A federal judge has allowed Caliber Home Loans to move forward with a poaching suit against CrossCountry Mortgage, rejecting the defendant company’s move to dismiss five counts including misappropriation of trade secrets.
Dallas-based Caliber sued CrossCountry last May for allegedly raiding over 80 workers across the country in early 2022 who accounted for more than $2.3 billion in annual origination volume and took confidential borrower information with them. U.S. District Court Judge Richard Jones last week agreed with CrossCountry to dismiss two counts, but denied its move to toss five other counts.
“Whether the Departing Employees acted under Defendant’s specific direction is yet to be proven,” he wrote in the order dated March 30. “But at this stage, the Court must accept Plaintiff’s allegations — that CrossCountry now possesses purloined information that could only be obtained from Caliber employees in violation of their employment contracts — as true.”
Caliber has a 14-day deadline from the time of the order to file an amended complaint in the Seattle-based U.S. District Court. The lender also has an opportunity to amend the two counts Jones dismissed in the court, which is located in Washington State’s Western District.
“We are pleased with this early win in our case and that the court agreed that the case should proceed to the next stage on 5 of the 7 claims,” Caliber said in a statement Tuesday. “We are evaluating our options to comply with the order and meet the court’s deadlines. We look forward to continuing to make our case as we move forward.”
New Residential Investment Corp. acquired Caliber in 2021, but the former company is not named in the complaint.
A CrossCountry spokesperson said the firm doesn’t comment on pending legal matters. Attorneys for both parties did not respond to requests for comment on Tuesday.
The court’s order is another setback for Cleveland-based CrossCountry in poaching litigation after a federal judge in Illinois in December suggested loanDepot is likely to succeed in one of its two suits against the firm. That case has been stayed pending the outcome of upcoming arbitration between loanDepot and the individual CrossCountry defendants, according to an order dated March 30. CrossCountry meanwhile saw a federal judge in February dismiss another complaint from Guild Mortgage.
Caliber has accused CrossCountry of orchestrating a “master plan” to raid its branch managers, loan consultants and other staff in six states from the beginning of 2021, with many of the employees departing between January and April 2022. Departing personnel allegedly took with them company records such as detailed loan information for customers and pipeline spreadsheets.
Jones in his order dismissed Caliber’s unfair competition and tortious interference counts, but allowed others to remain including civil conspiracy and conversion of confidential information. His ruling came seven months after the case’s most recent filing, which was CrossCountry’s motion to dismiss last August. Caliber suggested damages in excess of $5 million.
The NewRez subsidiary also is pursuing similar accusations against Stronsgville, Ohio-based Union Home Mortgage which allegedly poached 51 workers responsible for over $400 million in origination volume in 2021. The sides have agreed to mediate the dispute with a June 12 deadline while a jury trial is scheduled for September 2024, according to court filings last month.