loanDepot is accusing its competitor Movement Mortgage of damaging its business by hiring over 25 employees in three months and “effectively crippling” “now-depleted” branches.
The poaching lawsuit, filed on June 22 at a federal district court in Delaware, states that South Carolina-based Movement recruited and hired its employees in late 2021 and early 2022 to take trade secrets and confidential information. It also accuses Movement of inducing these employees to breach contracts by soliciting others to leave loanDepot.
A Movement representative did not return a request for comments.
A spokesperson for loanDepot said, “Inducing individuals to breach contractual prohibitions against employee solicitation and misuse of confidential information in order to steal business and customer relationships crosses the line into unfair competition, and we will continue to vigorously protect our interests.”
The California-based lender claims employees in Virginia, Pennsylvania, and Florida left the company to join Movement after an “orchestrated” move and “all-expenses-paid recruiting trips,” including to Movement’s headquarters in South Carolina. Additional Maryland, Washington, D.C., and Delaware employees also transitioned to the retail competitor.
In some cases, Movement offered a $125,000 signing bonus to loanDepot loan originators to come to the company, the lawsuit claims.
“To date, several loanDepot branches have been effectively gutted and loanDepot has lost at least 25 employees at the hand of Movement’s predatory raiding,” the lawsuit states.
The lawsuit follows: “In the weeks leading to their departures, the former employees accessed and misappropriated confidential and trade secret documents about loanDepot’s business, its employees, and its clients; information that, in the hands of Movement, was used to convert customers to Movement and away from loanDepot.”
loanDepot has ongoing arbitrations with certain of the former employees.
The lender seeks damages and permanent injunctive relief against Movement for misappropriation of trade secrets, aiding and abetting breaches of fiduciary duty, unfair competition, unjust enrichment, unfair trade practices, and tortious interference with loanDepot’s contracts and prospective economic advantage.
That’s not the Orange County, California-based lender’s only poaching legal battle.
Since April 2022, the company filed three lawsuits against CrossCountry Mortgage in New York, California and Illinois.
In early June, a judge in the N.Y. case ruled in favor of loanDepot in a preliminary injunction by prohibiting CrossCountry and employees who switched companies from using data they obtained from their prior employer. It follows a decision from a judge in the Chicago lawsuit. However, according to the judge, as loanDepot has not shown an “actual and imminent” risk of irreparable harm, its request for a preliminary injunction against the solicitation of loanDepot’s employees was denied. The judge mentions “loanDepot is likely to succeed on the merits of its Defend Trade Secrets Act claim.”
