Mattress Firm, ex-Atlanta brokers settle dispute over alleged kickbacks

Allegations of bribery and fraud across years of real estate transactions sparked a lengthy legal battle
File photo. (Photo by Scott Olson/Getty Images)

Credit: Scott Olson

Credit: Scott Olson

File photo. (Photo by Scott Olson/Getty Images)

A six-year legal battle involving a national retail mattress chain and several former Atlanta real estate brokers recently ended in a series of settlements.

Mattress Firm settled disputes with Bruce Levy, Ryan Vinson and Alex Deitch, a trio of former brokers and executives at Colliers Atlanta, who the mattress company sued in 2017 over allegations that they gave real estate advice based on incentives they would pocket. A news release last month by one of the brokers, Alex Deitch, said the final settlement was reached in December, concluding the litigation saga.

First reported by online real estate publication Bisnow, the settlements’ terms were not disclosed. Colliers Atlanta, another defendant in the lawsuit, was dismissed last year from the case, which was filed in Houston where Mattress Firm is based.

Deitch, who countersued Mattress Firm, said in his release that he “did not make any concession of wrongdoing,” alleging that the company endorsed his brokerage activities at the time and that the initial lawsuit was an attempt to interfere with his other clients.

“This has been a ‘David vs. Goliath’ fight,” Deitch said in the statement. “We always felt that Mattress Firm’s claims lacked merit, and my goal has been to return to focusing on real estate development.”

Before settlements were reached with each defendant, court records show the case was barreling toward a jury trial, which Deitch’s attorneys Kevin Ward and Andrea Pawlak said “was not going to be a good business decision for Mattress Firm.” Ward told The Atlanta Journal-Constitution that his client persevered through years of litigation to vindicate his reputation.

“Mr. Deitch was accused of the worst conduct and had to live with that for years in a community where he was formerly an award-winning top performer,” Ward said. “The impact of this litigation was significant.”

Mattress Firm and attorneys for Levy and Vinson did not respond to the AJC’s request for comment. Colliers Atlanta declined to comment.

Mattress Firm experienced explosive growth in the mid-2010s, expanding to more than 3,500 locations and establishing itself as one of the largest mattress retail chains in the world. The company severed its contract with Colliers Atlanta in 2016 after alleging that Deitch, Levy and Vinson orchestrated a scheme to capitalize on that growth at the expense of their client.

The initial lawsuit argued the trio steered Mattress Firm toward high-priced real estate in exchange for developer kickbacks across more than 800 store locations. The lawsuit claimed many of its store properties were owned by a small circle of developers that provided incentives to the brokers in return for agreements with inflated monthly rent prices.

The allegations, which the defendants denied, led to Deitch being fired shortly after the lawsuit was made public. Deitch’s countersuit argued Mattress Firm’s aggressive growth strategy was to blame for agreeing to leases with rents that were higher than market rate. He has since founded Atlanta-based Falcon Realty Partners, according to his release.

The incident spilled into Georgia’s legal system when Maxum Indemnity Co., the former insurer of Colliers Atlanta’s, declined to cover more than $1 million in legal fees Deitch accumulated in the Mattress Firm case. The dispute made its way to 11th U.S. Circuit Court of Appeals, where it was determined last November that Maxum would need to cover Deitch’s legal fees. His settlement with Mattress Firm was submitted weeks later.

Mattress Firm would see its real estate holdings and store locations decline in recent years, filing for Chapter 11 bankruptcy twice between 2018 and 2021. The company currently operates about 2,300 locations and announced in May that it agreed to a $4 billion buyout from Kentucky-based bedding giant Tempur Sealy International. The transaction is expected to close in the first half of next year.