Red Oak Denied Injunction Against Vanguard

One of the Bay Area’s largest independent brokerages has won one round of its ongoing battle over agent poaching claims.

A San Francisco Superior Court has denied East Bay-based brokerage Red Oak Realty’s request for a preliminary injunction against San Francisco-based Vanguard Properties.

Judge Joseph M. Quinn said in his late-January ruling that he denied the injunction, which sought to stop Vanguard from soliciting Red Oak agents until a larger suit is settled, because he did not feel there was a great likelihood that Red Oak would prevail and that the “balance of equity and harms” in granting the injunction did not weigh in its favor.

Quinn also ruled that Red Oak CEO Vanessa Bergmark’s declaration in support of the injunction failed to demonstrate the basis for her allegations that Vanguard was using non-disclosure agreement-protected information gleaned from failed merger talks to bring Red Oak agents over to Vanguard as part of its East Bay expansion.

Vanguard had several declarations from both its higher-ups and agents who came over from Red Oak claiming that there was no NDA-protected information used to sway Red Oak agents into departing. Quinn said in the recent decision that, based on the Vanguard-supporting declarations, it appeared it was the agents who reached out to Vanguard, not the other way around.

The ruling is a win for Vanguard as it defends itself against a suit filed by Red Oak in December alleging agent poaching using protected information and other questionable practices.

“There is no material evidence those employees did anything wrong in reaching out to Defendants,” Quinn wrote in his Jan. 27 decision, adding that disallowing agents from reaching out to competing agencies would likely be illegal.

In a statement, Vanguard said that it was “pleased” with the ruling and remained “confident in our ultimate success in the ongoing legal matter.”

Bergmark vowed to continue the larger fight even after the recent loss.

“It’s frustrating that the injunction wasn’t granted,” she said. “However, we will amend the complaint with the new information we’ve uncovered and continue the pursuit. This challenge is far from over, and we are prepared for the long conflict ahead.”

In the days before the ruling, Red Oak filed three more declarations supporting its injunction request and disputing the claims made in Vanguard’s court filings.

Erin Chan-Adams, a Red Oak agent who was recruited by Vanguard but went to Compass instead, said in a declaration that Vanguard’s recruiting tactics made references to the allegedly NDA-protected merger talks and disparaged Red Oak’s financial standing, accelerating her decision to leave the company.

Vanguard asked that these “late-filed declarations” be excluded. But the court reviewed them at the hearing, the company said, and “found that the totality of admissible evidence presented by Red Oak failed to demonstrate a misuse of confidential information.”

The larger legal battle between the two firms is moving ahead. On March 3, the court will hear Vanguard’s recently filed motion to deny the Red Oak-requested depositions of Hoffman, Vanguard CEO James Nunemacher, and President Frank Nolan, who were all named as defendants in the initial suit. The motion argues that Red Oak has not yet disclosed the trade secrets about which three Vanguard agents would be deposed, and cannot serve any discovery notices until it has done so.

The motion reads, “Red Oak is not yet entitled to commence discovery. Period.”

It is also calling for sanctions on Red Oak for the nearly $15,000 in attorneys’ fees spent on drawing up the motion, as it claims the East Bay agency “repeatedly refused legitimate requests” to drop the deposition summons.