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Thu Oct 14 2010 23:21:01

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

By: Ina Steiner

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Craigslist filed an amended complaint on Tuesday in which it added Pierre Omidyar and former eBay executive Josh Silverman as defendants in its lawsuit against eBay, alleging they breached their fiduciary duties as Craigslist Board members. AuctionBytes broke the story Thursday evening in Newsflash, now here's some back story.

In 2004, Craig Newmark and Jim Buckmaster were forced to agree to a sale of 28 percent of Craigslist when the company's third shareholder, Phillip Knowlton, wanted to cash out. Many suitors came knocking, including Google, Yahoo, Salon.com, Warburg Pincus and the venture arm of Bertelsmann. Kleiner Perkins was unwilling to sign an NDA, and Google only wanted to purchase 100 percent of the company, so someone in Google's Mergers & Acquisitions department tipped off eBay's Garret Price, who initiated talks with Craigslist.

So why did Newmark and Buckmaster smooth the way for eBay to make the acquisition? Testimony in December's eBay v. Craigslist trial show it was due to Pierre Omidyar's efforts.

Meg Whitman, CEO at the time, testified that she asked Pierre Omidyar to smooth-talk Newmark after negotiations had broken down. Omidyar had cultivated an image as just-a-software-developer-who-got-lucky with philanthropic interests, and Whitman believed that would appeal to Newmark.

Apparently it did.

Like many, I was surprised in 2004 when I heard eBay had acquired a stake in the independent classifieds site. Newmark explained in a blog post, "Although I never figured that part of Craigslist might be owned by a public company, Meg Whitman and Pierre Omidyar showed that they were interested in us for all the right reasons. Like Craigslist, eBay is about helping folks get everyday stuff done, on a level playing field - they emphasize trustworthiness and reputation, and try really hard to listen to people. Basically, we're both about building community, and humanizing and democratizing the 'net, and there's gotta be more of that."

Omidyar reluctantly agreed to sit on the Craigslist board after the acquisition. That decision has now come back to bite him; first he had to testify in the eBay trial, and this week he was added as a defendant in the Craigslist trial.

A lot of information came out during testimony in the eBay v. Craigslist corporate governance trial. I was shocked at the way Josh Silverman in particular talked about the sharing of Craigslist data with eBay employees who were in charge of eBay's own classifieds business. I'll bet Newmark and Buckmaster were surprised too, given that directors have a fiduciary responsibility to the company on whose board they sit.

During the trial, I got the idea that Craigslist had assumed its data was proprietary and would only be used by eBay's Board representative in the company's dealings with Craigslist, while eBay assumed they had the right to use the data any way they pleased.

There were a lot of questions at the trial about firewalls, and about what information eBay obtained through its Board seat it could and couldn't use and share internally at eBay. Former CEO Meg Whitman testified and basically said she was above it all, assuming her employees were handling it properly.

Josh Silverman's testimony was biting - he openly expressed his contempt for Newmark and Buckmaster and their refusal to monetize Craigslist. I can't help wonder if his testimony will hurt him as he must defend himself in the next trial.

Whitman, who is running for governor of California, is not currently named as a defendant, but is named in the complaint filed on Tuesday: "Whitman, Omidyar, Silverman, and eBay's other executives and agents, knowingly and willfully conspired wrongfully to induce Craigslist to enter into the NDA, SHA and SPA based on Misrepresentations; to obtain and use Craigslist's confidential information in breach of the NDA and the SHA; and to breach fiduciary duties of care and loyalty owed to Craigslist."

The complaint goes on to allege, "In acting and failing to act as alleged herein, Whitman, Omidyar, Silverman, and other eBay agents acted or refrained from acting with oppression, fraud and/or malice as those terms are used in section 3294 of the California Civil Code."




Comments (23) | Permalink

Readers Comments

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: gonefromebay

Fri Oct 15 00:39:39 2010

Wow!  I can hardly wait for the movie to hit the theaters.

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Rick1313

Fri Oct 15 00:54:36 2010

I think the next couple of years will be interesting (though, not for eBay,inc.) on the legal front of us (everyone but eBay,inc.) versus them (only eBay,inc.).

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Rick1313

Fri Oct 15 00:58:28 2010

For my pending (two) small claims court case against eBay,inc., they will have to send a person who is not a lawyer to argue their case.

Wonder if I will luck out and get Mr. Donohoe as the designated eBay,inc. employee for at least one of those cases?

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Rick1313

Fri Oct 15 01:01:27 2010

For the other one, I'd like Mr. Griffith to show his cowardly hide.

What do you say, Griff? You and me. Mano a mano in old Montreal.

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: nobody

Fri Oct 15 01:07:03 2010

I guess Pierre can only "play" dumb for so long, before he actually confirms it.

He was meg's puppet... gotta' freaking love it... I'm sure he sees the err of his ways now...

GO CRAIGSLIST! :)

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Bye Bye EBay

Fri Oct 15 02:45:26 2010

Just how many eBay employees / board members have left in 2010?

Does anyone have a list or current count?

It seems every time I open a paper or goggle, I'm reading about another eBay player who has left the field. What's up with that?

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Olive Yoo

Fri Oct 15 05:27:43 2010

Q: "It seems every time I open a paper or goggle, I'm reading about another eBay player who has left the field. What's up with that?"

A: Rats. Sinking ship.

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

This user has validated their user name. by: Al G

Fri Oct 15 07:02:01 2010

Rats. Sinking ship?

Perhaps it is the corporate ''maturation'' process of eBay. In other words, I can't do much more for the mover & shaker corporate climber types.

Meg[lomaniac] WAS good in building up eBay through about - say 2004 IMHO. After that, she succumbed to the ''that's done, now I can do what I want'' syndrome of hubris.

Pierre is/was just a lucky shlub with NO business experience & probably no knowledge/inkling of the inner workings or Korporate AmeriKKKa. Just stepped in the corporate cesspool - maybe with a little wispering of Meg in his ear a la many Shakespeare plays.

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Rick1313

Fri Oct 15 09:56:16 2010

I wonder how more consecutive months Mr. Donohoe has planned for selling his eBay,inc shares.

I believe he is up to 6 straight months with a maximum amount (16,000+) that will ''not raise'' Wall Street eyebrows.

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Just - an - Observation

Fri Oct 15 10:23:25 2010

''Silverman... abruptly stepped down from the company earlier this month.''

Surprise! Surprise!

Does this shock anyone? Sounds like corporate business as usual here in the Corporation of America (formerly known as the United States).

It seems every time a CEO, politician, ponzi schemer, or any elected official for that matter, simply steps down when they get caught or found to be misusing their position - and the clincher is that the system is designed to protect them with the analogy that since they quit, resign, or retire (with full pension and benefits), that this is punishment enough!

The system is broken.

Your government has been infiltrated by a cartel (thugs) working specifically for the rich and the elite.

Time for REAL change - don't you think?

On a side note:
NEG MEG 2010

MHO

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Horray For Criag's List ~ jsicolts

Fri Oct 15 10:49:37 2010

Craig's List HORRAY ! GO GET UM! Those creeps at corrupt ebay deserve to lose EVERYTHING including their freedom.

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Patricia This user has validated their user name.

Fri Oct 15 12:35:32 2010

About time they dragged innocent little Pierre into the mix.  He's turned his back on everything - mostly Ebay and the small sellers he thought so "highly" of when he needed them!  I hope they unburden him of some of his loose change LOL

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Bob@eBay11K

Fri Oct 15 13:44:26 2010

"Like Craigslist, eBay is about helping folks get everyday stuff done, on a level playing field - they emphasize trustworthiness and reputation, and try really hard to listen to people. Basically, we're both about building community, and humanizing and democratizing the 'net, and there's gotta be more of that."

FAIL

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: TomH

Fri Oct 15 16:34:27 2010

@ Patricia

>>About time they dragged innocent little Pierre into the mix.  He's turned his back on everything - mostly Ebay and the small sellers he thought so ''highly'' of when he needed them!  I hope they unburden him of some of his loose change.<<

Absolutely agree.

Everyone always appear to harp on John D. It is Pierre and the rest of the Board of Directors who have signed off, appointed, approved and support John D and richly deserve our ire.

They (the Board of Directors) should be in Harms Way for their lack of obvious fiduciary due diligence and irresponsibility.  I guess (from what I understand) their 6 figure appearance money smooths a lot of deserved guilty conscience.  

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Bye Bye eBay

Fri Oct 15 17:31:46 2010

Surely there has to be some way to dig into the real numbers here? Do stock holders not receive more detailed information on eBay specific revenues? I don't own eBay stock and from what I see, it isn't the best bang for your buck anyway.

Disgruntled, bitter sellers abound, here there and everywhere. What I'm curious to know (besides the REAL numbers) is what sellers have tried to do historically to get management to listen? Have they ever listened?  What happened to the focus groups (name escapes me) and what happened with the strike (s)? I never paid attention back then because eBay was still working for me. This has changed. Drastically.

Nowadays, I can’t believe the number of views (minimal)  and watchers  (non existent) my listings get. And it doesn’t matter if it’s fixed price or auction. The eyes just aren’t there. I’m not a newbie. I’ve used TP since it came out.  I know what needs to be in a header. But none of this helps anymore.

The only thing I’ve gleaned about “mis match” is that for my fixed price listings, the GTC and 30 day format is a complete waste of money. The only real exposure I get (if any) is in the first and last 24 hours of a FP listing. Therefore, seven day listings, obviously more profitable for eBay (surprise surprise) occasionally may work, providing it’s not my rolling blackout period, which is as predictable as clockwork now.

Like others here, I’ve experimented with auctions (low start) and these were a dismal failure - except again for eBay and the buyer. And, unlike the .99 cent auctions I’ve won, I actually shipped out my items at a loss.  My experience as a buyer of such auctions has been completely different. The seller inevitably misplaces the item or it gets lost in the post.  Can’t say I really blame the seller, who usually offers in good faith (tic) to refund the buck and postage.  Some things are obviously too good to be true.

My point, other than venting a bit here today, is to ask if anyone has any concrete suggestions to help shake up this rotting tree???  Ric13 suggests documentation and law suits, and I watch his posts closely to see what happens with this. But other than expanding onto others sites  - which like everyone else I’ve tried and continue to try -  and using eBay to  harvest new buyers, what else could or can be done?

I’m not trying to be  provocative or humorous.  I’d really like to know if anyone has a concrete suggestion on what to do?  Has anyone ever written an open letter to eBay in the press?  Obviously this costs money but it seems to me this might get some attention? Does anyone care anymore, or is everyone just ready to abandon ship?

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

This user has validated their user name. by: Philip Cohen
Web Site

Fri Oct 15 19:22:49 2010

“Meg Whitman and Pierre Omidyar showed that they were interested in us for all the right reasons. Like Craigslist, eBay is about helping folks get everyday stuff done, on a level playing field—they emphasize trustworthiness and reputation, and try really hard to listen to people. Basically, we're both about building community, and humanizing and democratizing the 'net, …”—Craig Newmark.

Well, it’s easy for us to be wise with hindsight, but Newmark’s assessment of eBay’s executive management and their priorities displays an extreme corporate naïveté. As we are all aware, eBay and PayPal, because of their every-day demonstrated deviousness and unscrupulousness, have become the two most despised commercial entities on the planet. Like the rest of us, Newmark has had to learn the hard way that what eBay/PayPal says bears absolutely no relationship to what they are likely to do.

eBay’s offer of fee-free listings, with no limit on starting price, is as plain an indication of eBay’s current utter desperation as there could possibly be.

Keep up the good work, John, and do continue selling your soon-to-be worth less eBay shares.

eBay/PayPal/Donahoe: Dead Men Walking.

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Rich

Sat Oct 16 00:36:20 2010

Curious why article starts by saying Craig Newmark and the other guy were "forced" to sell 28%.     I hope ebay loses but were they forced to sell? I wish I knew what this means:  "alleging they breached their fiduciary duties as Craigslist Board members."  Anyway; it's funny how Ebay owns 28% and Craigslist remains free.  Is this why Craigslist is free?  So Ebay can't make any money from it?  There's something unique and different about Craig Newmark.  It almost looks like a lose-lose for Ebay because they own 28% of a product that makes no money and Craig Newmark seems to like it that way.  And the longer they stay free; the more market share they take away from Ebay.  Almost like Ebay's worst nightmare

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: AC_in_Mich

Sat Oct 16 07:44:57 2010

@Rich - Craigslist DOES make money - a ton of it.  Read this article    http://www.nytimes.com/2009/06/10/technology/internet/10craig.ht
ml

@Ric1313
 When are your court cases due in court?  I can hardly  wait to hear the results! - geee, if you could only get Meg to appear

AC

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Rick1313

Sat Oct 16 12:38:09 2010

For my eBay,inc. (et al) case, it was filed in June.

Of course eBay,inc. is contesting it.

This delays the application from being heard.

If they did not contest, we would be facing each other in 8 to 10 months from filing date.

With the contest, it will be 16 to 18 months.

For my second case, filed in late August against PayPal CA Ltd/eBay,inc., a strange situation has just popped up.

I have been notified by the court that their notification mailing to PayPal CA Ltd/PayPal,inc. address has come back with USPS saying that the address does not exist.

Strange because the court has assured me that they did use the exact mailing address that was on the application.

This mailing address is what I used to send a registered letter (signature required) to PayPal's offices in late July (delivered and signed for).

The mailing address used was the one on both PayPal,inc.'s and PayPal CA Ltd USER AGREEMENT site literature.

The court will try again, but I will have to get a hard copy from the court that shows what they received back by USPS the first time.

So this one is limbo, which means further delays as eBay,inc./PayPal will eventually also contest this one and the whole long delay process will start, like the first case.

Patience is needed.

Meanwhile, with the first case, the amount will keep on climbing until it is heard (account mismanagement is still ongoing).

Have an appointment in two weeks to add to the first case.

In the PayPal case, the amount will also grow if they take any of my funds to reimburse a buyer's claim or reimburse themselves a charge back.

The same applies to eBay,inc. if they try and apply the bad faith BUYER PROTECTION POLICY.

eBay,inc. is the party who is in breach of what they say on the various site literature UA's and policies.

They will eventually have to explain themselves and have it on a public record.

eBay,inc. has also been notified that any sanctions, whatsoever, that they apply to my eBay.inc accounts will be dealt with more severely.

This is business and I (or any other seller, if they so choose) must protect one's business interest.

Any seller looking into taking eBay,inc. to court should not wait to what happens with other cases.

This is what an operation like eBay wants sellers to do, as it means fewer cases to handle at any one time and the ones that are active, they will try and push back from being heard as much as possible, thus buying time. Then their is the appeal process they will use if they are found guilty.

The cost of these various legal scenarios are calculated ahead of time and are incorporated into the various fees they charge on any revenue source (sellers, advertisers, etc.).

What they cannot control is the number of cases that are opened.

The more that are opened, the more their legal cost will rise and they will have to eat it (yeah, right!) or do further fee increases.

Also, if Wall Street gets a whiff of an increase in lawsuits against eBay,inc. then their stocks may suffer (the biggest blow of all).

Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit   Craigslist Adds Pierre Omidyar as Defendant in eBay Lawsuit

by: Jay

Sat Oct 16 12:45:57 2010

rick1313 says: Mano a mano in old Montreal

Rick, small claims must be made in the jurisdiction of the defendant not the plantiff!

That means you're going to SAN JOSE!

Good luck, Ebay's been there done that more then a few times. . .

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