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Seattle court unseals evidence in Move v. Zillow


SEATTLE – Jan. 26, 2016 – A large volume of evidence has been made public in a lawsuit brought by the National Association of Realtors® (NAR) and Move Inc. against Zillow Inc., Errol Samuelson and Curt Beardsley (the defendants). Move Inc., the oversight company, alleges that departing execs stole confidential info before taking jobs with Zillow, an allegation that Zillow denies.

According to NAR's latest update on the case, the defendants filed a series of motions to have evidence sealed, saying the documents were confidential and personal, but the King County Superior Court in Seattle, Wash., disagreed, saying a vast majority of the evidence did not reveal trade secrets or brand strategy.

Samuelson and Beardsley had been long-time Move executives before resigning in March 2014 to take industry relations positions within Zillow. After their departure, Move, NAR and two subsidiary companies sued the execs and Zillow alleging, among other things, that they stole valuable confidential information and then hid and destroyed evidence to cover their unlawful conduct. The defendants have strongly denied wrongdoing.

Since the initial allegations, the case has been through nearly two years of depositions and fact-finding, including a forensic review to recover documents deleted from Samuelson and Beardsley's computers.

Lawsuit pleadings are usually made public, says NAR General Counsel Katie Johnson, whose legal team argued for unsealing the documents.

"Ultimately, the public interest of open court proceedings outweighed any reason the defendants gave for keeping these documents sealed," Johnson says.

Among the documents made public

  • Text messages from Samuelson to Zillow CEO Spencer Rascoff written two months before Samuelson's departure from Move. Those texts refer to a "burner phone" – a term commonly used to describe a prepaid mobile phone purchased for one purpose and then trashed. NAR and Move say Samuelson set up the phone "so he could talk to the CEO of Zillow at night while he was in the middle of negotiating a potential multi-billion dollar Move-Trulia merger transaction by day." That transaction never went through, and in 2014, Zillow announced plans to acquire Trulia, an acquisition completed in early 2015.
  • A to-do list from Errol Samuelson, written before his departure from Move and recovered from his computer, which includes, among other things, "wipe hard drives and phone."
  • Excerpts from Samuelson's deposition testimony, in which he says he engaged a vendor for advice on how to securely delete personal data from a Move-owned computer in preparation for returning the computer to his former employer. Move and NAR contend that Samuelson destroyed evidence.
  • In Beardsley's deposition testimony, excerpts find him explaining why he deleted evidence and physically destroyed a hard drive.
  • In a deposition of Chris Crocker, the former Zillow executive who wrote a so-called anonymous "whistleblower letter" to counsel for Move and NAR, he offered clues about where to find evidence of improper actions by Samuelson, Beardsley and Zillow, including evidence that Samuelson was actively engaged in industry development during a time when a court order temporarily blocked him from doing that work.

After Crocker's identity was revealed, Zillow's attorneys called him a "disgruntled former employee" who misstated facts.

In his testimony, Crocker stood by his allegations, including a claim that Zillow was improperly using data from IDX feeds. Included in the court record are data license agreements between Zillow and two Realtor association-owned MLSs, purportedly restricting use of the MLSs' data for any purpose other than IDX.

Crocker also reiterated his statement that Beardsley had accessed a proprietary Move database to get information about listing counts, which is information Zillow doesn't have, according to Crocker.

In 2015, King County Superior Court Judge Sean O'Donnell admonished Beardsley for interfering with a court-ordered forensics investigation into the defendants' computers and cloud accounts. In the admonishment order, O'Donnell was affirming a recommendation by retired King County Judge Bruce Hilyer, who was appointed to manage the discovery process.

During the discovery process, Beardsley changed a cloud-account password, later saying he did so to protect personal information.

"We have elaborate protections built into this case to protect privacy," Hilyer said, calling Beardsley's conduct inconsistent with the forensic protocol ordered by the court. "Mr. Beardsley is admonished not to take unilateral actions to impede or delay or interfere with the investigation of the neutral forensic expert."

Many in the real estate industry considered the departure of Samuelson and Beardsley from Move a betrayal. Whether their actions violated the law will be decided this year. The case is scheduled for trial in June 2016.

Source: Realtor® Magazine

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Related Topics: Legal