The legal tensions are escalating between Zillow and News Corp.-owned Move Inc.
And with good reason. There’s a lot of money at stake.
In its fourth quarter earnings report this week, Zillow’s profits fell short of expectations, after the Seattle online real estate company spent $8.1 million on an ongoing lawsuit with Rupert Murdoch’s News Corp., which in 2014 acquired Move Inc.
In a SEC filing on Friday, Zillow said that legal costs related to the Move Inc. litigation mounted to $27.1 million last year. And those expenses are expected to go up in 2016, reaching an eye-popping $36 million.
That’s a lot of coin for a suit that largely centers around one employee.
The dispute is tied to former Move executive, Errol Samuelson, who was hired by Zillow in March 2014.
Samuelson and Zillow were promptly sued by Move for allegedly hijacking trade secrets, with Sameulson sidelined in July 2014 from working at Zillow by a Washington State Superior Court Judge, a ban that was lifted last year.
If the rivalry wasn’t nasty enough in the courts, some verbal barbs flew this week.
In a Friday appearance on CNBC, Rascoff was asked how long the legal bills would hang over Zillow.
“You’d have to ask Rupert Murdoch that question,” said Rascoff, referring to the News Corp. chairman.
“We are focused on innovating, News Corp. is focused on litigating. Unfortunately, you see this all too often in business where companies who lose on the business battlefield resort to the court room out of desperation. We have been sued by News Corp. We are forced to defend ourselves. It is vindictive, it is baseless. But I try to put it out of my mind, and focus on turning Zillow into a $5 billion or $10 billion revenue company and I leave it to the lawyers to handle it.”
In response to the CNBC appearance, Move issued this statement:
“Today on CNBC, Zillow CEO Spencer Rascoff accused Rupert Murdoch and News Corp of acting out of ‘desperation’ in filing a ‘vindictive’ lawsuit. But that litigation was filed by Move long before News Corp even owned the company, and it is based squarely on the merits of the case, not emotions. In Zillow’s own filings with the SEC, it has concluded there is a ‘reasonable possibility’ it will suffer a loss in this lawsuit.
It’s understandable why Mr. Rascoff said today of the litigation, he’s ‘tried to put it out of my mind.’ Just last week, the judge ordered defendants to appear for a two-day evidentiary hearing on April 13 and 14 into Move’s claims that important evidence has been destroyed by some or all of the defendants in this case.”
Rascoff has taken shots at Move Inc. in the past, calling it a “crappy company.” Meanwhile, at a real estate conference last year Murdoch exclaimed: “What the hell does Zillow mean?”