boinktardBay sues Craigslist, Craigslist sues boinktardbay

[mandy]

April 22, 2008 — In order to safeguard its four-year financial investment in craigslist, eBay (Nasdaq: EBAY; ) today filed a lawsuit in the Court of Chancery of the State of Delaware challenging recent transactions implemented by craigslist's board of directors, consisting of Craig Newmark and Jim Buckmaster.

In 2004, after negotiating the transaction with craigslist's board, eBay acquired a minority ownership interest in craigslist of 28.4 percent.

In January 2008, however, Newmark and Buckmaster adopted measures that, among other things, unfairly diluted eBay's economic interest in craigslist by more than 10 percent. By taking these unilateral actions, eBay believes that Newmark and Buckmaster breached their fiduciary duties in violation of Delaware corporate law.

"The recent actions by the craigslist directors have disadvantaged eBay and its investment in craigslist," said Mike Jacobson, eBay Senior Vice President and General Counsel. "Since negotiating our investment with craigslist's board in 2004, we have acted openly and in good faith as a minority shareholder, so we were surprised by these recent unilateral actions. We are asking the Delaware court to rescind these recent actions in order to protect eBay's stockholders and preserve our investment."

The complaint is being filed under seal because some of the information about craigslist contained in the complaint is governed by confidentiality restrictions.

A statement from craiglist calls eBay's actions unethical:

We are surprised and disappointed by Ebay’s unfounded allegations, which came to us out of the blue, without any attempt to engage in a dialogue with us.

Coming from a shareholder that views craigslist as a prime competitor, filing suit without so much as mentioning these assertions beforehand seems unethical, and hints at ulterior motives...

full statement and comments by users: http://blog.craigslist.org/2008/04/tainted-love/

[amy]

hints at ulterior motives...

I think it hints at desperation.  eBay realized that Kijiji sucks and can't compete with craigslist so it decided to try to wear down craigslist in the courtrooms for a few years in hopes that the legal fees will either hurt craigslist's ability to grow or force it to accept a takeover by eBay.

[mandy]

A copy of the court filing:
http://files.shareholder.com/downloads/e...plaint.pdf

Good reading if you have a fondness for the word "REDACTED"  :

[mandy]

Craigslist files countersuit:

We filed a complaint in California today, charging eBay with unlawful and unfair competition, misappropriation of proprietary information, deceptive passing-off, business interference, false advertising, phishing attacks, free-riding, trademark infringement, trademark dilution, and breaches of fiduciary duty.

We respectfully ask the Superior Court in San Francisco to enjoin this conduct and order eBay to (1) make full restitution to craigslist, (2) disgorge their related profits (3) restore to craigslist all shares of the company acquired by means of, or for the purpose of unfair competition, and (4) pay punitive damages for their malicious behavior

blog post: http://blog.craigslist.org/2008/05/unlawful-and-unfair/
full text of the court filing: http://blog.craigslist.org/etc/craigslist.vs.eBay.pdf

TechCrunch on the legal battle:

eBay filed first, though. So it has the legal advantage. But Craigslist has the reputation and publicity advantage. Everyone loves to root for an underdog. This legal brawl could lead to a customer backlash for eBay if customers decide to take sides...

full article: http://www.techcrunch.com/2008/05/13/eba...n-lawsuit/

:popcorneaters: