eBay Domestic Holdings Inc. v. Craig Newmark, Jim Buckmaster
Published: Sep. 25, 2010 | Result Date: Sep. 9, 2010 | Filing Date: Jan. 1, 1900 |Case number: 3705-CC Bench Decision – Injunctive Relief
Facts
In 2004, eBay Holdings Inc. purchased a 28.4 percent interest in Craigslist for $32 million. EBay Holdings firm was created solely for the purpose of being a minority shareholder in Craigslist. In 2007, eBay launched a rival classified business and the relations broke down.
Subsequently, eBay filed suit against Craigslist claiming the company unfairly diluted its stake.
Contentions
PLAINTIFF'S CONTENTIONS:
Plaintiff contended that, in January 2008, controlling shareholders Jim Buckmaster and Craig Newmark adopted a plan that diluted eBay's holding in the company. EBay also contended that the terms of the stockholders' agreement expressly permited eBay to compete with Craigslist in the online classfieds services.
Result
The court ruled in favor of eBay finding that Buckmaster and Newmark breached fiduciary duties owed to eBay when it adopted the rights plan. The ruling kept eBay's rights as a minority investor intact.
Other Information
The court left undisturbed the issue whether Craigslist may continue to operate with a staggered board. Craigslist is expected to appeal the court's ruling.
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