Richard L. Stone

A seminal shakeup in the way real estate brokers operate after much of their business shifted to online platforms resulted in a series of complex commercial, securities and intellectual property disputes in California and Washington state courts. Stone is lead counsel representing News Corp subsidiary Move Inc. and the National Association of Realtors' Realtor.org.

The outcome was a $130 million settlement in June in Stone's clients' favor.

Stone's clients sued in Washington following rival Zillow Inc.'s $3.5 billion acquisition of Trulia LLC. "That happened while Realtor.com was in the midst of merger talks with Trulia," Stone said. "Zillow got word of the talks, and we believe they were tipped off by two Realtor.com executives who left and went to Zillow." The suit, demanding $2 billion in damages, alleged that the executives stole trade secrets and tried to cover up their actions. Move Inc. v. Zillow Inc., 14-2-07669-0 (Wash. Sup. Ct., filed March 17, 2014).

Trulia later sued Stone's client over real estate data in Move's ListHub. The case was dismissed after a trial judge denied Trulia's request for a preliminary injunction against Move. Trulia Inc. v. Move Sales Inc., CGC 15-544255 (S.F. Super. Ct., filed Feb. 20, 2015).

As the Washington State case developed, computer forensic evidence led to Stone's discovery that the executives had taken extensive steps to cover their tracks. "We found wiped files and cypher programs designed to make information inaccessible," he said. "One of the departed executives was using a burner phone — his wife's old iPhone in which he had replaced the SIM card — and we were able to recover certain texts." At one point the defense claimed that one of the departed executives sought to hide pornography files — not real estate maneuvers — to protect his deeply religious reputation. A six-day hearing on Zillow's alleged spoliation of evidence proved fruitful for the plaintiffs. "We got an adverse instruction sanction against one of the defendants," Stone said. On the trial's eve, Zillow settled.

Stone said the case "is reflective of the red-hot real estate world and the sea change as online activity becomes indispensable to brokers and lets consumers do comparative shopping. Eyeballs on the net is the name of the game now."

The high stakes led to the lurid evidence and the defense's extensive efforts to hide its activities, Stone said, adding, "It was a wild ride for a trade secrets case."

— John Roemer