of its product and providers had been poor and its advertising misleading. Thus, since PIUS reviewed REX instantly earlier than it failed, it seemingly has details about: (1) the standard of REX’s know-how, providers, and advertising; and (2) the well being of REX’s enterprise.”
“Furthermore, PIUS’s evaluation and analysis of REX is related to REX’s (not but specified) damages declare; particularly to the extent these claims depend upon any valuation of REX as a going concern,” they added.
The subpoena seeks “[a]ll communications referencing REX despatched between your members, managers, or staff” and all paperwork:
- regarding any due diligence or underwriting you carried out regarding REX or its enterprise earlier than you secured funding for REX
- referencing REX that you simply supplied to traders or potential traders regarding REX
- referencing the efficiency of REX’s enterprise or future enterprise prospects
- regarding your “analysis of REX Houses’ mental property (IP)”
- referencing breach of mortgage covenants or different financing phrases by REX
- referencing REX’s choice to stop operations
- referencing the allegations within the Criticism.
- referencing any submissions made by REX to any authorities company regarding NAR or Zillow
In an emailed assertion, PIUS CEO Joe Agiato advised Inman, “PIUS has complied with all requests.” When requested whether or not this meant PIUS had complied with NAR’s subpoena, he didn’t reply. However NAR’s Shaw advised Inman, “PIUS has not complied with the subpoena and haven’t produced any paperwork in response to the subpoena.”
In a June 30 response to the subpoena, PIUS’s attorneys objected to the subpoena on a number of grounds.
“PIUS objects to the request on the grounds that it’s overbroad on its face to the extent it seeks ‘all paperwork’; seeks data that’s neither related to any occasion’s declare or protection nor moderately more likely to result in the invention of admissible proof nor proportional to the wants of the case; seeks the disclosure of privileged and/or confidential data; and imposes an undue burden and expense upon PIUS,” PIUS’s attorneys wrote.
Zillow declined to remark for this story.
Learn Zillow’s movement to compel:
Editor’s be aware: This story has been up to date with an extra remark from NAR saying PIUS has not complied with the commerce group’s subpoena.
E-mail Andrea V. Brambila.
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