Tinder Founders Swipe Right on Gibson Dunn's Orin Snyder in $2B Suit
In a New York State Supreme Court lawsuit, Tinder co-founders and key employees allege that the parent companies manipulated financial information to undercut the value of their stock options.
August 15, 2018 at 11:22 AM
5 minute read
If there's one thing you'd expect from the minds behind Tinder it's this: They know how to pick themselves a lawyer.
In their new $2 billion lawsuit against the dating app's parent companies, Tinder's three co-founders plus seven current and former executives swiped right on Gibson, Dunn & Crutcher star litigator Orin Snyder.
In some ways, matching with a lawyer isn't so different from finding a love interest. Is he available? Smart? Does he get me? How have his past relationships worked out? Does he like pina coladas?
Snyder certainly seems to check all the boxes. The Verge once called him “the deadliest trial lawyer in tech,” and he's represented clients including Apple in the e-books trial and Facebook in the ongoing Cambridge Analytica data scandal.
Co-chair of Gibson Dunn's media, entertainment and technology practice, Snyder doesn't just represent companies. According to his law firm bio, his individual clients include Anderson Cooper, Bob Dylan, LeBron James, Lady Gaga, David Letterman, the Rolling Stones and Bruce Springsteen. (This list alone would make me want to hire him.)
On behalf of the Tinder execs, Snyder is now taking on Barry Diller's IAC/ InterActiveCorp and its subsidiary, Match Group Inc.
In an email, Snyder said he was hired after he was introduced to Tinder co-founder Sean Rad “by mutual friends in the technology industry.” Rad was CEO, president and chairman of Tinder from February 2012 to September 2017.
On Tuesday, Snyder plus Gibson Dunn partner Matthew Benjamin and associates Laura Raposo, Connor Sullivan and Christine Demana filed a 55-page complaint in New York State Supreme Court, alleging that Tinder's parent companies manipulated financial information to undermine Tinder's valuation. As a result, the Tinder plaintiffs say they were shortchanged on stock options.
It's a complaint that appears to be written for mass consumption, with sentences like “Founders and early employees of startup companies often receive equity in the companies they create, giving them an incentive to build the company's success long into the future,” which is probably not something a judge needs to have explained.
Indeed, the suit (accompanied by a snappy press release about “deception, bullying, and outright lies”) got massive media coverage on Tuesday—featured everywhere from Fox News to The New York Times.
Adding fuel to the fire, the complaint also includes allegations that Match Group's chairman and CEO Greg Blatt groped and sexually harassed Tinder's VP of marketing and communications during and after Tinder's December 2016 holiday party in Los Angeles.
But the crux of the complaint concerns the value of the company. Because Tinder is privately held, the plaintiffs' stock options were scheduled to be independently valued at four specific dates in 2017, 2018, 2020 and 2021.
“[I]f defendants could undermine Tinder's valuation at their first opportunity in 2017 and then eliminate the future Scheduled Puts…they could save themselves billions of dollars,” Snyder wrote. “Because the Scheduled Puts occurred in private—beyond the view of public investors and regulators—defendants could lie about Tinder's financial projections and undermine the value of Tinder without hurting their stock prices or the public perception of Tinder's value.”
According to the Tinder execs, the defendants arrived at a $3 billion valuation “based on their bogus numbers. … They created false financial projections, inflating Tinder's expenses and inventing an alternate universe in which Tinder was stagnating toward freefall.”
The complaint is especially harsh in discussing Blatt (“a longtime lackey” and “notorious bully with a volcanic temper”), who was installed as Tinder's interim CEO during the valuation process. The plaintiffs allege that Blatt's sexual misconduct was “whitewashed” to keep him in place during the valuation and Tinder's subsequent merger into Match—only to announce his retirement two weeks after it was done.
The plaintiffs' Tinder options were then converted in Match options, and the future scheduled valuations were eliminated.
IAC and Match in a statement said they've already paid out more than a billion dollars in equity compensation to Tinder's founders and employees.
“With respect to the matters alleged in the complaint, the facts are simple: Match Group and the plaintiffs went through a rigorous, contractually-defined valuation process involving two independent global investment banks, and Mr. Rad and his merry band of plaintiffs did not like the outcome,” the statement said.
“Mr. Rad (who was dismissed from the company a year ago) and Mr. Mateen (who has not been with the company in years) may not like the fact that Tinder has experienced enormous success following their respective departures, but sour grapes alone do not a lawsuit make.”
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