Tuesday, December 15, 2009
In 2004 eBay and Craigslist announced a friendly deal in which eBay would take a minority position in the online classifieds business. It seemed like a nice fit at the time - complementary in a way that Skype wasn't. At the same time eBay's investment kept Yahoo! and Google at bay. By 2008 it was clear that the party was over and perhaps eBay would have been better off acquiring Craigslist rather than accept the minority stake. Craigslist sued eBay (Craigslist CA complaint) and eBay sued Craigslist (eBay Del. complaint) in competing lawsuits. You can imagine the allegations -- loyalty breaches left and right. It's been playing out in Chancellor Chandler's Delaware courtroom for the past week. You can view the proceedings care of Courtroom View. If nothing else, when we get a ruling, we can expect a nice restatement of Weinberger and entire fairness that will no doubt be quickly adopted into casebooks.
I'm not going to review the factual allegations - the claims of dilution, corporate opportunity, misuse of confidential information, etc. There are plenty of articles out there. Start here. However, yesterday's testimony from Craigslist CEO Jim Buckmaster is worthwhile. He recounted a discussion with an eBay exec following the transaction in which the terrible truth was revealed...
Among the many reasons why you rarely want your clients to end up in a courtroom is this -- goodness knows what might be said that could potentially sink your client's gubernatorial campaign. The vision of an "evil Meg" can't be good.