Cushman & Wakefield is alleging that several former members of its Dallas-based institutional investment sales team were solicited to join rival JLL after the group's leaders Mike McDonald and Jonathan Napper resigned from Cushman and were hired at JLL.
The solicitation of the team is a further breach of the nonsolicitation agreements between McDonald, Napper and Cushman & Wakefield that don't expire until next year, the brokerage firm claimed as part of its lawsuit in Dallas County District Court against the high-profile real estate executives.
McDonald and Napper resigned from Cushman & Wakefield in mid-September and joined JLL in what Cushman & Wakefield argues is a violation of their noncompete contracts. The lawsuit that followed has shed light on the competitive nature of the commercial real estate industry and the way business is conducted, including the structure of teams that support high-earning staff and the noncompete agreements written to limit losses when one firm recruits and hires important employees of a rival.
In the three weeks after McDonald and Napper resigned, five members of their investment sales team also gave notice and announced plans to work for JLL, Carlo Barel di Sant’Albano, chief executive global capital markets and investor services at Cushman & Wakefield, said in a declaration to the court. Those team members were named as Ryan Stevens, Ben Esterer, Bailey Wood, Keenan Ryan and Macki McKim. The five team members who followed McDonald and Napper to JLL are not named as defendants in the lawsuit filed by Cushman & Wakefield.
The team members were considered nonproducers and part of McDonald's and Napper's support team. Cushman & Wakefield invested significant amounts — in the seven-figure category — annually to support the team's business-generation activities, including salaries for the nonproducing support team members and a business development allowance to reimburse them for various travel and entertainment of clients and prospects, said Douglas Jones, managing principal with Cushman & Wakefield, in a declaration filed with the court.
"It would not be economically justifiable for a brokerage company to recruit and hire a group of non-producing professionals, such as those from the Dallas office, without hiring the producers with whom they work," Jones said in the declaration.
Offers Extended
In numerous one-on-one meetings after the departure of McDonald and Napper from Cushman & Wakefield, Jones said he met with the five team members and understood from them that JLL had reached out to them in a five-day period with an offer of employment, according to the declaration.
In each of their resignations, the five employees told Jones, "That while they did not want to leave C&W, they felt that they needed to move to JLL to keep the team together," Jones said in the declaration.
The five team members declined to comment to CoStar News. JLL has not responded to multiple requests from CoStar News seeking comment. Cushman & Wakefield has declined to comment beyond the lawsuit.
Dallas County District Judge Dale Tillery, who is presiding over the lawsuit, granted an order for limited expedited discovery this week with the oral depositions of McDonald, Napper, an unnamed JLL representative and Mark Gibson, JLL's CEO of North America Capital Markets, due this month. Last week, the court signed a temporary restraining order, barring McDonald and Napper from working real estate deals in the United States for a two-week period.
McDonald and Napper have each told CoStar News they plan to continue honoring the covenants in their employment agreements with Cushman & Wakefield, and that they have no plans to harm the firm or its clients.
Prior to their resignations, McDonald and Napper held senior positions and were vice chairmen at Cushman & Wakefield, where they worked for about four years. Before that, they both worked at Eastdil Secured. While at Cushman & Wakefield, McDonald and Napper took the lead on 43 transactions, which all involved real estate properties in the United States, including in Texas, North Carolina, Tennessee, Alabama, Indiana and Georgia, according to court filings.