Zillow could be in for a whopper of a bill in the two-year-old litigation between the company and its biggest rival, realtor.com operator Move Inc.
Move and its co-plaintiff, the National Association of Realtors (NAR), claim that Zillow and two of its executives are liable for $1.77 billion in damages due to misappropriation of trade secrets, among other claims. Zillow’s co-defendants are Errol Samuelson and Curt Beardsley, former Move employees who joined Zillow in March 2014.
The damages claim is just over 40 percent of Zillow Group’s current market cap: $4.2 billion.
Errol Samuelson
“The scope of this case — and damages claim — is staggering,” attorneys for Zillow, Samuelson and Beardsley said in a legal filing publicly released today.
In that filing, the defendants’ attorneys say many of the “thousands” of alleged trade secrets Move and NAR claim were misappropriated are overly “broad” and based on information that has already been publicly disclosed.
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The case Move and NAR want to present to the jury is “a confusing array of alleged trade secrets, with the hope that something might stick to the wall to support their $2 billion damages claim,” they said.
NAR declined to comment for this story.
What does that figure include?
The nearly $2 billion figure may include estimated damages from Zillow’s alleged foiling of a planned merger between Move and Trulia. Had the two merged, Move predicted some $100 million in cost savings as a result.
Zillow announced it would purchase Trulia in July 2014, and the deal closed in February 2015 after a six-month-long review by the Federal Trade Commission (FTC).
Curt Beardsley
Move, a News Corp. subsidiary, has also alleged that Zillow thwarted its plans for a “ListHub 2.0” strategy to create a real estate platform with APIs (application programming interfaces) to allow third parties “to create software applications that can help members of the real estate industry access and use information on listings, leads, agents, and consumer behavior.”
Zillow’s response
“As we’ve said, we believe the claims in this case are without merit and News Corp.’s calculations of damages are baseless,” Zillow Group spokeswoman Amanda Woolley said in an emailed statement.
“Within the past month, the court dismissed several claims and is currently considering our motions for summary judgment, which request that the bulk of plaintiffs’ other claims also be dismissed. We will continue to vigorously defend ourselves in this litigation.”
In response, Move spokeswoman Christie Farrell said in an emailed statement, “Zillow’s claim that the litigation is ‘baseless’ is proven false by a mountain of evidence of Himalayan proportions, including proof that numerous documents, texts and emails were destroyed and computers, smartphones and other storage devices were intentionally wiped or destroyed.
“We look forward to presenting the facts in court and achieving justice for these gross acts of corporate espionage and other wrongdoing. In the end, this may prove to be, for Zillow, a very regrettable act of executive poaching.”
Move did not respond to questions about how the damages figure was calculated.
Earlier this month, the King County Superior Court dismissed plaintiffs’ claims that all three defendants conspired to violate the Washington Trade Secrets Act, though the claims that each violated that same law still stand.
Two claims against Zillow for tortious interference with a business expectancy and with contractual relations also remain, though the court dismissed two other claims: aiding and abetting breach of fiduciary duty and unjust enrichment.
The court denied Samuelson and Beardsley’s motions to dismiss breach of fiduciary claims against them, but granted Samuelson’s motion to dismiss two other claims: trespass to chattels and conversion.
Zillow countersued Move last summer, alleging that a so-called “whistleblower” letter publicized by Move had strained Zillow’s relations with real estate agents and had serious negative effects on Zillow’s reputation and its ability to compete.
The trial is set for June 6.
Editor’s note: This story has been updated with additional information on claims the court dismissed in this suit in mid-March and with a comment from Move.
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