Judge denies eXp bid to dismiss fraud claims in sexual misconduct case

A federal judge has denied eXp Realty’s request to dismiss a fraud claim brought by four women who say the company lied about investigating their allegations of sexual assault by two former agents.

U.S. District Court Judge André Birotte Jr. ruled this week that the fraudulent misrepresentation claim could move forward — including allegations that eXp Realty and its parent company eXp World Holdings made false statements to keep plaintiffs from leaving the firm.

The lawsuit — originally filed in February 2023 — centers on claims that suspended eXp agent David Golden and now-former agent Michael Bjorkman violated federal sex trafficking laws. The women say the men drugged and sexually assaulted them at company events.

A third agent, Brent Gove, has also been named as having allegedly participated in or ignored the offenses.

During the three-year span of the lawsuit, eXp and its founder Glenn Sanford faced allegations of negligent hiring. But these claims against Sanford and the company were ultimately dismissed.

Plaintiffs claim they reported assaults to company leadership — including the general counsel and the director of agent compliance. But behind the scenes, the women say executives had already chosen not to investigate.

Their claims cite evidence uncovered during discovery, including communications between Bjorkman and Cory Haggard, eXp’s senior vice president of agent compliance, stating that “no investigation would be occurring.”

Judge rejects company’s arguments

In its motion to dismiss, eXp argued the women failed to meet the legal standard for fraud.

The company noted that it took written statements from the plaintiffs, spoke with legal counsel, offered to speak to witnesses and held meetings with its agent compliance committee.

eXp has also argued the plaintiffs “made no allegation” that any of the executives deposed were speaking on behalf of the company when they made their statements.

The company has since separated itself from both Bjorkman and Golden and claims it acted “as soon as the accusers brought (incidents) to our attention.”

But Birotte was not persuaded. He found that the women had sufficiently alleged “misrepresentations by members of eXp Defendants’ leadership teams,” including specific false statements about an ongoing investigation and the company’s severed ties with Bjorkman.

“Plaintiffs alleged they originally reported the sexual assaults because of the Policies and Procedures but the misrepresentations did not start there,” Birotte wrote. “Rather, each alleged several separate misrepresentations by members of the eXp leadership team throughout the course of the purported investigation.”

Case moves forward

The judge also rejected eXp’s argument that the fraud claim was barred by the economic loss rule, which prevents plaintiffs from repackaging a breach of contract as a tort claim.

“As the alleged tort is not based in a violation of a breach of contract the economic loss rule does not apply,” Birotte wrote.

The court granted eXp’s request to extend fact discovery by 60 days and ordered both sides to submit a new proposed schedule within 14 days.