[Please note: While my engagement with Compass has ended, I am subject to confidentiality requirements, and will stick to public informations and my own personal opinions only.]
I have gotten a number of questions about the CRMLS lawsuit against Compass, filed on Monday. I had not written about it because I thought there was a good chance that it was more or less moot.
Courts have broad discretion as to whether to hear a declaratory judgment case at all. Some of the factors they consider (in the Second Circuit, which is relevant for a SDNY case) are:
- Would a declaration serve a useful purpose in clarifying or settling the legal issues, and
- Would it end the controversy and remove the uncertainty that led to the suit?
- Is there a better more effective remedy available?
And a couple of smaller factors, like "procedural fencing" and such that likely don't matter.
Given how busy courts are, it seems to me that the most efficient way for the SDNY to deal with this is to just punt on it. If Compass never files a lawsuit, then there was no reason to do this declaratory judgment thing at all. If Compass does file a lawsuit, then that court can deal with these issues.
Having said that, Ed Zorn, the General Counsel of CRMLS is a veteran litigator and he knows the game. It is possible that this preemptive filing gives CRMLS some tactical advantage or another, and forces Compass to files its lawsuit as a counterclaim in SDNY, under Second Circuit precedents, rather than in California and Ninth Circuit precedents.
So I thought it worth spending a few minutes on this CRMLS lawsuit. To be honest, Sunny wanted to hear what I thought so... I hasten to obey her will. This lawsuit is, if you will, a Coming Soon listing. It lays out what will effectively be CRMLS's defense if and when it gets sued by Compass. I assume that Ethan Glass and his team at Compass, who are also very competent, will parse through this lawsuit and tailor their future complaint accordingly.
With the caveat that I don't actually believe this lawsuit will see the light of day, as the action will likely move to wherever Compass files its lawsuit, let's look at what CRMLS's defense will be.
